Australia's (Safe) Bet Against Huawei

1:15 PM -- As I read this story -- "Huawei Barred From NBN" -- I wonder what it is the Australian government can see that many telcos around the world cannot?

Is Huawei a supplier that can't be trusted? Its sales numbers and the constantly expanding customer base of Tier 1 operators suggest otherwise. Is former Alcatel-Lucent exec Mike Quigley, who heads up Australia's NBN project, the reason? I wonder how many headaches Huawei caused him during his tenure and I wouldn't be shocked if he wanted to return the favor.

Perhaps the Aussies are following the lead of the U.S. House Permanent Select Committee on Intelligence (HPSCI). In November, that committee began an investigation of Huawei and ZTE that was supposed to "review the extent to which these companies provide the Chinese government an opportunity for greater foreign espionage, threaten our critical infrastructure, and further the opportunity for Chinese economic espionage."

We ask Huawei what they're up to all the time. Huawei says again and again that it is an employee-owned company and its motives for expansion include making more money for its workers, adding more jobs, expanding its business, etc. The HPSCI cautioned businesses about dealing with Huawei until the firm's motives "could be fully determined." There may be other motives that I'm not aware of. I'd love to know more. (See Huawei, ZTE Probed by Intelligence Agency.)

Is the Australian government also unsure of Huawei's motives, despite the vendor's roster of big customers? Or would it just prefer not to invite the scrutiny that comes with having Huawei involved?

What follows is a partially edited statement from Jeremy Mitchell, Huawei's corporate affairs director in Australia, which I received when I inquired about today's news:

While we’re obviously disappointed by the decision, Huawei will continue to be open and transparent and work to find ways of providing assurance around the security of our technology.

Huawei partners with every major operator in Australia and 45 of the world’s top 50 operators. This year, Huawei is on track to become the world’s largest telecoms equipment vendor. You don’t get to that level of success unless you have customers that trust your company, your staff, and your technology.

Network security is an issue which affects governments, operators, end-users and vendors alike. Addressing security issues must be done collaboratively and cooperatively -- no single entity can resolve the challenges posed by network security. Individuals and governments around the world are still coming to grips with the emergence of the new China which is an innovation leader.

As China’s largest private company, Huawei is at the forefront of that -- being the world’s number-one company for new patent applications in 2008. While network security is an issue for all vendors, the real risk is missing out on the innovation China has to offer.

The questions left unaddressed are many: Did excluding Huawei from the national broadband network (NBN) project make Australia safer? What, exactly, does leaving Huawei out protect the country from?

— Phil Harvey, Editor-in-Chief, Light Reading

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ninjaturtle 12/5/2012 | 5:38:13 PM
re: Australia's (Safe) Bet Against Huawei

Huawei can never be a trusted supplier. Hopefully the US and EU contries take a que from Australia. They are the smart ones.

DCITDave 12/5/2012 | 5:38:13 PM
re: Australia's (Safe) Bet Against Huawei

What specifically will they do to a government entity that does trust them to build a network?

Also, why have BT and others trusted them to date? Are those companies that much worse at assessing network security risks?

DCITDave 12/5/2012 | 5:38:12 PM
re: Australia's (Safe) Bet Against Huawei

Good points. I do think the lines blur when we're talking about where management is located vs. where the work is done. Nearly all tech companies are, to some degree, Chinese companies. 

So can we trust Chinese companies?

Or is there something specific about Huawei that a couple of governments know, but aren't telling everyone else?

acohn 12/5/2012 | 5:38:12 PM
re: Australia's (Safe) Bet Against Huawei

Carriers choose Huawei because (1) they're the cheapest gang in town, often by a large margin and (2) Huawei has done nothing to a customer to warrant mistrust.

Saving money is often an overriding factor and those who speak up about not trusting the Chinese don't really have anything to show to prove that they're a threat. True, they have ties to the government and the PLA, but in business logic, there is not enough perceived risk to outweigh the cost savings that make shareholders and CEOs happy.

I'm not saying that Huawei is a company I personally trust (I personally do not - based on my own perception their business ethics and background/ownership), I'm simply offering a reasonable "business explanation" for why they're being picked by so many carriers.

With that said, how many of the "other guys" who compete with Huawei have significant R&D presences in China? Nortel had an R&D office in Beijing (which presumably is now owned by one or more of Nortel's buyers). Nortel couldn't have been the only one. What about NSN, AlcaLu, Ericsson, Genband, and the others? Should we trust gear from companies where Chinese hands may have had a chance to pop in a backdoor or two, unbeknownst to the American/European business heads?

Really, if we're going to get paranoid about China, we need to look at the entire supply chain, not just where the home office is.

DCITDave 12/5/2012 | 5:38:11 PM
re: Australia's (Safe) Bet Against Huawei

I'm sure Huawei and ZTE and other Chinese companies would disagree (and maybe they'll show up on this board to speak for themselves).

But, following your logic for a second, these same networks that our Fortune 1000 companies use -- are those being spied on as well?


Chhilar 12/5/2012 | 5:38:11 PM
re: Australia's (Safe) Bet Against Huawei

Espionage.  Plain and simple.  Espionage by Chinese companies and government agencies is rampant.  They lead the world in this area.  It would be irresponsible to use their equipment.

acohn 12/5/2012 | 5:38:10 PM
re: Australia's (Safe) Bet Against Huawei

RGru - I hear you. I'm just saying that a carrier might be willing to turn a blind eye to that because Huawei has never targeted a carrier for espionage. Huawei doesn't compete with the BT's of the world, they sell to them. That's the difference.

To my knowledge, Huawei has never been caught snooping on phone calls or tapping into data streams. That's why carriers have no real reason to reject them. Of course, what you (and even I) are worried about is that their past (alleged) behavior with competitors could eventually spill over to their customers. But no evidence of that yet.

How many companies do we as individuals do business with that have ethics problems? Many of us here use Microsoft products (OS, Xbox, etc.), yet Microsoft has a tarnished image when it comes to its corporate and competitive behavior. Users don't care about that sort of thing. That's the logic I'm using to explain why carriers don't care about Huawei's allegations of being a bad citizen when dealing with competitors.

wujian 12/5/2012 | 5:38:10 PM
re: Australia's (Safe) Bet Against Huawei

Agree with previous reply that every major telco vendors plus Microsoft have big presence in China.There is no argu that China now becomes a major contributor to not only manufacture but also high tech/innovation.

The way I see it is that Aussie has to pick a side, and they chose the US. EU, on the other side, they are on their own side.  From a pure business and technical point of view, having Huawei brings great value to consumer and share holder and that is why it is now world 2nd largest telco company.

Flook 12/5/2012 | 5:38:10 PM
re: Australia's (Safe) Bet Against Huawei

Hope we can get past the China/Huawei bashing in some of the posts. I haven't seen anyone present any evidence why Huawei is untrustworthy as an equipment supplier. Clearly a lot of carriers and countries don't share that feeling, as apparent from Huawei's success.

ecipo 12/5/2012 | 5:38:09 PM
re: Australia's (Safe) Bet Against Huawei

I think this is an issue of reputation. There have been a lot of reports lately of hacking attacks from China and what make things even worse those seems to have come from entities related to the government. I don't know if anything of that is true or even if Huawei or any other company from China has played any role in those alleged attacks. Seems though that the Aussies took the decision to leave Huawei out, just like the regulators in the US or India with some orders. Huawei is, rightly or not, suffering from the Chinese reputation resulting from those reports. All this assuming that they (in Australia, US, India etc.) don't know anything more that we all know from the press. I think it's a questions of trust and how much importance do you give to the security issues. I hope one day we'll find out who made the right and who made the wrong decisions. Concerning the statement that all companies have some operations in China or integrate chips or other subsystems made in China I think that we may assume that the risk of a Chinese intervention for whatever purpose in the operations of a Chinese owned company is much larger than the risk of such intervention in a foreign owned one.

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