To ban or not to ban?
That is the question facing the Australian government as it ponders Huawei's role in 5G. (See Huawei Faces Security Backlash in Australia.)
Prime Minister Malcolm Turnbull has been weighing a decision since US intelligence officials made clear their concerns about the Chinese firm in February. Government leaks since then have shown Canberra has been leaning heavily toward excluding Huawei Technologies Co. Ltd. from 5G.
Now it appears a compromise solution is within reach, with Huawei allowed to bid on less sensitive parts of the network, The Australian newspaper has reported.
Currently, although Huawei is blocked from supplying Australia's NBN, a government-backed wholesale network, its LTE gear is deployed by the two smaller mobile operators, Optus Administration Pty. Ltd. and Vodafone.
Huawei faces an effective blanket ban in the US but is not restricted in any other market, including the UK, where it signed a five-year 5G strategic partnership agreement with BT Group plc (NYSE: BT; London: BTA) in February.
Australia seems to be juggling the demands of the US, its key defense ally, with those of China, its largest trading partner.
Relations with Beijing have been strained over the past year after a series of revelations about influence peddling by Chinese interests in Australia. (Beijing has denied the claims.)
It's become a media cliché that the Huawei issue is a contest between Australia's economic and strategic interests. (See Huawei Is Main Sponsor of Trips by Australian Politicians, Says Report.)
But it is also a test for its telecom policy.
Australian politicians have spent a decade squabbling over the NBN, with disastrous results. If they decide go ahead with 5G without the world's biggest network vendor, they will put local telcos at the mercy of Ericsson AB (Nasdaq: ERIC) and Nokia Corp. (NYSE: NOK), the two big European vendors.
Analysts point out that Optus, Vodafone and broadband player TPG, which is expected to become the fourth 5G operator, are all attracted to the lower-cost Huawei kit. Those operators, and the wider economy, will have to bear the extra cost if they are forced to pay more to deploy next-generation infrastructure.
By leaving the door ajar for Huawei, Turnbull can also avoid the awkwardness of having to explain why Huawei is a security threat.
While Huawei has installed several hundred networks around the world, and China-backed hackers have been fingered on countless occasions, no link has been found between the two. China's spies seem to have no trouble hacking into western corporate and government networks without Huawei's help.
Reportedly the compromise being canvassed in Canberra would allow Huawei to bid on 5G core network or transmission contracts, but not on the radio access layer because of the insight it offers to the end device and user.
The tricky thing is that Optus and Vodafone already deploy Huawei gear in the LTE radio layer. Under a new telecom security framework, now being established, those operators may have to replace that equipment, according to The Australian.
Another part of the settlement would be to follow the UK in creating a network security assurance agency, funded by Huawei, to vet network equipment. (See Huawei Poses Security Threat, Says UK Watchdog.)
Yet another option might be to allow operators to deploy Huawei equipment, but on the understanding that they would not be considered for sensitive government contracts.
The government 5G review is expected to conclude at the end of the month.
— Robert Clark, contributing editor, special to Light Reading