The Australian government has finally bitten the bullet and decided to effectively ban Huawei and ZTE from the country's 5G network rollout projects.
It ended months of speculation by announcing Thursday it would not allow network operators to source 5G equipment from foreign equipment suppliers that were "likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law," and which "may risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference."
Local operator Vodafone Hutchison Australia (VHA), a joint venture between Vodafone and Hutchison, said the decision "undermines Australia's 5G future."
Huawei denied it had ever taken instructions from the Chinese government and said customers would pay the price.
The decision follows a six-month review of 5G security arrangements, launched after senior US security officials shared their views on the Chinese suppliers with Prime Minister Malcolm Turnbull during a Washington visit early this year.
The result is that Australian operators will have the choice of just Ericsson and Nokia for their 5G network infrastructure.
Two operators -- VHA (currently in merger discussions with new licensee TPG) and Optus -- already deploy Huawei 4G/LTE equipment. (See Eurobites: UK's Vodafone Eyes TPG Merger in Australia – Reports.)
VHA's chief strategy officer, Dan Lloyd, said in a statement that major decisions such as those on 5G security "need to be made with rigour, accountability and careful consideration" of the impacts.
"This decision, which has been dropped on the eve of the 5G auction, creates uncertainty for carriers' investment plans. This decision is a significant change which fundamentally undermines Australia's 5G future, and we will consider what it means for our business," he added.
Huawei Australia chairman John Lord has warned that excluding the company from 5G would mean effectively excluding it from the entire market.
Huawei noted on Twitter that the ban was an "extremely disappointing result for consumers. Huawei is a world leader in 5G."
We have been informed by the Govt that Huawei & ZTE have been banned from providing 5G technology to Australia. This is a extremely disappointing result for consumers. Huawei is a world leader in 5G. Has safely & securely delivered wireless technology in Aust for close to 15 yrs— Huawei Australia (@HuaweiOZ) August 22, 2018
The Turnbull government rejected options for compromise measures that might have allowed Huawei or ZTE to play a role, such as splitting the core and radio networks, or creating a dedicated network security agency. (See Australia Could Open 5G Door to Huawei.)
It also seems to have put heavy emphasis on the passage last year of China's new national intelligence law, which stipulates that companies can be directed to support Beijing intelligence-gathering.
No other western nation has placed blanket bans on Chinese vendors, including the UK, the other close US ally.
Despite claims to the contrary, no evidence has been found of an intentional breach in any Huawei kit.
The decision has been driven primarily by politics, as Australia tries to balance relations with its closest defense and intelligence partner and those with its major biggest trading partner.
Diplomatic relations with Beijing have been frosty during the past 18 months over claims of Chinese political interference in Australia.
But 5G is not the only point of tension between Australia and China involving Huawei.
The Australian government has taken over from the Asian Development Bank the funding of a subsea cable between the Solomon Islands, Papua New Guinea and Australia. It has committed A$137 million (US$100 million) to the project, which had previously been awarded to Huawei in a controversial tender.
— Robert Clark, contributing editor, special to Light Reading