Will the NBN be 'affordable' without Huawei?

The Coalition has promised to review Huawei's lockout from NBN tenders. But bringing the Chinese giant back on the NBN table won't be easy unless Turnbull is willing to stand up to US pressure.

Now that the election is done and dusted we need to turn our attention to the broadband minefield that the Abbott government needs to navigate. There will be casualties and some hard decisions to be made along the way, particularly about the involvement of Huawei.

As the government slowly but steadily sets about the process of refocusing NBN Co onto the path outlined in the government’s pre-election NBN plan titled “Fast. Affordable. Sooner. The Coalition’s Plan for a Better NBN” it’s important to identify some of these mines that the government will have to defuse, sooner rather than later.

The most important aspect of the government’s plan is to facilitate open and transparent competition in the telecommunication industry. If the government fails to ensure that there’s a truly competitive market they will fall at the first hurdle.

The question on everyone’s lips is how can you promise an “affordable” NBN when the companies involved opt to utilise equipment from one vendor that is more expensive than an equivalent item in all respects from another vendor?

Won’t this drive up the costs and ultimately lead to Australian’s paying more?

My way or Huawei

Remember the outcry from our greatest ally when Huawei tendered to provide NBN Co with Gigabit-capable Passive Optical Network (GPON) equipment for the Fibre to the Home (FTTH) rollout?

At the time, the Federal Attorney-General Nicola Roxon’s office told Delimiter:

“The National Broadband Network (NBN) is the largest nation-building project in Australian history, and it will become the backbone of Australia’s information infrastructure. As such, and as a strategic and significant Government investment, we have a responsibility to do our utmost to protect its integrity and that of the information carried on it. This is consistent with the government’s practice for ensuring the security and resilience of Australia’s critical infrastructure more broadly.”

Earlier this year The Australian Financial Review reported that the former head of the Central Intelligence Agency, Michael Hayden, alleged that Huawei was a spy for China. Evidence was not forthcoming.

A search of media and relevant government literature has turned up no evidence, no government investigation, absolutely nothing of substance.

What was even more puzzling was why the Chinese government owned ZTE was invited to tender for the NBN in 2012, when Huawei was banned. The former government and agencies such as ASIO have remained tight lipped and provided no glimpse as to why.

Kowtowing to White House

What we do know is that the recent government review of IT prices found that US companies have been ripping off Australians for years and continue to do so with impunity. We also know that the likes of Google, Microsoft and many others have structured their companies so that they pay very little or no tax to the Australian Tax Office. On top of that, the recent NSA leaks by Edward Snowden highlight that the Chinese aren’t the only ones we need to worry about when it comes to our security.

The security argument against Huawei seems moot, especially when you consider that we don’t even have mandatory data breach reporting because the government and businesses would rather Australians not know that their personal information is being stolen by what now appears to be every country and bad guy connected to the internet.

The lack of evidence of Huawei’s spying can be attributed to the US government’s scare campaign being nothing more than a way to introduce a trade barrier by other means. That may seem justified to some but what’s remarkable is the manner in which Canberra has so far kowtowed to US interests.

Has Australian political self-esteem fallen so far that our politicians don’t know or don’t care when their being led by their noses by their US masters?

Turnbull steps up

A change in Canberra may not change the status quo but communications minister Malcolm Turnbull has shown in the past that he is willing to rock the boat, if needed.

In July, Turnbull weighed in on the Google tax debacle when he described Australians as the “loser” should Google continue to channel revenue earned in Australia overseas to avoid local taxes. That remark should be in the running for the understatement of the century.

He went on to say “If Google was paying tax in a conventional way I think it’d be paying probably half a billion dollars of tax in Australia.”

What we have here is a US company walking away with the proverbial shirt off our backs while the former government prevaricated. Put another way, if US multi-nationals paid local tax the government would be able to fund the entire NBN without taking out any loans and there would be funds spare to ensure that Tasmania and regional and remote areas no longer remain in the telecommunication wilderness.

With regards to Huawei, in August 2012 Turnbull promised that as part of a Coalition government "We will review that decision [to ban Huawei] in the light of all the advice in the event of us coming to government."

Competition review urgently needed

Turnbull needs to carry out that review quickly and publish the results within weeks – including evidence for any adverse finding. Failure to do so could cause a farcical situation within the telecommunications industry where NBN Co and Telstra continue to ignore Huawei while other telcos (Optus, TPG, etc.) purchase Huawei equipment, that will be used on networks that form part of the government’s NBN.

In the lead up to the election Huawei chairman John Lord told the Australian Financial Review “[Coalition broadband spokesman] Malcolm Turnbull is making positive statements about us and that is a good position for us to be in compared to 18 months ago.”

A Huawei Australia spokesman told Technology Spectator that “Huawei is one of the leading manufacturers of access equipment – 46 per cent market share globally. Huawei has commercial [VDSL2] vectoring contracts with eight operators including BT Openreach, Switzerland Swisscom, Ireland eircom, Austria A1, France Fastweb, Italy TI, PCCW and Turkey Telecom and contributes to the developing standards.”

The Huawei Australia spokesman went on to say “today Huawei’s business in Australia continues to grow and we provide the Tier 1 and Tier2/3 market with leading industry solutions in the fixed access environment.”

If the Huawei ban continues will any fixed network containing Huawei equipment be disconnected from the NBN? How will traffic flow from Optus, TPG and other telcos / ISPs that use Huawei equipment and the NBN?

If NBN Co utilises VDSL2 or G.Fast (which is the superior option) after the government review does this mean that customers will be prevented from purchasing Huawei modems/routers/switches for their homes and offices?

TPG has announced that it will rollout fibre to the basement (FTTB) to high value apartment buildings in inner urban areas. TPG is likely to utilise Huawei VDSL2 equipment as it is already using Huawei ADSL2 DSLAMS.

Competition without US interference

Competition between Alcatel-Lucent, Cisco, Ericsson and Huawei to supply telcos and ISPs has been fierce in recent years. Alcatel-Lucent and Cisco have been the prime beneficiaries of the ban on Huawei becoming a supplier for the NBN and will undoubtedly continue to fight tooth and nail (with the US government’s help) to ensure the Huawei ban continues unabated.

Most Australians were brought up on a diet of US television, movies and government propaganda that has brainwashed us into believing the US government has our best interests at heart. That’s not always the case and our politicians need to ensure that things are kept in perspective.

Rather than being patsies for US government propaganda Australia must look after its own affairs, especially when it comes to the NBN.

Whether Turnbull can truly engender competition in the telecommunications industry without US interference remains to be seen. Bringing Huawei back to the NBN table could prove to be a key test and if he doesn’t take the right step the affordable NBN proposition could be thrown right out the window.

Mark Gregory is a Senior Lecturer in Electrical and Computer Engineering at RMIT University