China is our best friend, and soon they could be watching everything we do in a way that best friends really shouldn't. Now the Coalition wants to reverse the restrictions on Chinese company Huawei from bidding to supply equipment to build the NBN. Huawei has grown rapidly in the past ten years to become the largest telecom equipment maker in the world. They have offices in Sydney as well as every other major city. Their growth could be in part because they allegedly stole code from Cisco in 2003, but it's probably also because they're able to roll out broadband quicker and cheaper than anyone else. However, sometimes things are cheap because there's something a bit off about them.
Last week the Coalition announced its broadband policy. The main difference between the Coalition and Labor is that Labor wants to connect fibre to everyone's houses, whereas the Coalition wants to connect fibre to a node – a central spot like an apartment block basement or a cabinet in a suburban street – and then use the old-school copper wire phone network to connect to all the surrounding houses. This makes it slower, but it's much cheaper. As it happens, Huawei is an expert in building this particular type of system.
Chinese companies are different to Western companies. While they may claim to be independent, or in the case of Huawei, a collective, in reality the Chinese Government is always present in some way. The lack of separation between the public and private sectors allows collaboration that gives them a huge advantage over Western companies. Take mining for example. A Chinese mining company can bid on a concession for a mine in a poor, corrupt country, and as part of the bid they can offer the foreign government things like roads and schools and hospitals, paid for by the Chinese Government. It pretty much guarantees that they'll win the bid. What's more, they can build those roads far cheaper than anyone else using flown-in labourers, and they can mitigate risks in ways western companies can't – any conflict the company has with the foreign Government can be fixed by the very generous Chinese Ambassadors. That leaves more money in the hands of the happily dishonest politicians in those developing countries that are lucky enough to have minerals (eg Zambia and Sierra Leone). Australian companies can't compete with this overseas – they're not allowed to pay bribes, and they can't ask the Australian Government to collaborate on commercial deals. But now it's the Australian Government that is in the sights of such a Chinese company, with the multi-billion dollar NBN contracts.
Labor has excluded Huawei from bidding on construction of the NBN. They haven't said why, but in the US a congress select committee reported the Americans were “afraid of Huawei, in fact we are afraid of every Chinese company, public or private.” The US inquiry was based on fears that Huawei, under the Presidency of a former People's Liberation Army engineer, was passing on information to the Chinese Government and the PLA. Canada has invoked special powers to exclude Huawei from involvement in its broadband network. Huawei was caught spying on the Indian Government. They built Iran's intelligence monitoring system. And Huawei routers have been found to have security vulnerabilities that could let remote users control devices.
Perhaps we don't need to be told why Huawei has been excluded, because it seems pretty obvious. We can get cheaper (slower) internet, but the Chinese Government will know everything about us all. On the other hand, who really cares? We all give away so much data voluntarily that between Apple, Facebook and Google there's little left to find out about any of us anyway.
Follow Carly on Twitter: @carlylearson
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