Huawei has come under more pressure with the Australian running a report about the Chinese maker of telecommunications gear allegedly being involved in espionage.

But Spark NZ says its standing by its key supplier, and Huawei calls the story vague and unsubstantiated - and notes its key rivals Nokia and Ericsson are also entangled in any allegations through their joint enterprises in China.

Secret intelligence reports given to Australian officials outlined a case in which Chinese espionage services used telecommunications giant Huawei's staff to get access codes to infiltrate a foreign network, the paper says.

The un-named source said it was the first instance of privately-held Huawei being used for national intelligence gathering. It was not known if it was successful. It was said to have taken place in the past two years.

Advertisement

The Australian Government has not made public its reason for banning Huawei gear from 5G mobile networks.

However, beyond Huawei's alleged track record, Australian Strategic Policy Institute cyber expert Dannielle Cave said China passed its National Intelligence Law last year, which obliged citizens and organisations to cooperate with and collaborate with China's intelligence services if required. That put even good companies in an impossible situation, she said.

Asked about the Australian report Spark managing director Simon Moutter said his opinion had not changed since Friday, when he mounted a fired-up defence of the Chinese company, saying our government must table "incontrovertible proof" of Huawei's involvement in espionage or allow the Chinese company to bid for 5G business.

Huawei NZ deputy chief executive Andrew Bowater referred the Herald to comments made by one of his colleagues across the Tasman who called the Australian's story "more tired, unsubstantiated comments from anonymous sources''.

Huawei NZ deputy chief executive Andrew Bowater says Australian politicians are being
Huawei NZ deputy chief executive Andrew Bowater says Australian politicians are being "sensationalist." Photo / Supplied.

Huawei Australia head of corporate affairs Jeremy Mitchell said Australian security agencies had declined invitations to visit its headquarters in China and inspect its processes. He noted that rival vendors of 5G technology, Ericsson and Nokia, sourced their hardware from China in joint venture with state-owned enterprises.

GCSB Minister Andrew Little and Communications Minister Kris Faafoi are still considering whether to ban Huawei from bidding for Spark, Vodafone and 2degrees respective 5G mobile network upgrades, expected to go live in early 2020.

However, Faafoi has been notably more restrained in his language than his Australian counterpart, and Little has emphasised that New Zealand will make its own decision, independent of Australian thinking.

And on Friday came some news that could make their decision easier. Bowater told the Herald that Huawei will not bid for "core" 5G network business, giving Nokia and Ericsson a clear run.

In broad terms, the core is the "brain" of a mobile network. Bowater says because it is "aware of sensitivities" and "frankly, it's not worth the hassle", Huawei will restrict itself to bidding for RAN (radio access network) elements of Spark, Vodafone and 2degrees' respective mobile upgrades - that is, transmitting and receiving gear on cellphone towers.

"I can't see why we would follow Aussie on any technology decisions," Telecommunications Users Association CEO Craig Young says. He also sees a Huawei ban pushing up costs. Photo / Supplied.

With Huawei not pushing to be part of the 5G core, it will be harder for its foes to push a security threat argument.

Bowater strongly denies his company poses any security threat. He says there are no examples of Huawei compromising national security, despite the company being under more scrutiny than any other.

He notes that under the Telecommunications (Interception Capability and Security) Act (2013), the GCSB has to approve technology used by network operators for telecommunications network upgrades. Huawei faced similar scrutiny by the GCHQ in the UK, which shared results with New Zealand. It has passed.

If the Government were to block Huawei from bidding for 5G contracts, consumers would ultimately pay the price, Bowater says.

IDC senior research manager Shane Minogue says it's
IDC senior research manager Shane Minogue says it's "difficult to say" whether our government should follow Australia in banning Huawei. Photo / Supplied.

In Australia, Huawei was also blocked from the National Broadband Network (NBN), the equivalent to our public-private Ultrafast Broadband (UFB) rollout and international cable projects.

Here, former Prime Minister John Key actively promoted Huawei as a cost-competitive option for our telcos back in 2010 as the UFB build was about to kick off.

Banning Huawei from 5G builds would imply the company was also a security threat for all of our telco network infrastructure. Ripping out its gear would cost hundreds of millions.

Bowater says Huawei has around 150 staff in NZ.

The company supplies landline and mobile network technology to 2degrees; landline technology to Vodafone and mobile technology to Spark.

Huawei was also a key technology partner for Chorus on the Rural Broadband Initiative, and supplied Ultrafast Broadband (UFF) and Enable Networks for their legs of the UFB.

All up, Huawei's gear is in around one-third of New Zealand's telecommunications infrastructure, Bowater says.

The Huawei executive says he appreciates Kiwi politicians have been "pragmatic," following a process-based approach and the GCSB's formal review under TCSA.

Some Australian politicians had taken a more "sensationalist" approach, Bowater said, basing decisions on more political factors.

IDC senior research manager Shane Minogue says it's "difficult to say" whether our government should follow Australia in banning Huawei.

"The NZ government has to do its own due diligence to determine if there is a security risk in allowing Huawei to build 5G," Minogue says.

"Australia and the US have decided to exclude Huawei from supplying 5G equipment so NZ needs to investigate and determine if there is a risk. When you look internationally there are countries and telcos that are investing strongly with Huawei - for example, South Koreas SK Telecom and Spain's Telefonica - and those that aren't. So NZ needs to conduct its own investigation to determine the best course of action."

Minogue adds, "Huawei has already invested large sums in NZ and is a competitive provider [in terms of pricing] with excellent technology so any decision to ban them will have ramifications on competition in New Zealand network pricing and have follow-on impacts on the NZ consumer. With that in mind, any decision should not be taken lightly or without proper reason."

Telecommunications Users Association chief executive Craig Young says, "I can't see why we would follow Aussie on any technology decisions. The removal of one of the competitive vendors from the market may lead to increased costs by the providers and thereby increased costs for users."

He adds, "Given that two of our UFB built networks are using Huawei technology, it would be a huge disruption to the UFB project, as well as a significant cost."