The UK will use Huawei technology in its 5G network upgrade. Australia and the US have warned against this. Why? What are the pros and cons of going with Huawei? And what is 5G anyway?
February 14, 2020
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Superfast mobile broadband is coming our way. But the race to bring us a 5G network has been caught up in the geopolitical storm between the West and China – with Chinese firm Huawei at its epicentre.
5G mobile technology will power the much-vaunted Internet of Things, when all connectable domestic devices (smartwatch to your fridge to your car to your washing machine) will be linked not just to the internet but to one another.
Yet the very technology required to bring us superfast mobile broadband will
also make our network more vulnerable in new ways.
With 5G, for example, critical infrastructure such as hospitals and traffic lights will also be connected.
This helps explain why Britain’s decision to use Huawei equipment in its network has upset officials in Australia and the US.
So what are the pros and cons of going with Huawei?
What is Huawei?
Huawei (pronounced wah-way) Technologies Co Ltd is a Chinese company founded by former military officer Ren Zhengfei in 1987 in Shenzhen, where it is still headquartered. It started out selling switching equipment to direct phone traffic through rural China but now produces smart devices, cloud services and telecommunications equipment. It surpassed Apple to become the world’s second-biggest smartphone maker in 2018.
The company says it is private, with no links to the government – but who actually owns Huawei remains unclear. The operating company is not publicly listed and US researchers say it is owned by a holding company that is 99 per cent owned by an entity called a “trade union committee” and 1 per cent owned by Ren.
The researchers have found that if the ownership stake claimed by the trade union committee is genuine, and if the trade union and its committee function as trade unions generally function in China, then Huawei may be deemed effectively state-owned.
How big is the company?
It is claimed Huawei receives massive subsidies from the Chinese government. Analysis by The Wall Street Journal puts the figure at $75 billion. Huawei disputes this but will not specify the amount itself.
In 1997, it entered the Global System of Mobile communications (GSM)
network, making equipment for 2G and 3G mobile systems.
The company is now estimated to supply 30 per cent of the world’s mobile technology market, double the reach of its nearest rivals, Nokia and Ericsson. It employs 194,000 staff worldwide, 60,000 of them based in Shenzhen. Huawei says 45 per cent of its staff work on researching and developing new technologies.
In 2018, Huawei recorded revenues of $US105 billion ($157 billion) with profits of $US8.5 billion. For the first three-quarters of 2019, Huawei recorded total revenues of $US87 billion – up 24 per cent on the same period in 2018.
It operates in 170 countries but Ren says global dominance is not his intention. “Huawei is not ambitious, we don’t want to dominate the world,” he told CNBC last year. It wants to be the world’s leading supplier of the equipment that runs 5G networks enabling super-fast mobile broadband speeds.
What is 5G?
The G is for generation and the 5 is for fifth: 5G is the fifth generation of mobile broadband technology.
Key features are network speed and low latency, meaning minimal delays between the time it takes to click on a page and load it. It can handle many more connections at one time, meaning you won’t lose signal next time you’re at a concert or a footy game and everyone’s trying to connect at once.
Ideally, mobile providers believe that 5G could enable you to download a feature film in 60 seconds and experience zero lag when gaming.
It could make other new technologies possible too, such as virtual surgeries, enabling traffic lights and cars to send signals to each other and so on.
Is Huawei the only 5G supplier?
No. There are three companies – Huawei, Nokia and Ericsson – that analysts say can provide 5G technology. Huawei has the lead in the total telecom equipment market share.
Why do we care right now?
China’s 2017 National Intelligence Law says: “All organisations and citizens shall support, assist, and co-operate with national intelligence efforts in accordance with the law.” The US and Australia believe that Huawei could be used by the Chinese government for espionage.
The US has lobbied its allies to ban Huawei, a move some see as a part of Washington’s power struggle with Beijing and more recently, part of US President Donald Trump’s trade war with Chinese President Xi Jinping.
Australia first banned Huawei from supplying equipment to the nascent National Broadband Network in 2012 under Julia Gillard.
In 2018, then prime minister Malcolm Turnbull banned Huawei from taking part in the 5G rollout, on security advice.
The US and Australia lobbied Britain to ban Huawei from its 5G rollout but Prime Minister Boris Johnson has refused even if Huawei was a “high-risk vendor”.
Why did the UK agree to go with Huawei?
British Telecom, known as BT, signed a deal with Huawei in 2005. BT told civil servants two years before it gave Huawei the contract that the Chinese firm was interested but they didn’t inform the government until 2006, to the shock of the House of Commons’ intelligence committee.
This means BT’s 4G network is built using Huawei equipment – 5G will build on the existing 4G network. Because the British government kept delaying and ultimately took more than a year to make its decision on 5G, British telcos went ahead and began using Huawei equipment in lieu of a government directive.
Britain is allowing Huawei to supply 35 per cent of what it categorises as periphery infrastructure, such as masts and antennae.
What do ‘core’ and ‘edge’ mean?
Under 4G, the network consists of a central hub, often referred to as the “core”, where the sorting and transfer (known as computing) of all the data we’re consuming and sending happens. The radio towers and antennae you see on buildings are considered the “edge” of the network.
Because the data bit is centralised, the “core” is currently easier to protect from hackers and bad guys. But this changes under 5G because the highest-speed 5G will use radio spectra that don’t reach very far. To address the problem of people losing connection as they move around and leave the reach of the transmitter or have their signal interrupted by obstacles, more antennae will be needed. Computing that once took place in the core will be pushed out into the wider network, meaning more data will be transmitted, making the network more vulnerable to disruptive actors.
This means more processing of your data – keeping in mind how many devices will be connected in the Internet of Things – has to take place outside the “core” and on what was considered the “edge” in 4G.
What is Britain’s view?
Australian and US spy agencies have assessed that under 5G, there can be no difference between the core and the edge, meaning the entire network is considered “critical infrastructure” and must be protected accordingly.
But Britain’s National Cyber Security Centre (NCSC) thinks differently. Inside the NCSC sits the Huawei Cyber Security Evaluation Centre (HCSEC), which was established to monitor the security risk posed by using Huawei equipment.
The HCSEC centre, known as The Cell, is funded by Huawei and its board includes Huawei HQ’s deputy chair, Huawei’s UK managing director, Huawei’s UK communications director and Huawei’s managing director.
The centre believes that, while more computing will be pushed out of the centralised hubs or core, that computing can still be protected.
Why do we care what Britain does?
Australia, Britain, the United States, New Zealand and Canada are part of an intelligence-sharing alliance called Five Eyes, established after World War II.
The US says it won’t send intelligence over networks that could be compromised or hijacked by China. Washington and Canberra believe that through 5G, Huawei could easily build in access points known as “back doors” that would allow it to take control of 5G networks to either hack them, take them down or take over mobile-connected devices to perform hostile actions. Such secret back doors could be installed into the equipment over time, allowing Beijing to penetrate networks.
Malcolm Turnbull has said the greatest threat Australian agencies identified was not necessarily interception of intelligence, which can be sent through encrypted means, but denial of service.
In the worst-case scenario, the US and Australia believe the systems we rely on for the smooth functioning of society could be taken offline.
By contrast, Australia’s Telstra does not have any Huawei in its network – it used Ericsson for its 4G rollout.
Vodafone and Optus used Huawei for their 4G. But Vodafone has signed with Nokia to supply its 5G and will phase out Huawei equipment in some parts of its network.
Optus says it is using “other suppliers” even though Huawei is ahead of the others “from a pure technology perspective”.
What are the advantages of going with Huawei?
Defending his decision, Johnson said Huawei could deliver the super-fast broadband he had pledged to deliver because of its cost and rollout speed.
As well as leading in technology, Huawei is ahead on price – it is about 30 per cent cheaper than its rivals. Critics say massive Chinese state subsidies are allowing the company to undercut and kill rivals, leaving the world depending on Chinese equipment for its critical infrastructure.
Where in the world is Huawei technology used?
Huawei has signed 18 deals to supply its 5G network to companies in these countries
Europe and Canada are the main places to watch. Canada is the final member of the Five Eyes alliance to decide. Complicating things even further for Canada is that China has detained two Canadians since 2018 after Vancouver police arrested Ren’s daughter and Huawei’s CFO, Meng Wanzhou, on a US extradition warrant.
Germany is also poised to make its decision and, while not a member of the Five Eyes, is facing pressure to take a stance in line with US policy.