Huawei Technologies is facing a big crisis in Australia as the country is preparing to ban the China-based telecom equipment maker from supplying 5G broadband network.
Optus and Telstra, two leading telecom operators in Australia, could be spending billions on 5G equipment to start rolling out 5G mobile services in 2020.
The largest telecom equipment maker is already facing perception issues in the US and other telecom markets due to its alleged connection with China government. Huawei Technologies is a privately held company.
Australia’s intelligence agencies have raised concerns that Beijing could force the Shenzen-based telecom equipment maker to hand over sensitive data, Reuters reported on Wednesday quoting political sources.
The latest development indicates that Huawei’s recent marketing strategy in Australia to gain support from government officials did not work well. The planned ban on 5G network deals will benefit Huawei rivals including Ericsson, Nokia and ZTE.
Huawei has promised that Australia will have complete oversight of 5G network equipment, including base stations, towers and radio transmission equipment.
UK’s government intelligence officials review all Huawei products at a special laboratory set up for such scrutiny.
Other Western countries, including the New Zealand, Canada and Germany, say they have sufficient safeguards for assuring that Huawei equipment does not contain “back doors” or other mechanisms for secretly monitoring or collecting information.
“It is a Chinese company, and under Communist law they have to work for their intelligence agencies if requested,” said one of the government sources. “There aren’t many other companies around the world that have their own political committees.”
Huawei’s business serving small, rural telecom operators is at risk after new attacks on the company in recent weeks by some U.S. lawmakers.
John Lord, chairman of Huawei Australia, said that law does not apply to its operations outside of China.
“That law has no legitimacy outside of China,” Lord said. “Within that country, any information coming through us and any equipment we put into their national infrastructure is safe to the best of our ability, and it’s secure.”
Australia in 2012 banned Huawei from supplying equipment to National Broadband Network.