Taking a tech lead from China

James Riley
Editorial Director

The vocal ‘anti-China’ forces in Australia that the federal government is now attempting to counter – somewhat awkwardly – continue to view the technology world through a very US and European-centric lens.

The pointy end of that right now is the Turnbull government’s imminent decision on whether Chinese telecoms equipment makers Huawei Technologies and ZTE can bid for contracts to build the 5G networks.

Talk to Huawei and its two major competitors – in the Australian telecoms network sector, Nokia and Ericsson – and you will get the same spiel: that each is investing more research and development dollars than their rivals and each is (just between us) ahead of the game on 5G technology.

Xi Jinping, General Secretary of the Communist Party of China

Also playing in the core mobile and radio access networks for 5G are South Korea’s Samsung and Japan’s NEC, neither of them slouches in R&D.

For the end user, the 5G technology headline is about increased efficiency in spectrum use, including the ability to connect significantly more devices at once to networks, as well as better speeds.

But for the companies deploying it, 5G is also about re-architecting mobile networks so they merge with fixed line networks, relying ever more on not just firmware (the software that is hard coded into network equipment) but software which is easier and cheaper to upgrade.

Already, at the basic hardware end, there are multiple anomalies in the Australian market which make a mockery of Huawei’s 2012 ban from providing equipment to the NBN.

TPG, now Australia’ second largest fixed line broadband service provider, uses Huawei modems to connect customers, as do some of its rivals.

And after its purchase of Canberra’s TransAct broadband network from iiNet in 2013, the NBN has Huawei equipment running network services in the national capital, no less.

There appears now to be some confusion – perhaps a reflection of the government’s exquisite dilemma here – on the timing and nature decision of the government’s decision on Huawei and ZTE.

InnovationAus.com understands the company and many others are expecting a decision the end of August or early September, ahead of the Telecommunications Sector Security Reforms (TSSR), that come online September 18, contrary to some reports.

That means the advice from the Critical Infrastructure Committee (CIC), which sits in the Department of Home Affairs but includes representatives from a range of departments including security agencies, would be close to being handed to departments whose ministers sit on the National Security Council, the Cabinet subcommittee which makes the final call.

Each department reviews the advice and can attach its own note ahead of the NSC meeting.

It’s clear that security-focused departments are in favour of a blanket “no” to Chinese vendors. But a number of others led by the Department of Foreign Affairs and Trade and Turnbull’s own department are looking for a solution that would see some compromise.

It is worth noting that the Defence Department’s Australian Signals Directorate has been asked to provide separate advice on the technology and its various layers, using deep technical skills the CIC does not possess.

It’s also unclear if the CIC’s ruminations are simply about Chinese vendors or about any equipment made in China. Every telecoms equipment vendor in the world has had Chinese manufacturing operations for decades.

The price of entry to the vast Chinese mobile network market, as well as providing better certainty for plants that manufacture equipment that is sent around the world is a joint venture with a local partner, often government owned. But this is hardly news.

In an opinion piece in the South China Morning Post at the weekend (Aug 11) former Foreign Minister and leading China cheerleader Bob Carr said that Malcolm Turnbull’s recent speech at UNSW was a “re-set”’ attempt aimed at securing a prime ministerial visit to China before the end of the year.

“Australia rejecting Huawei will be taken up by anti-China hawks in Washington and waved in front of European allies, Canada and New Zealand as the model they should adopt,” Mr Carr warned.

“The Canberra decision will, one way or the other, reverberate, with the potential to damage Huawei if, as expected, it’s negative.”

If the government goes for a halfway house on Chinese vendors it could take up the suggestion by Professor Mark Gregory about setting up a telecoms testing centre.

Indeed Huawei has offered to fund such a centre, but critics deride this as “theatre” because the equipment being tested can easily be changed as it is installed into networks, especially as they become more software based.

The focus on telecoms networks is only one piece in the broader picture of the internet and the emerging “internet of things” that 5G will enable, but which will be managed through blended fixed and mobile networks.

This obscures the bigger question the government should be asking, which is what is our technology relationship with China, what’s in and what’s out, where the problem areas are and how this will be managed within Australia’s Comprehensive Strategic Partnership (whatever that really means) with our biggest trading partner.

Technology is a core plank in Chinese leader Xi Jinping’s plans to modernise the country’s economy and move up the value chain.

Technologies such as artificial intelligence and, as Mr Turnbull noted last week, renewable energy, are having billions of yuan pumped into them, not only by the Chinese government but also by its home-grown technology giants like Tencent, Alibaba and Baidu.

Will they or won’t they, should we or shouldn’t we? There are not necessarily any right answers.

Australia should having a well-informed public debate on our relationships with China, absent the racist and xenophobic dog whistling that has plagued it to date.

Australia has every right to be wary of China, its influence, and the fact that Chinese technology – not just that supplied by China-based vendors but also technology developed and or made in China – could play a role that could be detrimental to Australia’s interests.

Still, after taking our lead for so long from the US and in particular Silicon Valley, (and Europe in mobile technology) it’s time to look and think a little more broadly at technology.

While Japan, Korea and Taiwan have succeeded in moving from smart imitators to innovators wrapped in the guise of democratic government, make no mistake, their success in getting there was as unified corporate states with holistic national technology policy, and national champion companies.

China is doing the same thing. So the decision about Chinese network vendors must be considered in this broader longer term context or Australia may well be cutting off its nose to spite its future.

Do you know more? Contact James Riley via Email.

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