TOM PULLAR-STRECKER
OPINION: The Government may be being "pragmatic" by allowing Chinese telecommunications firm Huawei to supply equipment for the ultrafast broadband network but it is wrong to think it is completely naive.
A source says that when ministers visit China they take "clone phones" instead of their regular mobiles with them, with no stored emails and text messages, and that it is the only country where they have taken the precaution.
The Australian government's decision to bar Huawei from supplying equipment for its A$36 billion National Broadband Network raises the question of whether New Zealand should follow suit, even though Australian prime minister Julia Gillard has been enigmatic about what triggered its ban.
On Thursday she said she would not comment in detail on "what ultimately are national security matters", saying only that the government had taken the decision "for the right reasons through the right process based on the right advice about a piece of critical infrastructure for our nation's future".
Reading between the lines, the ban may simply be retaliation for cyber attacks blamed on Chinese state-sponsored hackers. It could even be a response to some direct cyber attack on Australian interests that isn't, and may never be, in the public domain? but that of course can only be complete speculation.
The global cybercrime strategist at Intel's McAfee security division, Pamela Warren, warned New Zealand businesses in May that they should assume they were now operating in an era where state-backed economic spying was being conducted from multiple countries.
In February 2011, McAfee detailed "co-ordinated covert and targeted" attempts by hackers in China to harvest commercial secrets from global oil, energy and petrochemical companies? including Australian mining companies? in what were dubbed the "Night Dragon" attacks.
International tensions threatened to boil over in June, when Google said hackers in China had broken into the Gmail accounts of several hundred people, including senior US government officials, military personnel and political activists.
A day earlier the US government had warned that cyber attacks by any foreign nation on critical US computer networks might be considered an "act of war" that could provoke a military response.
It is reasonable to guess such antics would be regarded by Huawei as a stone in its shoe.
The troublesome issue for the company and equipment purchasers alike is that if Chinese agencies approached Huawei's staff in China and asked them to leave a security "back door" in a piece of equipment or software that they could later exploit to snoop on a foreign business or government, could they realistically refuse and who would know?
"The Chinese economy is not transparent and Chinese politics makes it rather easy to control directly or indirectly Chinese companies and that makes western government uneasy," Australian analyst Paul Budde says.
As Chinese hackers and the virus attacks on Iran's nuclear facilities (usually attributed to United States and/or Israeli agents) have shown, foreign powers certainly don't need to supply equipment for a network in order to spy on it? though of course that may make it easier.
The 2006 Tom Clancy novel Power Plays: Cutting Edge starts with telecommunications engineers in a submersible discovering that a subsea cable had been "spliced" and tapped into, after ostensibly being cut by a ship's anchor, so the traffic it was carrying could be spied on.
US company Access Control & Security Systems says that fiction may already have become fact, citing veiled comments by US National Security Agency engineer John Pescatore and former US Air Force General Michael Hayden with regard to an outage on a Flag Telecom submarine cable in the 1990s.
Researchers have proved that it is not even necessary to tap into the fibre-optic cables that will be used to carry traffic on the New Zealand and Australian ultrafast networks in order to steal information from them. It is possible, and cheap, to read information on such cables by putting a slight kink in them and then trapping the small amount of light that will penetrate the cable's cladding at the point of the bend.
Far from being a solely theoretical risk, at least two US companies, Opterna and Oysteroptics, sell equipment that is designed to mitigate that threat by detecting the resulting drop in the strength of the optical signal. However, it is only economic to deploy such counter-measures on major cable routes? not, say, a cable running into an ordinary office building.
Faced with those realities, perhaps the Government has concluded there is simply no point in excluding Huawei from supplying equipment for the UFB network based on what appears to be just one more unquantifiable risk.
Not only has the horse bolted on Chinese involvement in the telecommunications industry, the field in which it was grazing has long since been ploughed up and turned into a shopping mall.
Labour communications spokeswoman Clare Curran is keeping up the heat, however. "Cyber security is the new frontier and all countries take it extremely seriously," she said in a blog post yesterday.
"Despite the lip service paid to it by our government, it appears they have ignored advice and this may have the potential to undermine and compromise our infrastructure."
What is Huawei?
Huawei is a company headquartered in Shenzhen, China, and was founded in 1987 by Ren Zhengfei, its current president. He was previously an engineer in the People's Liberation Army officer. It is owned by its employees and governed by a board whose directors were only made public in 2010.
How big is it?
Huge. Huawei employs 140,000 people and turned over US$32 billion last year, having grown rapidly to become the world's second biggest supplier of telecommunications equipment after Sweden's Ericsson. It claims a relationship with all but five of the world's top 50 carriers and more than 70 per cent of its business is outside China.
And its New Zealand operation?
Huawei opened a subsidiary in New Zealand in 2005 and built 2degrees' mobile network. It has won contracts to supply equipment to Chorus (though French rival Alcatel-Lucent remains its main technology partner) and to ultrafast broadband (UFB) network developers Enable in Christchurch and Wel Networks in Hamilton. Huawei New Zealand reported a profit of $1.1m on revenues of $16.8m in 2009, the most recent accounts filed with the Companies Office.
Has it had any trouble elsewhere, what with being a Chinese firm?
Yes, actually? especially in the United States and India, though the Australian ban has also turned plenty of heads. Huawei tried to buy US networking giant 3Com for US$2.2b in 2008 but the deal was stymied by the US Committee on Foreign Investment. The US Commerce Department also prevented it from supplying equipment for a national wireless network for "national security reasons".
Were those really the reasons, or is the US just afraid of the competition?
Depends who you ask. To be fair, many US politicians weren't at all keen on France's Alcatel buying the US company Lucent, home of the iconic Bell Labs. Huawei New Zealand spokesman Mark Champion last week said he believed the barriers that had been put in front of the company were "not about security" but about commerce. Others see it differently of course.
What have its relations been like with the New Zealand government?
Eyebrow-raisingly good at times. Prime Minister John Key surprised the industry by singling Huawei out as a possible partner with regard to the UFB network in 2010. The Dominion Post later revealed former Telecom technology head Murray Milner had been consulting for the company while on the board of Crown Fibre Holdings. Ministers Steven Joyce, Bill English and Tim Groser have all paid visits to the firm. Huawei Australia chairman and former Victorian state premier John Brumby, referred warmly to the visits in October, saying it was important that New Zealand got out in front of "geo-political trends".
- ? Fairfax NZ News
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