Australia’s 5G ban on China’s Huawei, ZTE: will others make same call?

Asian countries may be weighing the cost of abandoning cheaper Chinese tech – in terms of the higher outlay involved in rolling out the next generation of mobile wireless networks as well as the possible security implications

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Australia has followed the United States and Britain in deeming Huawei and ZTE national security risks. Photo: AFP

Published: 1:30pm, 7 Sep 2018Updated: 2:26pm, 10 Sep 2018

The splash from Australia’s decision to ban Huawei Technologies Company and ZTE Corporation from its 5G roll-out continues to ripple out to other Asian nations, posing a risk to Chinese companies’ grip on a region poised to be at the front line of the much-anticipated next generation of wireless networks.

Citing national security concerns, Australia last month prohibited Huawei and ZTE from taking part in the development of the country’s fifth-generation mobile infrastructure, following the United States and Britain in deeming the two Chinese firms national security risks. The move made waves in the region; Japan is considering whether to beef up regulations to prevent espionage through foreign-made telecommunications gear, while India is said to be “cautious” over Huawei’s role in the country’s telecoms networks. Huawei and ZTE have repeatedly dismissed claims that they provided intelligence to Beijing.

The next generation of mobile networks is said to be 10 times faster than the speed of the existing 4G network. While both mobile operators in the West and rich Asian nations can afford to look past China-based technology companies to procure such telecoms technology, analysts say many cost-conscious carriers in emerging Asian markets cannot adopt a similar stance if they want to provide 5G connections at affordable prices in the future. In Japan, for example, Huawei only accounted for 9 per cent of the country’s telecoms equipment market last year, as opposed to the 60 per cent share Huawei and ZTE have of the Indian market. Huawei and ZTE are also already deeply involved in existing telecoms infrastructure in key Asian markets such as China and India, as well as in Australia and its allies in the Pacific Islands.

Analysts say carriers in emerging Asian markets cannot afford to avoid cheaper Chinese telecoms equipment during their 5G rollout. Photo: Xinhua

“Huawei and ZTE, especially Huawei, are important stakeholders in terms of telecoms infrastructure. It is very difficult for any country – especially markets where there is cutthroat competition and operators are struggling on financials – to ignore them and go with tier-1 vendors like Nokia and Ericsson only,” says Faisal Kawoosa, founder and co-partner at New Delhi-based technology research and consulting firm techARC.

“Typically, operators in high-paying markets go with tier-1 vendors and in [low-paying] markets they go with the likes of Huawei and ZTE, which give them better [returns on investment], justifying the business case … the same will be the case with 5G.”