Huawei banned from Australian broadband buildout

Australia's government banned Huawei from entering equipment tenders for the national broadband network over fears of espionage and cyber attacks from China. Huawei, not surprisingly, is vigorously battling the ban, both through marketing and subtle hints of retaliation from the Chinese government.

The company intends to begin sponsoring the Canberra Raiders rugby league football, based in the nation's capital, in order to increase its profile, according to an article in the Australian Financial Review. The potential sponsorship with the Raiders is Huawei's second attempt to back a Canberra sporting team, said the publication, which noted an earlier deal to sponsor the ACT Brumbies rugby team fell apart in December 2011 after Huawei was informed that it had no chance of winning any NBN tender.

"Huawei sources have also hinted that the Chinese government will retaliate strongly against Australia if the ban on the company's tenders is not lifted," said the Financial Review article.

The Financial Review reported that the deputy secretary of the Attorney-General's Department told Huawei Australia's chairman late in 2012 that Huawei need not bother applying for any NBN supply contracts because it would not succeed.

Announced on April 7, 2009, the National Broadband Network will be the single largest building infrastructure project in Australian history, and the multibillion supply tenders cover fixed wireless as well as fiber-optic cable broadband deployments across the nation. The company created by the government to oversee the project is slated to invest up to $45 billion over eight years to build the national broadband network.

Huawei has found many doors closed to it due to its rumored links to the Chinese government. The company was founded by ex-Chinese army officer Ren Zhengfei, who has never agreed to a media interview. In the U.S. Congress, the House Permanent Select Committee on Intelligence has been probing whether the presence of Huawei and another Chinese company, ZTE, pose security threats to U.S. telecommunications infrastructure and might provide opportunities for Chinese government espionage. National security concerns torpedoed Huawei's bid to win part of a multibillion-dollar network modernization contract from Sprint Nextel (NYSE:S), which was ultimately awarded to Alcatel-Lucent (NASDAQ:ALU), Ericsson (NASDAQ:ERIC) and Samsung

A spokeswoman for the Australian government told the Financial Review that the decision to ban Huawei, "is consistent with the government's practice for ensuring the security and resilience of Australia's critical infrastructure more broadly."

Nonetheless, Huawei is involved in national broadband networks being installed in eight other countries, including the United Kingdom and New Zealand. It also won significant infrastructure contracts with Vodafone Australia and Optus.

In June 2011, Australia's government awarded Ericsson a 10-year $1.1 billion contract to design, build and operate the NBN's 2.3GHz, LTE-based, fixed-wireless network. The first locations being built out serve the rural and regional communications around Ballarat, Victoria; Darwin, Northern Territory; Geraldton, Western Australia; Tamworth, New South Wales; and Toowoomba, Queensland.

The fixed-wireless component of the NBN rollout is expected to be completed by 2015 and aims to pass approximately 500,000 homes and business, 4 percent of the nation's total addressable premises. The network will require the use of 2,300 towers.

NBN goals include providing 93 percent of all Australian homes, schools and workplaces with wired broadband services with speeds up to 100 Mbps and linking all other premises in Australia with wireless and satellite technologies that will deliver broadband speeds of 12 Mbps. The NBN will be Australia's first national wholesale-only, open access broadband network.

For more:
- see this Financial Review article

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