Ban could sting customers
Aban on using Huawei gear for Spark's pending 5G mobile network upgrade could mean the technology is more expensive for consumers, the head of a major telco says.
On Wednesday Spark said it had been notified by Government Communications Security Bureau (GCSB) DirectorGeneral Andrew Hampton that it could not use Huawei gear for the upgrade to fifth generation technology.
The upgrade will increase the speed at which data can be transferred across the wireless network and make it easier to upload large files.
Hampton told Spark he considered its proposal to use Huawei 5G equipment would, if implemented, raise significant national security risks, the telco said.
2degrees chief of corporate affairs Mathew Bolland said the decision could mean price increases for consumers. A Huawei ban would leave only two big telco infrastructure providers to bid for 5G work — Nokia Networks and Ericsson — which would make the market less competitive. Resulting price increases would be passed on to the consumer.
When Huawei entered the market a few years ago it undercut Nokia Networks and Ericsson to gain market share which forced prices down, Bolland said. In a small market, with only three players, losing one would make a major difference.
Bolland said 2degrees had not had a discussion with the GCSB on how the decision impacted its plans for 5G and was seeking clarity: “Our comments on the importance of multiple vendors to deliver price competitiveness still stand, so if this announcement has a similar impact on 2degrees it will be a real disappointment for competition.”
GCSB Minister Andrew Little said the “national security risks” identified by the agency in regards to Spark's planned 5G roll-out related to “intervention in an unauthorised way”.
Under the Telecommunications (Interception Capability and Security) Act 2013, technology used by telecommunication network operators for upgrades need to be vetted and approved by the security agency.
Little said the agency had identified technology that Spark wished to introduce for 5G constituted “what would create a national security risk”. But he wouldn’t say what those risks were, citing “classified information”.
Spark and the GCSB needed to work together and see if any “outstanding issues could be resolved”, he said.
Spark said it had not had time to review the decision in detail: “While we are disappointed with this decision, we are confident that the decision will not affect our plans to launch Spark's 5G network by July 1, 2020, subject to the necessary spectrum being made available by the New Zealand Government.”
At Spark's annual meeting on November 2, managing director Simon Moutter said Huawei should be allowed to bid for 5G upgrade business unless the Government could supply “incontrovertible proof” that it was a security threat.
Huawei NZ deputy chief executive Andrew Bowater said his company had a policy of full co-operation with the GCSB. As in Britain and Canada, no issue had been raised with its technology, he told the Herald last week.
The GCSB move came after reports that the US was pressuring allies to drop Huawei. US officials were reportedly worried about the prospect of Chinese telecomequipment makers spying on or disabling connections to an exponentially growing universe of things, including components of manufacturing plants.
While the US and Australia have long-standing bans on Huawei, former Prime Minister John Key was an active booster of the Chinese company.