NZ's big call on Huawei - politics best explains 5G 'ban'

ANALYSIS The block on Huawei providing 5G technology to Spark may be 90 per cent about geopolitics, and 10 per cent about changes in the technology behind mobile networks.

It is not clear yet whether the Government Communications Security Bureau (GCSB) is just concerned about the "potential" for Huawei 5G equipment to be compromised, or had found evidence it is likely to be.

But the revelation on Wednesday that it had declined an application by Spark to use 5G equipment from the Chinese telecommunications giant because of a significant network security "risk" suggests the former.

Nor is it clear yet whether the decision necessarily marks the end of the road for Huawei in 5G in New Zealand, although that does seem quite possible.

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It is risky to speculate about what led the GCSB to make its move, given neither details of Spark's proposal nor the any information on the GCSB's concerns are public.

It is effectively impossible to guarantee telecommunications or computer equipment is free from any backdoors that could be built into its hardware or software to enable spying.

Earlier this year, Google security researchers discovered a major flaw with potentially huge security implications that had gone undetected in the microcode of most of the microprocessors that Intel had sold over the previous 10 years.

And that flaw was an "accident" that hadn't been intentionally hidden.

One network expert believes a theoretical risk that could have troubled the GCSB is that the modems in 5G radio network controllers supplied by Huawei could be somehow doctored to secretly mirror communications to a hidden internet address.

​Huawei in NZ

But Huawei, which is one of the world's largest technology companies with revenues of US$93 billion and 180,000 employees, is already deeply embedded with many New Zealand telcos.

Spark has used Huawei equipment to upgrade its 3G and 4G network. Huawei supplied and even partly-financed 2degrees' mobile network.

In 2015, Huawei also provided the technology for Vodafone's $22 million cable broadband upgrades in Wellington and Christchurch.

Chorus, too, buys a small amount of Huawei equipment for its rural networks.

Last year, Huawei founder and chief executive Ren Zhengfei met with then prime minister Bill English in Wellington and said it would spend $400 million in New Zealand over the next five years, including on a (yet to be confirmed) cloud computing data centre and a research lab hosted by Victoria University.

Ren chose to give his first ever media interview in New Zealand, where he discussed – through a translator – his decision in 1978 to join the Communist Party and made the claim that Huawei's relations with the Chinese government were no different to those that might exist between a New Zealand firm and the New Zealand government.

The Australian government banned Huawei from providing equipment to its National Broadband Network in 2012 and the US bars on Huawei long predate Trump.

The US Congress' Intelligence Committee, also in 2012, advised US companies not to buy from Huawei if they "cared about intellectual property, customers' privacy or the national security of the US".

The New Zealand government currently manages the perceived issues associated with Huawei in part by drawing on the expertise of Britain's security service to help check its equipment, Huawei New Zealand deputy chief executive Andrew Bowater revealed this month.

"New Zealanders can have a lot of confidence that every major piece of work we do in New Zealand goes through independent evaluation in the UK through the cybersecurity evaluation centre there, which we haven't really acknowledged publicly before, he said.

"Everything we do goes through that evaluation centre which has oversight from [British spy agency] GCHQ and they feed that through to the GCSB."

Huawei realised it had to "go above and beyond because we are headquartered in China", he added.

Indeed the BBC reported on Thursday that New Zealand's Huawei "ban" raised questions about why the UK appears less concerned about use of the Chinese company's technology.

But if Huawei is entrenched in New Zealand and the GCSB has only identified a "risk" rather than any actual dubious activity by the company what has changed?

The technology of 5G

A part of the answer might be in the changed nature of 5G networks.

Mobile networks are no longer just about phone calls and text messages. 5G networks are expected to help control everything from self-driving electric cars to smart sensors built into city infrastructure.

That means they may control more critical infrastructure, but it also means 5G networks are being designed so they can handle different types of network traffic that have different characteristics in different ways through a technique commonly called network slicing.

That necessitates incorporating intelligence that was once confined to the core of mobile networks into the access network itself. That intelligence is achieved through software in the cellsites that could be subject to new vulnerabilities.

Spark and Huawei had been running a trial to isolate the access equipment that could be supplied by Huawei from the equipment that provided that intelligence, but it is perhaps questionable how completely achievable that separation could be.

Older generations of mobile network technology are also commonly being used to control "internet of things" devices though.

Many of the country's electric meters are managed via Vodafone over aging 2G network, for instance, so the particular sensitives specific to 5G technology could be overblown.

Geopolitics  

Some industry insiders believe the GCSB's move comes down almost entirely to politics.

The GCSB has never directly blamed any cyber attacks on China.

But Australian media companies Fairfax Media and Nine Entertainment reported China's Ministry of State Security was responsible for "Operation Cloud Hopper" and a surge in cyber espionage against Australian companies over the past year.

Consultant PwC reported on Operation Cloud Hopper in April last year, describing it as one of the "largest ever sustained global cyber espionage campaigns".

In October, the US Department of Justice accused China's Ministry of State Security of hacking an Australian domain name provider to access computer systems at aviation companies in the United States and Europe.

It is hard to imagine China's military build up in the South China Sea or its biggest ever military exercises with Russia in September will have helped Huawei's cause, or made it easier for the GCSB to resist any request from the US to isolate the company.

In July, New Zealand published a new defence strategy paper that named China as a threat.

China is also building a social credit system that would reportedly draw on people's online and other activity to create a "digital scorecard" for all its citizens that will reward good behaviour and publish bad behaviour.

The system has already been used to prevent 9 million Chinese with "low scores" from buying plane tickets.

Can a country that is using new technology in that way, at the same time, expect to be a key supplier of technology to western democracies?

Could or would Chinese employees of Huawei realistically be able to refuse a request from its security services to assist in any matter? These are difficult questions.

Is this a ban?

The GCSB pointed out on Wednesday that rejecting a specific proposal from Spark to source 5G gear from Huawei was the start of a process not the end of one.

This raises the question of whether the rejection was just intended as a "shot across the bows" to Huawei and a nod in the direction of New Zealand's Five Eyes security partners the United States and Australia – or something much more serious that could put New Zealand's relations with Beijing under strain.

Spark could try to "prevent or mitigate" the risk the GCSB had identified, it noted.

If Spark did that, then the GCSB would then have to decide whether to refer the matter to the Minister responsible for the GCSB, Andrew Little, who would then have to make a decision on broader criteria including the impact any ban on Huawei could have on competition and innovation.

The feeling from Spark appears to be that it framed its original procurement request in a way that had the best chance of getting approval from the GCSB, so the rejection may indeed mark the end of the road.

Its proposal did involve Huawei employees installing the radio access network equipment, spokesman Andrew Pirie says.

But as of Thursday, Spark was still awaiting a full debrief from the GCSB, so it may be a bit early to guess whether the GCSB intended its concerns to be addressable.

2degrees has deeper ties with Huawei and could be expected to test the waters further, if Spark walks away now.

So this could take months to play out – behind mostly closed doors.