Australia bans Huawei, but it is yourself that ultimately suffers

Recently, Huawei Australia branch announced on its official Twitter that it has been notified by the Australian government to ban Huawei from becoming a 5G network equipment provider in Australia. In this regard, FT also pointed out in the report that Australia is the first country to specifically prohibit its own operators from cooperating with Huawei and ZTE. Not long ago, the US ban on these two companies involved only government officials.

In fact, the Australian government has always been skeptical about the telecommunications equipment of Huawei and ZTE. For example, Australia’s defense against Huawei can be traced back to 2012, when the country banned Huawei from providing components for the country’s national broadband network. In May of this year, the submarine high-speed optical cable project from Solomon Islands to Sydney, which was supposed to be undertaken by Huawei, was spoiled by Australia. The reason was also inexplicable safety factors. The project was 4000 kilometers long and had a total investment of 70 million US dollars.

Until recently, the Australian Labor Party MP Michael Danby formally filed charges against Huawei. He called on the Liberal-National coalition government to ban Huawei and ZTE from supplying 5G network equipment. At that time, the Australian government has stated that it will assess whether equipment such as telecommunications networks poses a risk to national security, and thus may prohibit the purchase of Huawei 5G equipment on a case-by-case basis.

Australia bans Huawei, but it is yourself that ultimately suffers

In response, Huawei responded that the 5G security guidelines issued by the Australian government use security as an excuse for political considerations, while ignoring the interests of the Australian people, making Australian businesses and consumers suffer from slow and expensive network connections. However, the wrong decision of the government is borne by the enterprises and consumers.

In addition, Huawei has never received any request from the government to cooperate with government intelligence work, and there is no law in China that requires Chinese companies to cooperate with the country's intelligence work. The wrong and one-sided understanding of relevant Chinese laws should not be the basis for the government to worry about Huawei.

Finally, there is no essential difference between 5G architecture and 4G. Its core network and access network are separated. Compared with 3G and 4G, 5G technology has a more complete guarantee mechanism in terms of security and privacy protection. The government should objectively manage safety issues and find long-term solutions. Openness, innovation, and cooperation are the main trends in industrial development.

Relevant information shows that about 55% of 4G equipment in Australia is provided by Huawei, and 4G is also Huawei's main business in the local area. Australia is not considered as a large revenue region for Huawei. Huawei's 2017 financial report shows that Australia belongs to the "other" regions outside of China, Europe, Middle East and Africa, Asia Pacific, and the Americas. In 2016, Huawei Australia's revenue was 673.3 million Australian dollars, an increase of 5% year-on-year, or about 3.3 billion yuan.

From this point of view, losing the Australian market will have minimal impact on Huawei, but not for Australia. Fairfax Media reported that the ban on Chinese communications equipment will force Australian suppliers to purchase equipment from competitors, resulting in an additional cost of up to 30%, leading to skyrocketing consumer prices. If this ban extends to devices made by China for Australia, and affects products such as smartphones or modems, the ban may have further financial ripple effects. In addition, Dan Lloyd, chief strategy officer of Vodafone Australia, said in an interview with CNN that the Australian government’s move "fundamentally undermines Australia's 5G future."

It should be noted that since the start of the Sino-US trade war this year, the Australian government first decided to phase out the mobile phones of Huawei and ZTE brands, and blocked Huawei from laying Internet cables between Australia and the Solomon Islands. According to reports, the United States is behind these bans. So the question is, what is the United States afraid of?

According to BBC reports, in December 2010, the US mobile operator Verizon Wireless began large-scale commercial FDD LTE networks, marking the US dominance of 4G technology. Since this year, the wireless communications industry has contributed US$475 billion to US GDP growth each year, equivalent to 2.6% of US GDP in 2016. In addition, the wireless communications industry has a significant multiplier effect. Every US dollar invested can drive a GDP of 3.2 US dollars, and an additional direct job can drive 7.7 related jobs. Since the United States dominates 4G technology, the wireless communications industry has created 4.7 million jobs for the United States since 2010, and has driven an overall output of US$1 trillion. Therefore, it can be said that whoever dominates 5G technology can obtain huge technical and economic benefits. According to data from IHS Markit, it is estimated that by 2035, the global economic output of 5G will reach 12.3 trillion U.S. dollars.

Based on the above-mentioned market, Huawei has been increasing its R&D investment in 5G technology. This year, the company has allocated a budget of US$800 million for 5G research based on the investment of US$1 billion. And 5G technology research is also the top priority of Huawei's 80,000 R&D personnel. Huawei announced in February that the company had signed 5G test agreements with 45 telecom operators around the world, exceeding the number of agreements publicly announced by Nokia or Ericsson. Obviously, Huawei’s 5G innovation and market capabilities are very likely to surpass its American counterparts, and this kind of security-based obstruction will ultimately harm American companies and consumers. For example, United TelCom, a rural wireless network operator in Kansas, USA, recently stated that most of its wireless networks currently use Huawei equipment.

United TelCom said the FCC's proposal against Huawei may force it to shut down its wireless business. The operator wrote in a document submitted to the FCC: "Almost all equipment used in the United TelCom wireless network is provided by Huawei. The prohibition on using Huawei equipment will cause serious consequences to residents in remote service areas of United TelCom wireless. Impact.” Importantly, preventing Huawei from providing equipment for United TelCom runs counter to the FCC’s stated goal of providing telecommunications services to rural areas.

In summary, the author believes that business belongs to business, and politics belongs to politics. If you use the so-called security as an excuse to block, or even block fair competition and choice in the market, you will ultimately suffer.

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