Friend or foe? How Huawei is poised to lead a technological revolution

5G represents a huge stride into the future; without it, modern economies won’t be able to flourish. The Chinese company has become almost indispensable to it, as the leading maker of cutting edge telecoms equipment, making some Western governments nervous

FILE PHOTO: The logo of Huawei Technologies in front of the German headquarters of the Chinese telecommunications group in Duesseldorf, Germany, February 18, 2019.  REUTERS/Wolfgang Rattay/File Photo
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Back in 2013, when smartphone users were marvelling at the speed of the newly established 4G mobile networks, a Chinese technology firm called Huawei quietly announced that it would be spending $600 million on research into 5G, a next-generation network 100 times faster than its predecessor.

Since that announcement, the firm has established itself as a leading 5G innovator and has consolidated its position as the world's largest telecoms equipment manufacturer. It now stands poised to become the leading gatekeeper of a supercharged 5G information network that has the potential to revolutionise society – but while Huawei could be congratulated on its foresight, the prospect of a Chinese firm wielding such power has caused alarm in global politics.

Scarcely a week goes by without a politician expressing grave concern over Huawei’s position of strength. But are such fears really justified? And how has Huawei ended up becoming the bogeyman of global tech?

The key to understanding the paranoia about Huawei is to appreciate the role that 5G will play in the coming years. Scorchingly fast, latency-free and fully mobile, 5G will be able to properly facilitate the so-called "Internet of Things", where everyday objects have internet connections as standard. The increased flow of data across the world at speeds of less than a millisecond will, by the year 2022, connect some 29 billion devices and help to further the development of cutting edge technologies such as driverless cars or remotely-performed heart surgery. 5G represents a huge stride into the future; without it, modern economies won't be able to flourish.

You could consider the information that passes through 5G networks as an essential fuel, and while much of that information will be mundane, plenty of it will be highly sensitive. It's seen as critical that we can trust the companies that facilitate the data flow, but Chinese firms tend to be viewed with suspicion. That mistrust has its roots in the Cold War; the fact that Huawei founder Ren Zhengfei once played a prominent role within the People's Liberation Army is seen as particularly significant by the American government, which has voiced concerns about Huawei ever since it established its US operation in Texas in 2001. In 2012, after a lengthy investigation, the US Congress' Permanent Select Committee on Intelligence concluded that Huawei represented a national security threat, criticising the firm for refusing to answer questions about the activities of its research facilities in the USA.

Listen to the Business Extra podcast on Huawei and the promise of 5G

That disquiet surrounding Huawei became more tangible in 2017 with the passing of a new Chinese law that required its companies to “collaborate in national intelligence work.” The loyalty of corporate China to its national government was now clearly outlined, in black and white; as Dr Samantha Hoffman, non-resident Fellow at the Australian Strategic Policy Institute puts it, “Chinese tech companies operate because the Chinese Communist Party allows them to.”

While Beijing established the obligations of Huawei and other Chinese technology firms to the state, it continued to pump huge resources into planning for 5G, a move which wrong-footed many Western governments. China began to flex new muscle within the 3GPP, the international organisation that establishes standards for wireless communication, and as a result, in February of last year, Huawei became the first company to produce a chip supporting the new 5G standard. As it filed hundreds of patents in multiple territories and hired some of the best brains in computer networking, Huawei’s potential to commercially dominate the world’s 5G infrastructure grew – but so did its potential to dominate its security. In the words of one IT consultant: “Whoever controls the technology knows, intimately, how it was built and where all the doors and buttons are.”

The internet as we know it today was originally funded by the US Defence Department, and the US still considers itself to be its founding father. As the global network grew and flourished under American stewardship, the world’s biggest internet firms were established in Silicon Valley. The US even had control over the global domain name system, until it passed control to a non-profit organisation in late 2016 – but the US government has, in recent months, formally considered reasserting that control.

Not surprising, then, that the prospect of surrendering technological power to China has sent many American politicians – most notably President Donald Trump – into a tailspin. Huawei is now regularly accused of posing a threat to America, not only in terms of intercepting communications and passing them to Chinese intelligence, but also its potential to control (or even destroy) the software and infrastructure it has installed across the world.

Some believe that with Huawei so far ahead in the 5G race, the primary threat it poses is a commercial one, and accusations of espionage are merely a smokescreen – but whatever the reason, the US has sought to persuade other countries (including the UK, Canada and Australia) not to employ Huawei, with varying levels of success. Australia implemented a ban last August, but the UK – a country that’s become increasingly dependent on Chinese investment – fudged the issue, allowing Huawei to build the "non-core" parts of its 5G network.

The UAE, meanwhile, has taken a pragmatic stance. "You cannot stop implementing technologies just because of some negative flags flagged externally," said Aisha bin Bishr, director general of Smart Dubai, in interview with CNBC last week. "You need to take that risk and calculate it."

The problem the world faces is that it's not easy to implement 5G without Huawei's help. The CEO of British mobile network Three, David Dyson, said back in March that 5G in the UK could be "a year and a half late" without Huawei's involvement. As this intractable problem plays out, leading to political arguments, global summits and stern warnings, Huawei's founder has expressed bemusement. "We are like a small sesame seed," says Ren, "stuck in the middle of conflict between two great powers."

Ren’s comparison of his firm to a sesame seed demonstrates his knack for quiet understatement; this was also evident when he recently downplayed 5G as little more than a speed upgrade.

"[America] has been regarding 5G as the technology at the same level of [military equipment],” he said in interview with CBS News, adding that “5G is not an atomic bomb.” But when a planet comes to depend entirely on an information network, the damage wrought by misuse of that network could well be comparable to a nuclear explosion.

The firm continues to maintain its innocence. Back in February, company chairman Guo Ping stated at the Mobile World Congress in Barcelona: "Huawei has not and will never plant backdoors. And we will never allow anyone to do so in our equipment." (That additional comment was intended as a jibe at the USA, whose own National Security Agency has been accused of hacking Huawei's corporate servers and whose own attempts to gain access to global data flows is well documented.) But even if Huawei can be trusted today, the world is in flux. Governments can fall, alliances can crumble, powerful technologies can be upgraded remotely and harnessed quickly, quietly and dangerously. The structures of 5G networks are so complex that governments inevitably fear losing control of them. And so, what began as plan to speed up the pace of global communication has now transformed into a battle for global power.