GCSB blocks Huawei from 5G networks

New Zealand is the latest western nation to exclude Huawei from supplying key hardware for strategic telecommunications networks. It follows similar moves in Australia and the US. In each case the government concerned cited security concerns as the reason for not allowing the Chinese equipment supplier to provide network infrastructure.

The news broke in a roundabout way when Spark issues a press release on Wednesday saying: "GCSB declines Spark’s proposal to use Huawei 5G equipment".

Spark's release says: "Spark New Zealand recently notified the director-general of the Government Communications Security Bureau (GCSB), in accordance with the requirements of the Telecommunications (Interception Capability and Security) Act 2013 (TICSA), of its proposed approach to implementing 5G technology on the Spark mobile network.

Cell towers the focus

"Specifically, this proposal involved the deployment of Huawei 5G equipment in Spark’s planned 5G Radio Access Network (RAN), which involves the technology associated with cell tower infrastructure.

"The director-general has informed Spark today that he considers Spark’s proposal to use Huawei 5G equipment in Spark’s planned 5G RAN would, if implemented, raise significant national security risks."

Technically the decision is not a ban. It would be possible to challenge the GCSB decision. However, the process is far from simple, so, in effect, the decision amounts to a hard ban.

Risk of unauthorised intervention

Soon after the story broke, Andrew Little, the minister in charge of the GCSB, backed the organisation. He says Huawei would put Spark's network at the risk of "intervention in an unauthorised way".

Little backtracked later saying the GCSB's assessment of the risk doesn't necessarily mean a ban. He suggested Spark and Huawei could work together to address any security concerns.

Australia and the US are New Zealand's partners in the Five Eyes security alliance. New Zealand has followed its partners by passing the The Telecommunications Interception Capability & Security Act. The legislation gives the GCSB the power to block any companies that it considers risky from key infrastructure projects.

Limited alternative options

The ban is a huge problem for the industry because at the time the only active alternative network equipment supplier in New Zealand is Nokia. Spark had a poor earlier experience with Alcatel-Lucent, which is now part of Nokia. Between 2009 and 2010 the XT network crashed. Alcatel-Lucent paid Telecom, now Spark, tens of millions in compensation.

Ericsson has suitable technology, but has not played a significant role in recent NZ roll outs and would need to ramp up its operation fast. Samsung has entered the market, but again has little presence on the ground. Many in the industry regarded Huawei's technology as being more advanced and complete than its rivals.

Another issues is there is less competitive pressure without Huawei. Carriers have less bargaining power when talking to equipment suppliers. This is likely to mean more expensive network builds, a cost that, eventually, will be passed on to users.

Spark has previously said it will build a 5G network in time for the 2021 America's Cup. The company says that will still happen. While it could challenge the GCSB decision, the process is unlikely to finish in time to meet the deadline.

Commerce Commission unimpressed as complaints fall

There has been a drop in the number of complaints about telecommunications companies, but the industry is still the most complained about. The Commerce Commission’s annual Consumer Issues Report says there was 584 complaints in the year to June 30, about nine percent of all Fair Trading Act complaints. Last year there was 603 complaints.

The report says this is in line with overseas. Our specific complaints also mirror those internationally.

The Telecommunications Forum notes there has been a three percent drop in complaints during a time of rising connections. It also points out that with around 8.2 million connections, the number of complaints per customer is low.

TCF CEO Geoff Thorn says the number of complaints reaching the industry-run Telecommunications Dispute Resolution service is proportionately much lower than with similar bodies in the UK and Australia.

Code prepares for end of copper

A proposed Commerce Commission code could see copper services withdrawn as early as 2020. The code, which comes with a raft of consumer protections, will set up rules about how and when Chorus may withdraw copper-based voice and fibre services in areas where fibre is available.

Among other matters, this can only happen when fibre is available at no extra cost. There are also provisions for providing emergency 111 services when there is a power failure.

West Coast, Southland get $45 million coverage boost

The government has earmarked $45 million from its Provincial Growth Fund for network improvements on the West Coast and in Southland.

The Haast Fibre Loop gets most of the money with $22 million being spent on a connection between Fox Glacier and Lake Hawea. There is $12 million for the Milford Highway Fibre Connection which will link to Milford Sound. Another $5 million will buy improved mobile coverage on the West Coast and $1 million will accelerate UFB fibre to more West Coast towns.

60,000 new UFB connections in quarter

UFB connections continue to soar with 63,000 added in the most recent quarter bringing the total to 669,000. That's 48 percent of the 1.4 million homes and businesses with fibre access. UFB demand is highest in Dunedin where 57 percent are connected. Waiuku, Rotorua, Tauranga and Hamilton all have uptake rates over 55 percent.