Huawei and ZTE have been officially ruled out of supplying equipment for Australia’s 5G network.

The controversial Chinese telcos were dealt the blow on Thursday by then Acting Minister for Home Affairs, Scott Morrison, as the country was swirling in political uncertainty.

Morrison was elevated to the office of Prime Minister the following day.

Huawei was quick to express its unhappiness at the snub via Twitter.

“This is a extremely disappointing result for consumers,” it said, adding that the company had “safely and securely delivered wireless technology in Aust for close to 15 years.”

In June, Huawei wrote to the government saying that any move to ban Huawei would not be in Australia’s best interest.

Huawei's tweet following the announcement. Source: Twitter

Protecting Australia’s interests

The minister’s statement, entitled ‘Government Provides 5G Security Guidance to Australian carriers’, said an extensive review of national security risks had been undertaken.

“5G requires a change in the way the network operates compared to previous mobile generations. These changes will increase the potential for threats to our telecommunications networks, and these threats will increase over time as more services come online,” the statement said.

On 18 September, the Government’s Telecommunications Sector Security Reforms (TSSR) commence, which “place obligations on telecommunications companies to protect Australian networks from unauthorised interference or access that might prejudice our national security,” according to Morrison.

“The Government considers that the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law, may risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference.”

The statement did not specifically mention Huawei or ZTE.

Australia’s newly appointed Foreign Affairs Minister, Marise Payne, said Huawei and ZTE had not been deliberately targeted.

Speaking to Sky News on Monday, Payne said the rules applied to any country whose internal rules clashed with Australia’s need to protect itself.

“It’s targeted and aimed at solely protecting Australia’s national interests, and the protection of Australia’s national security. That is our first responsibility as a government, it’s our first responsibility as a national security committee,” she said.

Earlier this year, the heads of six US intelligence agencies – including the CIA, FBI and NSA – warned consumers to avoid Chinese-owned Huawei and ZTE phones and services.

It is believed then Prime Minister, Malcolm Turnbull, was briefed by the US government.

Anger from Huawei

In an angry rebuttal released the following day, Huawei said the Australian Government's decision to bar Huawei from the development of Australia's 5G network was “politically motivated, not the result of a fact-based, transparent, or equitable decision making process” and accused the government for not understanding Chinese law.

“A mistaken and narrow understanding of Chinese law should not serve as the basis for concerns about Huawei's business. Huawei has never been asked to engage in intelligence work on behalf of any government.”

Huawei said it had presented the Australian Government with an “independent, third-party expert analysis of the Chinese laws in question: Chinese law does not grant government the authority to compel telecommunications firms to install backdoors or listening devices, or engage in any behaviour that might compromise the telecommunications equipment of other nations.

“Interpreting Chinese law should be left to qualified and impartial legal experts.”

ZTE is yet to comment publicly.

Telecommunications analyst Paul Budde said it was important to note that barring Huawei and ZTE was not a technical issue but a political one.

“There is no evidence whatsoever that some clever bits of technology have been added to networks designed and developed by the Chinese what would allow the Chinese government or anybody else for that matter to interfere with networks they have built or are building.

“As a matter of fact, communications networks around the world – as they are in place at the moment - manufactured by Americans, Europeans, Chinese or Russians can be used by governments around the world for cyberwarfare, cyberespionage or cybercrime if they want to do this.”

Budde said the consumer would ultimately bear the cost of a more expensive network, suggesting a price jump of more than 30% to build the network using other suppliers.