Canada and the UK have straddled the fence on Huawei and withstood years of American cajoling and threats. Photo: Lynn Grieveson

UK Prime Minister Boris Johnson announced that Chinese telecommunications company Huawei will be allowed to design part of the country's 5G network, Marc Daalder reports

The United Kingdom's decision to allow Chinese telecom corporation Huawei to design part of its 5G infrastructure is the first gap in the armour of the Five Eyes intelligence-sharing alliance.

United States officials had been pressuring allies to reject the company's advances for fear of security risks posed by the company, which is widely seen as an agent of the Chinese state.

Australia was the first of the Five Eyes nations to fall in line, banning Huawei from designing any part of its 5G network. In 2018, New Zealand's Government Communications Security Bureau (GCSB) blocked an application from Spark asking to use Huawei technology in the Kiwi telecom's 5G rollout.

Spark has instead gone ahead with products from Nokia, but has emphasised that its approach will be "multi-vendor", leaving the door open for Huawei's involvement in the future.

Canada and the UK have straddled the fence on Huawei and withstood years of American cajoling and threats. Republican Senator Tom Cotton introduced a bill in early January that would forbid US intelligence agencies from sharing information with countries that operate a Huawei-designed 5G network.

Cotton said on Wednesday morning that “allowing Huawei to build the UK’s 5G networks today is like allowing the KGB to build its telephone network during the Cold War. The CCP will now have a foothold to conduct pervasive espionage on British society and has increased economic and political leverage over the UK.”

“The short-term savings aren’t worth the long-term costs. In light of this decision, the U.S. Director of National Intelligence should conduct a thorough review of U.S.-UK intelligence-sharing,” the senator said.

GCSB Minister Andrew Little said he didn’t think the UK’s decision immediately threatened the Five Eyes arrangement. “I don’t think anything is going to change, at least immediately. There will be exchanges over the next few weeks between all the Five Eyes partners, understanding the UK assessment and their technical assessment,” he said.

Threat could be 'mitigated' - UK

Johnson's decision, which was forecast in prior days, required approval from Cabinet before it could be officially announced. UK intelligence agencies have disagreed with US arguments that Huawei could jeopardise the country's national security or pose a surveillance threat and have insisted that the risk could be "mitigated".

Huawei will not be given free reign in the UK. Instead, it will be designated a "high-risk vendor", subjecting it to a 35 percent market share cap and a ban on supplying technology to sensitive industries and parts of the public sector.

The UK has also agreed to work with its Five Eyes partners to “develop alternative telecoms suppliers,” the Financial Times reported.

The decision gives New Zealand and Canada more leeway to give Huawei access to their 5G networks, now that they can point to the UK for precedent and don't have to go it alone.

However, Little has insisted that the only considerations the GCSB takes into account are those it is bound to under the Telecommunications (Interception Capability and Security) Act 2013 (TICSA), saying the UK’s decision was “unlikely” to have an impact on the company’s viability in New Zealand.

“We’ve got a statutory regime under which our agency assesses the technology that [telecommunications companies] use. Every time they want to use new technology, then they’ve got to notify the GCSB, that gets assessed for national security interests.”

"It won’t be good enough just to say, ‘Well the UK’s got this, therefore we should do the same.’”

“Just raising [the UK’s decision] as an argument doesn’t work,” Little said. “The GCSB does a technical assessment so any applicant would have to provide a technical assessment that allows them to say it doesn’t pose any national security risk and then it would be for the GCSB to assess that.

"It won’t be good enough just to say, ‘Well the UK’s got this, therefore we should do the same.’”

TICSA lays out the requirements which telecoms must meet in order to receive approval to work on New Zealand's mobile networks.

It is country- and vendor-neutral, meaning that it won't harbour prejudices against Chinese companies or Huawei in particular, the GCSB says. Instead, decisions are made purely on a case-by-case basis according to "what the likelihood is that it will lead to the compromising or degrading of the New Zealand’s public telecommunications network".

Spark, Huawei respond

In response to the announcement, Spark NZ spokesperson Arwen Vant told Newsroom, “We are interested to see the UK’s approach to allowing Huawei’s participation in the UK’s 5G mobile networks, while still managing security risks. We will continue to engage with our Government to understand its views, while also continuing to pursue our multi-vendor strategy, which we announced last year.”

Vant said that Spark currently operates “have 5G wireless broadband services in parts of Alexandra, Westport, Clyde, Twizel, Tekapo and Hokitika […] using Nokia equipment. We’ll announce further plans (including vendors) for our continuing 5G rollout in due course.”

Huawei New Zealand deputy managing director Andrew Bowater said, “We’re encouraged by the United Kingdom Government’s decision to allow Huawei to continue supplying its world-leading 5G technology in the UK. This decision from a close ally, shows it’s time for the New Zealand Government to engage with Huawei and New Zealand operators to find a way forward.”

“5G done in the right way is an immense opportunity for New Zealand and we know Huawei technology is the best in the market. Huawei is an open book. We want to work with the New Zealand Government to find a solution so that the country doesn’t have to compromise on competition or quality.”

Here's the latest with extra background and links from Bernard's 8 Things email this morning.

Britain has defied America's protests overnight and allowed Huawei to build the 'fringe' of its 5G networks, but with a 35 percent market share limit. (BBC)

Why it matters: It gives Spark another chance to apply for GCSB approval to put Huawei into its 5G 'fringe' with other suppliers, including Nokia and Samsung.

Dancing between elephants - That would put the pressure back on New Zealand to make a clearer choice between America and Australia on the one hand and Britain (and potentially) Canada on the other hand.

Devilish detail - The FT-$$$ reported British ministers have agreed to work with Five Eyes partners America, Australia, Canada and New Zealand to develop alternative telecoms suppliers.

Stat du jour - Huawei already has a 34 percent share of the market for 5G equipment and full fibre fixed line networks.

The reaction? Republican senator Tom Cotton described the decision as deeply disappointing for American supporters of the Special Relationship and called for an official review of US intelligence sharing with Britain.

Key quote from Cotton: "I fear London has freed itself from Brussels only to cede sovereignty to Beijing. Allowing Huawei to the build the UK’s 5G networks today is like allowing the KGB to build its telephone network during the Cold War."

So what next? We will find out if Spark re-applies for GCSB approval with the argument that Britain's geek spooks know more than ours or the Americans'. If that happened, the Government would again have to make a tough call and devise some clever communication

Get it early – This article was first published on Newsroom Pro and/or included in Bernard Hickey’s ‘8 Things’ morning email of the latest in-depth business and political analysis.