Meet John Key’s Chinese broadband contender
Yesterday, the prime minister raised a seemingly dramatic new possibility for the government’s $1.5 billion ultrafast broadband (UFB) initiative: China’s Huawei throwing its hat into the ring at the last moment.
UPDATE: Huawei keen on Kiwi Crown fibre – but within limits
READ ALSO: Huawei signs Aussie fibre technology deal
On Q&A yesterday, John Key had the following exchange with host Guyon Espiner (recorded in Shanghai on Friday night).
JOHN We had a bit of a round table yesterday, equivalent to sort of what we do with the United States, where we have the US/New Zealand partnership forum, we have kicked off an idea like that here in Shanghai, and there were some very heavy hitters around the table. So some big players, both from New Zealand and from China, and they certainly have a desire to want to do things in New Zealand and increase their involvement.
GUYON Are there specific projects that have been looked at, I mean I've seen commentators talk about projects like Transmission Gully in Wellington. I mean is that a realistic thing that the Chinese might come and do something like that?
JOHN They might do, and at the end of the day from New Zealand's perspective I mean we're looking for value for money. So let's take ultrafast broadband. They've got a lot of expertise in that area, Huawei is a big player, they're bigger round the world, they've got a huge partnership in the United Kingdom for instance.
No one's saying they would be the final selected partner in New Zealand but they've certainly got the capacity if they wanted to.
In fact, no one’s mentioned Huawei at all in the extended, delicately-balanced UFB process (which recently went to a refined tender, only open to those who participated in the first round).
Crown Fibre Holdings’ official shortlist, and most of the discussions around it, are secret. So in theory any company could be on it.
But that’s not what Huawei’s about. The Shenzen-based, privately held company is huge, and growing, with revenue of $US23 billion-plus a year.
But it’s a telecommunications equipment maker, not a company that invests in and runs networks, as the government is seeking.
Already here
Plenty of Huawei gear is already here.
Huawei hardware runs 2degrees’ mobile network, launched in August last year.
And when Vodafone started unbundling Telecom’s Auckland exchanges in 2008, it moved in Huawei switching gear (although Nokia-Siemens remains the company’s primary equipment partner).
Huawei also partners with Vodafone in the UK (which could account for the prime minister’s UK reference) but again it’s supplying gear - including, this year, Huawei-branded cellphones.
It’s theoretically possible that Huawei could be contracted by a successful UFB bidder, like Vector or CityLink, for argument’s sake, to help them lay cable or - more probably - supply some of the necessary kit to run it.
Canadian UFB contender Axia NetMedia (allied with Vodafone NZ) told NBR it would consider any of the major technology suppliers - but chief executive Art Price saw it as a purely logistical step, of little interest at this political cut-and-thrust stage of the project.
And maybe if Telecom or its Chorus division picked up some UFB business, it would consider Huawei (although that would be a surprise; Alcatel-Lucent is the company’s long-standing partner).
If Huawei does become a supplier or contractor for Telecom or Axia or any other company tendering for UFB business, then the PM is right, it could be expected to offer some keen pricing.
Put it would be a radical departure for Huawei itself to become a co-investor at any level of the UFB project.
International rebuff
To NBR's knowledge, Huawei has never tried to buy into a foreign telco or fibre company.
In 2008, the Chinese company did mount a $US2.2 billion bid to buy US network hardware company 3Com, but the deal was blocked by Congress, for example (HP subsequently bought 3Com in a $US2.7 billion deal wrapped up in February this year).
US lawmakers said they were worried about 3Com's security technology falling into foreign hands.
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Comments and questions21
I think we - NZ as a whole - should be very careful about entrusting anything to Chinese businesses. They thrive and survive in an environment of rampant corruption and cronyism. Ethically, there are huge question marks around them. Huawei is a company that built its success on copying Cisco router hardware and software and selling in countries that don't enforce copyright and patent law. Mr. Key and the National party should reflect carefully on the implications of advocating ethically challenged businesses with dubious backgrounds, operating amid a haze of cronyism and corruption.
there was just normal commercial and marketing behavior, if you got enough money, you could buy cisco too.
... Now our prime minister is thinking about giving control of our broadband network to a company with close links to the Chinese Army and intelligence agencies.
The biggest problem with NZ broadband (and always has been) is that the ISP networks are overloaded.
The bottleneck is not in the final link between someones home and a Telecom cabinet. If everyone got fibre to the home tomorrow the speeds would not increase as that's not where the bottleneck is.
If Huawei equipment can be brought in to fix the overloaded networks and it is cheaper than competitor equipment then they should be hired. This is not a trivial point that will be looked at in due course when fibre arrives, because if it had been trivial and inexpensive this problem would have been fixed by now and every one would have much faster broadband right now.
The biggest problem with NZ broadband (and always has been) is that the ISP networks are overloaded.
The bottleneck is not in the final link between someones home and a Telecom cabinet. If everyone got fibre to the home tomorrow the speeds would not increase as that's not where the bottleneck is.
If Huawei equipment can be brought in to fix the overloaded networks and it is cheaper than competitor equipment then they should be hired. This is not a trivial point that will be looked at in due course when fibre arrives, because if it had been trivial and inexpensive this problem would have been fixed by now and every one would have much faster broadband right now.
Better check the equipment for security backdoors. The Chinese aren't exactly the most up nation to do business with. Take allegations in India for malware on their networking hardware.
Unless the kit can be completely vetted in a clean-room environment and Huawei grant the researchers complete access to the source code of the devices, this is a non starter. Huawei's ownership and equity control is murky, but a large portion is almost certainly vested with the Chinese government. India is already spooked by this, and we don't need to touch it with a barge pole.
A free and democratic society must never cede control of its vital infrastructure to an authoritarian government -- whether that government is here or abroad. Walk it back, Mr Key.
[Huawei has had moments of international controversy. It's $US2.2 billion bid to buy US network hardware company 3Com in 2008 was blocked by Congress, for example (HP subsequently bought 3Com in a $US2.7 billion deal wrapped up in February this year). US lawmakers said they were worried about 3Com's security technology falling into foreign hands.
But, in New Zealand's case, as per the article above, I don't think Huawei is out to buy into any fibre operation or otherwise invest in the UFB.
Huawei technology is already in NZ, with Vodafone and 2degrees. It's standard stuff, and it's installed and run by third parties - so even if the most extreme conspiracy theories are true, and the Chinese State does want to tap the calls of Glenfield teens on 2degrees pre-pay, it's hard to see how it could be used for spying. - CK]
All very well, but bringing Huawei into any direct bidding role at this stage would be a serious breach of ethics on the part of the Government and CFH in relation to the current bidding process. There is already real scepticism among bidders about whether this is a fair dinkum process given Joyce's secret negotiations with Telecom - this would be just too much.
Is this really a shot across all the bidders bows that they are too expensive?
CFH have just mused that the quarter acre section is the problem!
Really?
Maybe the problem is who's bidding and why?
Telecom have no real engineering capacity left (but a lot of legacy issues and demanding investors) and the lines cos see new monopoly rents!
Perhaps the answer does lie in drains and driveways!
The government might want to 'investigate' "homes with tails" with some of the extra policy money CFH want to spend?
We manage to fit (and own) drains and driveways to our properties how about we own the duct too!
That takes 30-40% of any build cost and can be easily financed
Works even better in the country!
Whats the point of having fibre in every home when ips like xtra can't even handle the current demand on their networks
If you have FTTH, you can start your own Xtra at home and invite people to join. It would be like every internet contents in the world are already stored in your computer.
We all know about Chinese censorship. I'll bet their internet comes with this ability well built into their broadband systems. Switch it on no problems. Filtering is what I have allways suspected was behind Nationals Broadband wishes. And Key is very much like Mr Obama as he Jokes. The face of the New World Order are people like Tony Blair, Bill Clinton, Obama etc. All these people seem very nice indeed. We are being conned by a good salesman NZ
Backed Crosby textor scripting his every appearance by the Worlds Elites. And if business people here think this will benefit them in the long run they are dreaming. We are headed for more corruption with the object of consolidation in the oil industry re the spill. Tony Hayward sold 1.4 million dollars worth of his BP shares about 3 weeks before the spill and paid off his mansion. Goldman Sachs sold about 44% 250 million of their BP shares around the same time. And other companies sold smaller parcels of shares but as a larger % of their total holdings.
The spill is likely a hit. Just google Hayward and BP shares to get this info that is not on TV.
www.globalresearch.ca has articles on both of these events.
Goldman Sachs Sold $250 Million of BP Stock Before Spill
http://www.globalresearch.ca/index.php?context=va&aid=19591
BP Chief Tony Hayward sold shares weeks before oil spill
http://www.globalresearch.ca/index.php?context=va&aid=19592
Wake up. It is very likely Key was involved in the hit on the NZ dollar. There are big holes in the story published in the Herald clearing him of being at the Bankers Trust. If the dates Key gives in the Herald re his starting at Bankers Trust then he and Andy Kreiger can not have worked together as major US publications (more than one) have put Krieger leaving Bankers Trust as January and Keys start time as between March - Jun. Yet they both talk a lot about their great working relationship at the trust.
We all know about Chinese censorship. I'll bet their internet comes with this ability well built into their broadband systems. Switch it on no problems. Filtering is what I have allways suspected was behind Nationals Broadband wishes. And Key is very much like Mr Obama as he Jokes. The face of the New World Order are people like Tony Blair, Bill Clinton, Obama etc. All these people seem very nice indeed. We are being conned by a good salesman NZ
Backed Crosby textor scripting his every appearance by the Worlds Elites. And if business people here think this will benefit them in the long run they are dreaming. We are headed for more corruption with the object of consolidation in the oil industry re the spill. Tony Hayward sold 1.4 million dollars worth of his BP shares about 3 weeks before the spill and paid off his mansion. Goldman Sachs sold about 44% 250 million of their BP shares around the same time. And other companies sold smaller parcels of shares but as a larger % of their total holdings.
The spill is likely a hit. Just google Hayward and BP shares to get this info that is not on TV.
www.globalresearch.ca has articles on both of these events.
Goldman Sachs Sold $250 Million of BP Stock Before Spill
http://www.globalresearch.ca/index.php?context=va&aid=19591
BP Chief Tony Hayward sold shares weeks before oil spill
http://www.globalresearch.ca/index.php?context=va&aid=19592
Wake up. It is very likely Key was involved in the hit on the NZ dollar. There are big holes in the story published in the Herald clearing him of being at the Bankers Trust. If the dates Key gives in the Herald re his starting at Bankers Trust then he and Andy Kreiger can not have worked together as major US publications (more than one) have put Krieger leaving Bankers Trust as January and Keys start time as between March - Jun. Yet they both talk a lot about their great working relationship at the trust.
We all know about Chinese censorship. I'll bet their internet comes with this ability well built into their broadband systems. Switch it on no problems. Filtering is what I have allways suspected was behind Nationals Broadband wishes. And Key is very much like Mr Obama as he Jokes. The face of the New World Order are people like Tony Blair, Bill Clinton, Obama etc. All these people seem very nice indeed. We are being conned by a good salesman NZ
Backed Crosby textor scripting his every appearance by the Worlds Elites. And if business people here think this will benefit them in the long run they are dreaming. We are headed for more corruption with the object of consolidation in the oil industry re the spill. Tony Hayward sold 1.4 million dollars worth of his BP shares about 3 weeks before the spill and paid off his mansion. Goldman Sachs sold about 44% 250 million of their BP shares around the same time. And other companies sold smaller parcels of shares but as a larger % of their total holdings.
The spill is likely a hit.
Just google
BP Chief Tony Hayward sold shares weeks before oil spill
Goldman Sachs Sold $250 Million of BP Stock Before Spill
If you google these articles you will find them at globalresearch dot ca but are easier to find by googling the title. I cant quote the url as the spam filter on this site stops me posting.
Wake up. It is very likely Key was involved in the hit on the NZ dollar. There are big holes in the story published in the Herald clearing him of being at the Bankers Trust. If the dates Key gives in the Herald re his starting at Bankers Trust then he and Andy Kreiger can not have worked together as major US publications (more than one) have put Krieger leaving Bankers Trust as January and Herald puts Keys start time as between March - Jun. Yet they both talk a lot about their great working relationship at Banders Trust.
It would be interesting to know how many of the above comments are the convived calculated spin of parties interested in contracting to upply the ultra fst broadband
Would the reaction be the same for Israeli, UK or US parties.
Or do we just accept they're alreading tapping our broadband?
Its going to get crowded
Where does John Key get off bypassing all the processes that other companies have had to go through in order to become participants in the ultrafast fibre initiative? If all it took was to be in a country that has a FTA with NZ then there was no point in the local participants even trying to gain a foothold. Just try to calculate the costs incurred by these local participants, especially since IRD has determined that project planning is not tax deductible if the project doesn't get off the groung.
We live in China , and enjoy ultra fast connection and wireless vastly superior to the NZ offerings, its not a third world country and you guys need to get over your xenophobia. China just wants to be a global manufacturing hub, its goal is to employ its people and get on with life. For NZ to keep up with the rest of the world it needs a competitive fast broadband and external competition in its infrastructure, the existing participants have gronn fat and lazy.
Be honest NZ has few secrets that would be of interest to China anyway,
As one who often tends to look for the conspiracy, I don't think I'm being niave in saying you're dead right Ian - the Chinese will dominant the world through business, and I have little argument with that since its them that's got their act together unlike most of the rest of thr western world in the past couple of decades.
I thought EU was gonna dominate the business world. Oh wait, they suddenly got bankrupted. Nobody knows whats going to happen.
I don't know if china will dominate the business world in the future but I sure hope NZ will not fall behind the technology.
I believed Labour had done a job on Telecom, National want to kill it, don't worry I had a message from the Mr Joyce, Telecom made billions and now we need to get it back.. sorry the Bells & A and others have gone with the billions. Sorry the message I get - don't back NZ business as the government will build another structure. IS THIS THINK BIG!! AGAIN
South Korean government own their telecom company.
Landline plus unlimited fibre optic only costs $NZ 20 a month.
They've got better technology compared to the chinese competitors and they are allies of the NZ, the UK and the US. It's much safer!
When John Key went to S.korea for FTA deal, he should have mentioned it. I bet koreans can install it at least twice faster for much less money while start NZ-S.Korea FTA to reduce $2 bil / year tariff for NZ. I call that a good business.