The Turnbull government’s latest announcement ^[1] on how its new telecommunications sector security reforms will apply to 5G in Australia has effectively excluded Huawei (and ZTE, the other Chinese large telecoms provider) as vendors of 5G systems and services.

Or at least that’s what the lengthy media release from acting Home Affairs Minister Scott Morrison and Communications Minister Mitch Fifield seems to mean.

Beijing’s Global Times newspaper, which often channels the views of the Chinese government in a fairly strident way, had predicted that the decision would be the bilateral relationship’s next test. Reacting ^[2] to yesterday’s decision, it’s a different tune—apparently the paper’s thoughts are with consumers, and it’s extremely disappointed for them.

Those who welcomed Malcolm Turnbull’s recent ‘resetting’ of the China relationship ^[3] had cautioned that banning Huawei would put Canberra back in the diplomatic deep-freeze. They didn’t add that such frostiness hasn’t stopped Chinese customers from buying our high-quality resources and services at globally competitive prices.

Intelligence agencies have clearly provided frank security advice about embedding Huawei deep in Australia’s data system.

The government’s media release is studious in not naming any vendors, but says:

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 unauthorized access or interference.

That sounds like it applies to Huawei (and ZTE).

Huawei Australia has said there’s no security problem, because Huawei in Australia will obey Australian law ^[4]. Inconveniently, however, Chinese law ^[5] requires Huawei to comply with Chinese intelligence organisations’ demands—and 5G networks and services provide compelling opportunities for those intelligence agencies. Huawei employees in Australia need not understand what’s done.

Assurances in large ads carried in Australian newspapers about Huawei creating ‘a better and safer ICT landscape for everyone’ were welcome. According to credible international reporting, though, assurances don’t seem to have stopped the African Union’s data on Huawei systems from being sent without permission to unknown servers in Shanghai every night for five years ^[6].

The Global Times reports Huawei is considering ^[7] mounting a legal challenge to the government’s direction on unfair competition grounds.

It might be better for Huawei not to draw more attention to Australia’s decision, which appears well supported factually and in line with the government’s regulatory powers.

Yesterday’s decision has also recognised that 5G isn’t just a new version of the 4G network. It’s the central nervous system that will connect Australian people, businesses, power, electricity, water and other systems to the internet much more deeply. It will make the internet of things real.

Its design means that current controls, which depend on a clear distinction between the core (NBN) network and edge systems like WiFi and 4G, don’t work in the 5G world—because the distinction between the core and the edge will disappear over time.

Most refreshingly of all, the government seems to have recognised that a combination of saying no to some systems and components but yes to others from Huawei, along with adopting the UK evaluation centre model, just wouldn’t work. That was the rumoured ^[8] magical compromise solution.

The ministers said the government ‘has found no combination of technical security controls that sufficiently mitigate the risks’. That’s good news, because the UK solution that tries to put such controls in place is failing in plain sight ^[9].

The UK’s Huawei Cyber Security Evaluation Centre has cybersecurity and telecommunications specialists examining various Huawei components, software and source code to assess security risks. In a bureaucratically worded report last month ^[10], the centre’s oversight board (which is chaired by the head of the UK’s National Cyber Security Centre) said that ‘the NSCS has advised … that it is less confident that NSCS and HCSEC can provide long term technical assurance of sufficient scope and quality around Huawei in the UK’. It reports ‘repeated discovery of critical shortfalls’ and ‘a further medium-term issue [in] the shift in architecture and technology brought about by … edge compute architectures such as 5G’.

Australia’s politicians may have taken some comfort that the US provides good company for this decision. Last week, Donald Trump signed the John S. McCain National Defense Authorization Act ^[11] into law. It prohibits the US government from buying telecommunications equipment or services from China’s Huawei and ZTE, and from companies doing business with them. Phase-in periods allow orderly replacement of current Huawei and ZTE systems. Not a bad approach.

So, it appears that the Turnbull government has made a decision that actually confronts the problem—compromise of Australia’s 5G network to the Chinese state. And it’s done so in a way that will deliver 5G benefits to Australians and Australian businesses.

The decision sets the scene for new directions in how communications systems and services are designed and provided in future years.

Not locking in a big Chinese tech company as a Big Telco end-to-end provider creates room for the emerging open standard, open source software and hardware future ^[12] that is emerging across electronics more generally. That’s the land of opportunity for Australian carriers, and Australian software houses, in partnership with US and EU firms. And it’s the next Great Game in international communications technology.

As the Big Telco model gets disrupted by technological change, the future is likely to show that the path the government has opened up is smart economics and smart strategy at the same time.

It’d be great now to see some bipartisanship on this critical national decision. Having doubt cast on the strategic direction of the national communications sector could risk telecommunications policy becoming the new energy policy—something both sides of politics might avoid to show that our system of government can still work well.

Now for the follow-through on implementation.