Huawei's Fight for 5G

Written By Monica Savaglia

Posted June 19, 2018

Chinese tech company Huawei is fighting for its opportunity to build a 5G network.

Huawei is one of the world’s largest makers of smartphones and telecommunications equipment, and on Monday the company did something out of the ordinary.

It decided to publish an open letter to Australian lawmakers.

You’re probably wondering why a tech company would do this.

Well, it’s because Australian national security agencies are attempting to block Huawei from building a 5G network in Australia.

The company has been accused of being a security risk for some time. In fact, in 2012, Huawei was blocked from bidding on a massive national broadband network in Australia because it was seen as a security risk at the time.

A Heavy Burden to Hold

Unfortunately for Huawei, it has been carrying the burden of being an undesirable and significant security risk for a while, and that’s hindered its chance at expanding its technology in other countries.

One of the biggest growing concerns is the possibility of Chinese access to the heart of the new 5G mobile networks.

This concern isn’t just limited to Australia. Even the U.S. government has expressed its worries over having Huawei building a 5G network on U.S. soil.

U.S. lawmakers and security agencies have accused the company of having ties with the Chinese government. Huawei has continually denied that any of its products having any security risks or ties to the Chinese government, but that wasn’t enough for the U.S. The company continues to be largely shut out of the U.S. market.

FBI Director Chris Wray said:

We’re deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don’t share our values to gain positions of power inside our telecommunications networks. It provides the capacity to maliciously modify or steal information. And it provides the capacity to conduct undetected espionage.

Is Huawei a Security Risk?

If it already isn’t obvious, there’s a significant amount of fear that comes along with the idea of Huawei building a 5G network. As I mentioned earlier, security agencies are hesitant because of how close Huawei is to the Chinese government and the Communist Party. The fear lies in the idea that there would be a creation of “back doors” into 5G networks that would give Chinese authorities access to communications that are happening on the network.

An official ban from the Australian government over Huawei building a 5G network could have one significant risk for Australia: A ban would create even more tension with China, Australia’s biggest trading partner. But that’s not stopping politicians from taking a stance against the company.

Australian Labor backbencher Michael Danby said:

On matters like the electronic spine of Australia, the new 5G network which will control the internet of things — automatically driven cars, lifts, medical technology — I don’t think it’s appropriate to sell or allow a company like Huawei to participate.

Politicians are very adamant about keeping Australia risk-free, especially with a network that will be the backbone of so many technologies and a significant part of everyone’s daily lives.

Maybe Not So Bad?

In order to keep up with technology, Australia and its wireless carriers will need to start hiring companies to build new superfast 5G mobile networks. This could be one way that Australia benefits from Huawei.

Huawei Australia wrote to all federal members of parliament (MPs) and said:

Increased competition not only means cheaper prices but most importantly better access to the latest technologies and innovation. We are a private company, owned by our employees with no other shareholders. In each of the 170 countries where we operate, we abide by the national laws and guidelines. To do otherwise would end our business overnight.

The New Zealand government hasn’t blocked Huawei, and the British have allowed the company to build a new network for national telecom BT. Huawei’s code was checked line-by-line by the intelligence agency Government Communications Headquarters (GCHQ) to ensure it followed all guidelines.

5G is the Future

Governments are paying close attention to which companies they work with and who they allow to roll out certain technologies, especially 5G technology.

5G is going to be the backbone of a lot of devices and technologies that we currently use and will be using.

5G is the future. And it’s going to be even bigger than any other network generation before it.

The Internet of Things (IoT) is going to be everywhere, and it’s going to need 5G to make it happen. The IoT basically means an interconnected network that includes machines, wearables, buildings, automobiles, and many other types of devices.

Cisco estimates that by 2020, the number of connected devices will reach upward of 50 billion. In four years, that figure is estimated to reach 1 trillion.

We’re gonna need a strong network to effectively use all of those devices. And that’s where 5G steps in.

It’s going to be important not only to the average consumer, but to governments and communities as well.

So it makes sense that Australia is making sure it’s doing what’s best for the country by not putting it in any security risk scenarios.

5G is going to pave the way for some really great technologies, and it will lead the way to unbelievable profits for investors.

If you’re interested in investing in 5G, I recommend taking a look at a presentation put together by my colleague and Wealth Daily’s lead technology analyst, Jason Stutman. He’s done the hard work and has already picked some stocks that could prosper in the 5G boom. The early (and most prosperous) years are here. Take advantage now!

Until next time,

Monica Savaglia Signature Park Avenue Digest

Monica Savaglia

Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.

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