Does Huawei represent a national security threat or is its success driving political efforts to stave off a highly visible symbol of the potential of China’s nascent economy?
For the past few years, I have entitled my year end wrap up with a line from Joni Mitchell’s Circle Game. Today, I am using another of her lyrics, from Big Yellow Taxi. Let me start with a bit of a warning. My son likes my blog posts that reminisce about the olden days. So I may take a little time getting to the point in today’s post. Here is the ‘too long; didn’t read’ extract: North America lost its telecom giants and the major suppliers are all based off-shore. “Don’t it always seem to go, that you don’t know what you’ve got ’til it’s gone.”
I got into the telecom business just about 40 years ago, working as a summer management intern between my undergrad and graduate studies. I had landed a job at “the Bell” as it was known.
That was an interesting time of transition for the sector in Canada. The first interconnection decision was released, CRTC 79-11, enabling limited forms of competition. The first DMS-100 digital switches were rolling off the assembly lines from Northern Telecom (which had just recently been renamed from Northern Electric). Northern Telecom (known widely as ‘Nortel’ even before it formally changed its name) was still majority owned by Bell Canada, and it was competing against its former US parent, Western Electric, which was still a part of AT&T. I remember feeling in those days that the Nortel salesman was more of an order taker than an actual sales person. We only had one supplier at that time. Indeed, I recall causing a bit of a stir after Bell bought an independent phone company operating in the Kingston area that had a couple fairly new Automatic Electric C1-EAX switches, built by a Nortel competitor. The central office engineer wanted to pay Nortel to scrap the equipment when installing replacement digital switches. He was forced to put the equipment on the second-hand market when I offered to personally buy the switches for $5 each under the company’s employee purchase of surplus equipment program. Sorry, I digressed – we’ll save that story for another day. The bottom line: the close symbiotic relationship virtually guaranteed Nortel a market for its emerging innovations and enabled Bell to shape the development of products.*
Fast forward to the mid-80’s and I spent time at Bell Labs in New Jersey, primarily working on new capabilities for AT&T Communications, the post-divestiture long distance company. However, we also did some systems engineering work with our colleagues at Western Electric, which was still part of AT&T at the time. I loved that job, working with incredibly bright people at a legendary institution and I got to lead work on a some significant projects. It would be another decade before AT&T spun out the equipment business to what became Lucent, which later merged with Alcatel and before becoming part of Nokia.
Without a doubt, both companies, Nortel and Western Electric (Lucent), delivered world leading innovations, arguably thanks in part to the tight corporate linkages with having an operating services company as a parent. To what extent were Nortel and Lucent victims of their growth and independence, unable to survive without their anchor customers? These are the kinds of questions that might be interesting academic research projects.
Don’t it always seem to go that you don’t know what you’ve got ’til it’s gone.
There is no longer a “home town” champion supplying the major network elements in North America’s communications networks. In the end, North American communications service providers are dependent on foreign suppliers for much of the network infrastructure. That said, all of the major suppliers, including Huawei, have made substantial research and development investments in Canada, with labs and significant levels of funding toward university partnerships. There are large numbers of Canadians – employees and students – involved in all of the major suppliers.
Communications gear features sophisticated software so complex that one must question if it is possible to completely test performance, let alone detect and isolate malignant code. With distributed architectures inherent in 5G networks, to what extent have we become dependent ultimately on trust in our networks’ suppliers?
The government has been slow to respond to pressures seeking to restrict Canadian carriers from deploying Chinese technology, stating that it “is a serious decision and we will make it in a serious and conscientious way.”
Indeed, it is a very serious decision. Removing any supplier from the marketplace could raise carrier costs (and consumer prices) and reduce access to innovative features. Huawei’s annual global revenues, in the order of US$100B are nearly double the combined revenues for Nokia and Ericsson.
Statements by the US President must give rise to questions about whether security concerns are being intermingled with industrial and trade policy. Are we reminiscing about the good old days in the late 1980’s and early 1990’s, when domestic icons like Nortel and Lucent were among the gold standards in building the foundations for our information age? That time is gone.
Don’t it always seem to go that you don’t know what you’ve got ’til it’s gone.
How do we measure trust in our network suppliers? Has any other communications equipment supplier undergone the rigorous level of security scrutiny as Huawei? In a country like Canada, with our commitment to diversity and principles over politics, how do we ensure that we objectively quantify trust, free of xenophobia and racism?
As an aside, I actually built up a Nortel pension when I was with Bell Canada International based in the US, and then added to it while working for Bell Northern Research. The US Government backstopped that pension plan when Nortel went under. My understanding is that I will be eligible for enough to buy a grande latte each month in just a few more years.