Reuters Canada is reporting that Nortel Networks, and its key competitor in China, Huawei are forming a joint venture research and development product house focused on what they are calling 'ultra' broadband - user-aware, content-aware broadband access platforms capable of delivering IPTV (TV over the Internet) and NGN Next Generation Netwoks) to the home. Nortel, North American largest telecom equipment supplier, will hold the majority stake in the joint venture, which will be run from Ottawa.

A joint venture with Huawei raises some serious and immediate concerns. Craig Simons, writing in Newsweek International last month asked of Huawei,
Is it a security menace bent on doing Beijing's bidding, a legitimate international telecom competitor, or a corporate house of cards, all market share and PR releases but no profits? It's hard to answer those questions. CEO Ren refuses to talk with journalists, and there are persistent rumors that the firm is actually run by the People's Liberation Army. The company denies that, and has long claimed it no longer has any ties to the government. Huawei's books are audited by a well-known accounting firm (KPMG), but few of its financial numbers are made public. Opaque bookkeeping has also frightened analysts: an August report by the Thailand-based consulting company MWL argues that Huawei may rely on "unsustainably low prices and government export assistance" to make sales.


An unclassified CSIS commentary published 2003 on global weapons proliferation and the military-industrial complex of the PRC, on Huawei
There are two distinct components to the production and sale of arms in China: military and former military enterprises such as Poly Group, and civilian defence enterprises, both state-owned and private, such as NORINCO and Huawei...Besides state-owned defence producers, China also has private companies involved in defence production, such as the telecom firm Huawei. With offices in Cuba, Iran, and Burma, Huawei has been a major supplier of dual-use telecom equipment. In 2001, its Indian subsidiary was accused of tailoring a commercial order for the Taliban regime in Afghanistan. Also in 2001, Huawei supplied Iraq with fibre optics to link its radar and anti-aircraft systems, triggering U.S. and U.K. bombings. Private defence firms often also enjoy the shielding of powerful patrons. Huawei was founded by a former PLA officer, and benefitted from early sales to the PLA. But it also receives state support in the form of tax privileges and state-sponsored credit because it has been designated a “national champion” of new technology. Its supporters have included top general Yang Shangkun and head of the China International Trade and Investment Corporation, Wang Jun (also president of Poly). Unlike state-owned defence producers, private firms are more likely to be profitable. A further level of complexity in their proliferation activity is that foreign firms seeking to do business with them may try to shield them from U.S. sanctions.