THE Federal government has blocked a bid by Huawei Technologies to provide equipment for the NBN, citing security concerns.
Huawei, a Chinese telecommunications company, is currently being investigated by the United States House Permanent Select Committee on Intelligence as a possible cyber-espionage risk.
In a piece by the Australian, Prime Minister Julia Gillard called the NBN "a piece of critical infrastructure."
"It is the future of our nation's telecommunications, and you would expect that as a government, we would make the appropriate decisions to protect that critical infrastructure, and we have."
Greens communications spokesperson Senator Scott Ludlam said "the Government is right to be cautious, but needs to make the case for the ban public".
"Huawei has operated in Australia since 2004, but this is no ordinary tender; it is the most significant infrastructure project of our generation. It will be a crucial part of communications in Australia, with a vital role to play in commerce, education, the public health system, and all levels of civil administration.
"The Government is prudent do all it can to protect the integrity of the NBN. While it is unlikely ASIO would issue a security warning for trivial reasons under these circumstances, the Government should explain the decision."
Senator Ludlam said it's unlikely the decision will have any significant diplomatic impact on Sino-Australian relations.