BCE, Telus pick European suppliers for 5G network gear, leaving Huawei role unclear

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Two of Canada’s biggest wireless carriers announced they’re turning to European suppliers for gear to build their 5G networks, news that increased doubt about whether China’s Huawei Technologies Co. Ltd. would play a major role in this country’s next-generation telecom infrastructure.

Canada, which has been conducting a lengthy review of 5G cybersecurity, has yet to announce whether the Shenzhen company will be barred from supplying equipment for the coming generation of wireless technology, which promises much faster download speeds.

BCE Inc.'s Bell Canada announced Tuesday it has struck a deal to purchase gear from Swedish supplier Ericsson and said it won’t be using Huawei equipment unless Ottawa permits it. Telus Corp., which said in February that it would launch its 5G service with Huawei gear, announced partnerships with Ericsson and Finland-based Nokia Corp. on Tuesday but did not back away from the Chinese company.

Canada’s review of whether the Chinese telecommunications equipment giant should be excluded from 5G is entering its 21st month. The United States has been putting pressure on its allies to enact such bans over concerns that Huawei presents a security threat because it could be compelled to help Beijing spy on, or sabotage, Western networks.

Bell and Telus have argued that it will cost them more money and take longer to get 5G running in Canada if they cannot use Huawei gear, which is prevalent in their existing networks. Huawei gear comprises as much as 70 per cent of Bell’s radio access network, the gear on cell towers and cell sites, and close to 100 per cent for Telus.

Bell, which announced earlier this year that it would use equipment from Nokia to start building out its 5G network, said it’s working with multiple vendors and that it’s not closing the door on the Chinese telecom’s involvement. “Huawei has been a reliable and innovative partner in the past and we would consider working with them in 5G if the federal government allows their participation," spokesperson Marc Choma said in an e-mail. Telus did not respond to questions regarding what role, if any, Huawei will play in its next-generation wireless network.

A senior government official, who was not authorized to speak publicly about its consultations with Canadian telecoms on Huawei, said BCE and Telus gave Ottawa a heads-up about their announcement to go largely with European suppliers on 5G technology. The official said the companies did not give a rationale for their decision but said that the U.S. government has been “pretty loud” in its opposition to Huawei being part of Western 5G technology.

Canada remains one of two members of the Five Eyes intelligence-pooling alliance – which includes the United States, Australia, New Zealand and Britain – that have not taken any action to ban or curb the Chinese telecommunications giant from supplying 5G equipment. New Zealand rejected one wireless company’s proposal to use all-Huawei gear in a 5G network, but has not set new limits.

“We are taking all security factors into account, including those from our allies and our security agencies,” said Mary-Liz Power, communications director to Public Safety Minister Bill Blair. “We will ensure that our networks are kept secure and will take the appropriate decisions in due course.”

When asked about the timing of their twin announcements Tuesday, Telus did not answer while Bell said its announcement coincided with the conclusion of the deal.

The Americans and Australians say Huawei answers to China’s ruling Communist Party and could be compelled to help Beijing spy on or sabotage Western networks. Article 7 of China’s 2017 National Intelligence Law says Chinese companies must “support, co-operate with and collaborate in national intelligence work” when asked.

In addition to the United States and Australia, other countries building 5G networks without Huawei include Japan and Taiwan.

Alykhan Velshi, vice-president of corporate affairs of Huawei Canada, said the company remains committed to its presence in Canada, where it has partnered with a number of universities and spends about $250-million annually on research and development.

“We look forward to the federal government completing its 5G review and making an evidence-based decision about Huawei’s role in helping build Canada’s next-generation wireless networks,” Mr. Velshi said. “In 12 years in Canada, we have never received a complaint from any of our customers about the integrity of our network equipment.”

Edward Jones analyst Dave Heger said Bell and Telus appear to be lining up alternative vendors to prepare for the possibility of a Canadian ban, particularly in light of recent developments in Britain.

“I don’t think you’d want to sit and wait until the government finally makes a decision before considering other vendors,” Mr. Heger said. “It could leave you kind of flat-footed.”

Last week, Britain’s National Cyber Security Centre announced it’s conducting a review of the security implications of new U.S. sanctions on Huawei and the impact these might have on British networks. The U.S. recently moved to block Huawei’s access to established global semiconductor-chip supplies – a measure that could force the Shenzhen giant to seek alternative sources.

The inquiry comes after British media outlets reported last month that Prime Minister Boris Johnson has instructed officials to draw up plans that would cut the Chinese company’s involvement to zero by 2023. That represents a departure from its previous decision to set limits on Huawei gear in its 5G networks but not ban it outright.

“With the U.K. backing down from its previous decision, that has made me wonder, will Canada feel more pressure to follow suit?” Mr. Heger said.

Experts say Bell and Telus are likely looking to lock in vendors ahead of the Dec. 15 auction of 3,500 MHz spectrum, a key band for 5G, so they can map out their plans to deploy the radio waves, which are used to send wireless signals.

“Companies are going to want to be fully prepared for that [spectrum auction] and deciding on a supplier and knowing how that supplier is going to function in particular bandwidths they may want to bid on,” said Wesley Wark, a visiting professor at the University of Ottawa’s Graduate School of Public and International Affairs.

Mr. Heger said Bell and Telus are also eager to start rolling out 5G service using the spectrum they already have. Rogers Communications Inc., which has chosen Ericsson as its 5G supplier, has already launched initial 5G service in the downtown cores of Toronto, Vancouver, Ottawa and Montreal, while Bell opted to delay because of the COVID-19 pandemic.

Christian Leuprecht, a professor at Royal Military College and Queen’s University, said Canada’s lengthy delay in rendering a decision on Huawei seems to have been a strategy in itself – an effort to discourage wireless firms from picking the Chinese company by leaving a cloud of uncertainty over its gear.

By avoiding announcing a ban – and incurring the wrath of the Chinese government – Ottawa can instead leave it to wireless providers to back away from the Chinese firm’s gear by themselves.

“Why take the risk of making a decision when you can effectively have others make the decision for you?” Prof. Leuprecht said.

Richard Fadden, a former director of the Canadian Security Intelligence Service who was also national security adviser to Stephen Harper and Justin Trudeau, said he thought Ottawa’s foot dragging was related to the diplomatic standoff with China.

“I think they were ragging the puck, largely because they were trying not to antagonize China in respect of the two Michaels,” he said, referring to Beijing’s arbitrary arrest of Canadians Michael Kovrig and Michael Spavor in apparent retaliation for Canada’s arrest of Huawei executive Meng Wanzhou on a U.S. extradition warrant for alleged bank fraud.

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