Workers on the production line at Huawei's production campus in Dongguan, near Shenzhen, China, on April 11, 2019. Observers expect there will be pressure on the Canadian government to announce a decision on a Huawei 5G ban now, with the return of Michael Kovrig and Michael Spavor to Canada.Kevin Frayer/Getty Images
A long-delayed decision facing the federal government about whether to ban Huawei Technologies Co. Ltd. from the build-out of Canada’s 5G wireless networks is back in the spotlight after the return of Michael Spavor and Michael Kovrig.
While the two Canadians were in detention in China, Ottawa was notably silent on the question, even as its allies proceeded with bans on Shenzhen-based Huawei over security concerns.
But observers expect there will be pressure on the federal government to announce a decision on the Huawei 5G question now, with the return of Mr. Kovrig and Mr. Spavor to Canada, and of Huawei senior executive Meng Wanzhou to China after reaching a deferred prosecution agreement.
Meng Wanzhou lands in China with fanfare after release from Canadian custody
Until now, ensuring the return of the two Michaels had been a crucial element of Ottawa’s engagement with Beijing, said Jonathan Berkshire Miller, a senior fellow with the Macdonald-Laurier Institute, an Ottawa-based think tank. While Canadian officials “wouldn’t admit that they wanted to kick the can down the road on the 5G decision, I think effectively that was a big factor,” he said.
“I think there’s going to be a lot more pressure from the opposition now to have a resolution on this,” Mr. Miller said. Campaigning during this year’s federal election, the Conservative Party vowed to ban Huawei equipment “to protect national security.”
Canada is “pretty much last out of the gate” in making a decision about Huawei, Mr. Miller added.
The United States, Britain, Australia and New Zealand – the other four members of the “Five Eyes” security and intelligence alliance to which Canada belongs – have banned or restricted Huawei. It has also been effectively shut out of 5G networks in other countries such as Japan and Taiwan.
Huawei is regarded as a world leader in fifth generation (5G) wireless communication networks, which promise to be faster than existing technologies and facilitate remote manufacturing, self-driving vehicles and much more. But the company has been beset by allegations that it’s beholden to China’s ruling Communist Party and might help Beijing spy on its Western rivals or even sabotage their communications networks. (Huawei has consistently denied such allegations.)
Given the wide implications at play, Mr. Miller said Ottawa’s decision on Huawei will likely involve several federal departments – Innovation, Science and Economic Development, Public Safety, Foreign Affairs and Defence – as well as Prime Minister Justin Trudeau.
The federal government remained non-committal this weekend. “While we cannot comment on specific companies, an examination of emerging 5G technology and the associated security and economic considerations is under way,” said John Power, a spokesperson for Innovation, Science and Industry Minister François-Philippe Champagne, in a statement on Sunday.
“Our government has been clear that it will pursue an approach that takes into account important domestic and international considerations, and will make the best decision for Canadians.”
Paul Evans, a professor of public policy and global affairs at the University of British Columbia, said it was likely the government will ban Huawei from participating in 5G networks. “The overwhelming forces in this country would go nuts if we did anything else,” he said.
But Prof. Evans noted that while some of Canada’s closest allies may have excluded the company from their 5G networks, Huawei remains dominant globally.
“It sometimes seems as if it’s a global stampede. It isn’t – in fact, Huawei is still by far the No. 1 5G provider globally.”
With Huawei mired for several years in controversy, however, Canada’s major carriers have turned elsewhere.
Vancouver-based Telus Corp. and Montreal-based BCE Inc.’s Bell Canada have Huawei gear in their networks, but have been gradually swapping it out. In a report last month, telecom analyst Tim Casey at BMO Capital Markets said the two companies have factored the cost of retiring Huawei gear into their capital spending plans.
Bell “has a small but declining exposure to Huawei, which is being switched out within its existing spending envelope,” Mr. Casey wrote in the report. He said Telus “has some exposure to Huawei within its legacy RAN [radio access network] but is switching out that gear over the next two years.”
Last year, Bell Canada announced it would purchase equipment from Sweden’s Ericsson and Finland-based Nokia. Rogers Communications Inc. sourced its network equipment exclusively from Ericsson, and Telus announced partnerships with Ericsson, Nokia and Samsung. This year, SaskTel announced that Samsung will provide all hardware, software and expertise for its 5G network.
In a statement on Sunday, Huawei said it employs 1,500 workers in Canada and continues to recruit. Network equipment comprises only one of its business lines, which include consumer devices such as smartphones, laptops and wireless earbuds; enterprise equipment; and smart office productivity tools.
“Although Canada is a small market for us, generating around 1 per cent of the company’s global revenues, the country remains an attractive place to invest because of its skilled and diverse work force and openness to immigration,” said Alykhan Velshi, spokesperson for Huawei Canada.
With a report from Andrew Willis
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.