HUAWEI BAN WON’T SLOW 5G ROLLOUT: BCE.
COMMENT TERENCE CORCORAN,
We’re a couple of weeks away from the 2019 Mobile World Congress in Barcelona where one of the sponsors, China’s Huawei, can be expected to shine simultaneously as a world leader in wireless technology and as the world’s corporate villain and leading threat to global security.
Leading up to the event, the great China wireless scare is having little impact on consumers. Sales of Huawei mobile phones, which are rated among the world’s best, are climbing, despite the constant clatter from the political classes about national security, trade wars and allegations that the company is guilty of “stealing from the West,” as one Wall Street Journal columnist put it, reflecting a United States theme that has been burbling for a many years. While the U.S. agitates, Huawei is set to introduce its newest phone, the P30.
Canada, meanwhile, is caught in the middle between the world’s two most powerful nations: pressured by the U.S. to block Huawei equipment from our 5G network, in case China might use for spying, and pressured by China not to block their national champion from our market. What should Canada do?
Keep calm and carry on, for one thing. Canada can also reject the U.S. industrial strategy campaign against Huawei, a company that has knocked the U.S. down a peg in the global telecom game.
It now looks like Germany, Italy and France — said to be looking at reviewing Huawei’s role as the lead player in Europe’s 5G installation — have no plans to block Huawei. Canada shouldn’t either, despite badgering from cacophonic security industry spooks and the White House’s trade war apparatus.
The intelligence community’s attack on Huawei comes with little solid evidence and a lot of conjecture, speculation and underlying Sinophobia. One adviser explained that “it’s important for Canada to remember it’s in, and of, the West.” But what that means, exactly, is unclear.
China is certainly an undemocratic, one-party Communist thugocracy, but it is also an emerging industrial giant that has successfully provided millions of its citizens and entrepreneurs with increasing freedom and economic opportunity. And it has become, along with other
Asian nations, a manufacturing powerhouse that has transformed the global economy with staggering leaps in production that have benefitted people all over the world.
Huawei’s strong reputation among both telecom companies and end users cannot be dismissed entirely as the product of political hooliganism and corporate thievery. Charges of corporate theft in the global tech sector are as common as break-and-enter cases in any major city. Inter-corporate charges and allegations appear daily in news and legal reports. In the world of cutting-edge technology, everybody thinks the other guy is stealing ideas and violating patents. And maybe they are. A few months ago, Blackberry sued Facebook for patent infringement; then Facebook filed a patent complaint against Blackberry. Apple is suing Qualcomm in the U.S. for US$1 billion for allegedly charging false intellectual property royalties, and has filed another suit against Qualcomm in China for US$145 million. Qualcomm has followed with its own countersuit against Apple.
Two high-profile U.S. cases against Huawei involve Cisco and T-Mobile. Cisco, a U.S. telecom manufacturer, alleged in a civil suit in January 2003, that Huawei stole Cisco source code, copied documents and infringed on Cisco copyrights. After an incomplete court process, the case was later settled out of court, although neither company had to pay the other’s legal costs. I’m no lawyer, but that doesn’t sound like a dramatic victory for Cisco.
The T-Mobile case against Huawei has been taken up by the U.S. government in a recent court filing that looks more like a political gambit in its trade manoeuvres with China than a real instance of a Chinese company stealing from the West. China was also linked to the hacking of Canadian national telecom champion Nortel a few years ago, although the Nortel employee who reported the hacking said he did not believe Huawei was the culprit. A source tells me Huawei did hire key Nortel researchers.
Canada’s telecom companies are rightly playing it cool politically. George Cope, BCE’s chief executive, said Thursday during a quarterly earnings session with analysts that Bell Canada is ready for any eventuality. If Ottawa were to ban Huawei, the move would not impact Bell’s investment strategies nor the timing of its 5G rollout plan. He did not say what a Huawei ban — whatever its form — might mean to consumer prices for 5G services.
There is clearly a geopolitical game being played around a competitive battle primarily between Huawei, Ericsson and U.S. companies. (One industry source tells me Nokia and Samsung are not competitive.) Rogers is aligned with Ericsson.
Bell and Telus (which reports to shareholders next week) are already heavily invested in Huawei technology, but for only part of their wireless infrastructure. Huawei is apparently not involved in the security-sensitive “core” technology, where U.S. firms such as Cisco dominate. But Huawei is the leading choice for the part of the 5G system that involves less-sensitive network connections that reach end users. Such Huawei technology installed on every lamppost in the country, the telcos believe, does not pose a national security risk.
So instead of blocking Huawei, Canada should help block an American industrial strategy and protectionist racket that aims to take down Huawei as a technology competitor.
THERE IS CLEARLY A GEOPOLITICAL GAME BEING PLAYED.