Telus boss warns Huawei tech ban could mar Canada’s 5G network plan
Vancouver telecom fears cost increase, deployment delays, weaker performance
TORONTO Telus Corp. chief executive Darren Entwistle warned Thursday that banning Huawei Technologies Inc. equipment from Canada’s 5G networks could weaken wireless network performance and increase costs.
The Vancouver-based telecom, which uses the Chinese telecom’s equipment extensively in its 3G and 4G networks, reported it would face a “material, non-recurring, incremental” cost increase if the federal government bans Huawei gear from the next-generation network. A prohibition of Huawei technology without compensation could potentially delay 5G network deployment, according to Telus’s quarterly report.
The federal government is expected to make a decision on Huawei’s future in Canada in the coming months after concluding a 5G security review.
Allies including the U.S., Australia and New Zealand have already limited Huawei equipment in 5G networks due to fears the Chinese government could use it for espionage.
Huawei, for its part, insists its equipment is not used for spying.
Telus has not yet selected its 5G vendor and is collaborating with the government and the Communications Security Establishment on the security review, Entwistle said on a conference call with analysts.
But if the government blocks Huawei, telecoms would be limited to a choice between two global suppliers, Nokia and Ericsson. Entwistle argued a concentrated supply chain would “dilute Canada’s global leadership in wireless network performance and excellence.”
“Our partnership with Huawei over the past decade has been fruitful for Canada and fruitful for Canadians,” he said. “Canada’s wireless networks are consistently the most capable in the world. Our Huawei partnership has allowed us to be exceptionally innovative with our network deployment taking into account the realities of Canada’s vast geography and demographics.”
BCE Inc., which has a network sharing agreement with Telus, also uses Huawei gear in its existing network.
Bell, however, said it will not face additional costs or timing delays in rolling out 5G if there’s a Huawei ban. It has not yet selected a supplier.
Rogers Communications Inc. uses Ericsson equipment and Shaw Communications Inc. has a partnership with Nokia.
Hundreds of millions of dollars could be at stake for Huawei as Canadian telecoms choose suppliers. Telus alone spent $896 million on wireless capital expenditures in 2018.
Further complicating Huawei’s presence in Canada is the arrest of its chief financial officer, Meng Wanzhou, in Vancouver in December. She faces extradition to the U.S. on fraud charges related to business dealings in Iran, and is out on bail while her legal case proceeds.
Then in January, the U.S. Department of Justice accused Huawei of stealing trade secrets from T-mobile.
In this environment, Huawei is seeking to bolster its image in Canada. And it’s using some of the same arguments about network quality as Telus.
In an interview Thursday, Wang Yanmin, president of Huawei Central East Europe and the company’s Nordic Region consumer business, said that Canada’s large size and small population require very efficient networks so Canadians can enjoy better service. Huawei sees this as an opportunity to deploy really efficient technology, he said. “The Canadian market has a huge potential,” he said, speaking through an interpreter.
Huawei typically doesn’t make executives available for interviews. Wang spoke extensively about Huawei’s desire to invest more in talent and research and development in Canada. He also praised Canada’s multiculturalism and its “spirit of innovation,” pointing to companies like Blackberry and Nortel.
Regarding network security, Wang said suspicions about Huawei are groundless. Huawei collaborates with governments and third-party security companies to test its products, he said, adding that Huawei welcomes the testing.
“If we cannot even protect privacy and data security of our customer, I don’t believe there is any reason for us to survive in the industry,” he said.
Wang noted that Canada’s three largest providers all sell Huawei smartphones, products it is advertising on Hockey Night in Canada to try to build brand awareness. Huawei hasn’t received any consumer complaints about the security of its smartphones that run on Google’s Android operating system, he said.
Wang, who travelled to Vancouver and Toronto last month, said Huawei is looking for the right location to open a Huawei store.
“It’s really important for us to embrace this market,” he said.