Rich telecoms deserve no public cash: Tories
Use of Huawei equipment sticking point
The Conservatives are urging the Liberal government not to spend public money to compensate Canada's large telecom companies for choosing to use Huawei equipment if it goes ahead with a Huawei 5G ban.
“We ask that your government categorically reject requests for compensation from Canada's large telecommunications companies,” Conservative Public Safety critic Raquel Dancho said in a letter sent Friday to Public Safety Minister Marco Mendocino and Innovation Minister François-Philippe Champagne.
The National Post first reported last week that Bell and Telus, two of Canada's big three wireless companies, had asked the government about compensation if the Liberals decide to ban Huawei equipment in 5G networks. Champagne and Prime Minister Justin Trudeau have said a decision on a ban would come within weeks.
Dancho's letter noted Canadians already “pay some of the highest monthly fees for cellphone service in the world” and said Canadian taxpayers “should not be forced to subsidize the private business decisions of some of Canada's most profitable companies.”
NDP Leader Jagmeet Singh also cited Canadians' high wireless and internet bills when he said this week he is “very loath to talk about compensating companies that have exploited Canadians for so long.”
The Liberal government has put off a decision on whether to ban Huawei equipment for the past three years. In the meantime, Canada's large telecoms have all said they would be using non-Huawei vendors to build out their 5G networks.
Some form of ban is likely, given that all of Canada's Five Eyes allies have either banned or restricted Huawei equipment over security concerns. Where the issue of compensation emerges is if the government bans Huawei equipment currently in use.
That's because first-generation, “non-standalone” 5G networks are built on top of older 4G networks. Bell's and Telus's networks use Huawei equipment, and the bill to replace the gear could run into the hundreds of millions for each company. Early estimates peg the cost at $1 billion for Telus.
While routine replacement of equipment with non-Huawei equipment may have lowered that figure, both companies have also continued buying Huawei equipment in the meantime.
Huawei vice-president of corporate affairs Alykhan Velshi said the company has sold slightly more than $700 million worth of equipment to telecom operators in Canada since 2018.
Bell and Telus didn't respond to questions Friday about whether they are seeking compensation for the equipment they purchased while waiting for a decision on a ban. The two companies bought most of that $700 million in equipment, a source said.
How much compensation the companies may ask for depends on the scope of the ban. If the government bans Huawei equipment from standalone 5G networks only, compensation may not be an issue.
Christopher Parsons, a senior researcher at University of Toronto's Citizen Lab, said that “may not be a particular problem for the telcos in Canada given that they have substantive investment in non-Huawei equipment for 5G infrastructure.”
“However, if there's a requirement that 3G, 4G or non-standalone 5G equipment has to be removed, that could cause some complications,” he said.
In the case of a ban, there could also be uncertainty around the definition of what's considered 4G and what's considered 5G equipment in a non-standalone network. “I have faith the lawyers will arrive and much interpretation will be had no matter what the decision is,” Parsons said.
Telus told the government in 2019 that given “the critical role of 4G infrastructure in delivering 5G capabilities, a full ban on Huawei for 5G will force operators to replace their existing 4G Huawei equipment — an expensive and complex proposition over an elongated timeframe.”
The Conservatives have been calling for the government to ban Huawei for years. In response to a question about whether the party wants to see a ban that extends retroactively to equipment that's currently in 3G/4G networks, Dancho said in an emailed statement that the Liberals should “immediately ban Huawei from our 5G networks and include specific details on the policy (safeguards, rules around existing types of equipment) that are based on the recommendations of the Communications Security Establishment and the Canadian Security Intelligence Service for 3G/4G networks.”
Asked whether the NDP supports a Huawei ban, Singh said it “seems to be that the advice is, and from our Five Eyes allies, that we should not be going with Huawei. That seems to be where the evidence is pointing.”