Huawei, ZTE say decision not based in reality
By Ahmad Hathout
THE FEDERAL GOVERNMENT’S announcement last week to ban the use of equipment from Chinese suppliers Huawei and ZTE in the country’s 4G and 5G networks due to national security risks will make it more difficult for smaller providers to compete against larger players and will cause more problems with equipment orders amid a supply chain crisis, according to the head of one telecom.
Samer Bishay, the CEO of Iristel subsidiary Ice Wireless, which operates primarily in the territories and has an equipment deal with Huawei, told Cartt.ca that while the announcement provides the industry with needed certainty, it could effectively wipe out “tens of millions of dollars of investments.”
Bishay also noted the decision will exacerbate problems from the supply chain crisis, inflicted by the Covid pandemic, which has seen telecoms waiting many more months for equipment orders needed to build out networks. He said the company now cannot get equipment in time for the winter season, the northern artic conditions in which equipment can break down.
While Bell and Telus have had Huawei equipment installed on their networks, Bishay said the economic disparities between the companies will show that “applying the same rules to all operators big or small will further unlevel the playing field.”
“The proposed restrictions and timelines take into consideration the existing challenges faced by all TSPs, including smaller TSPs and their limited capabilities relative to larger providers” – Innovation Canada
Despite the federal government saying it will not compensate providers for having to rip out or replace equipment – unlike in the U.S. where Congress set up a dedicated fund for that purpose – Bishay said he hopes the government provides rural operators with some funding to “help offset this damage.”
Addressing concerns from small providers, Innovation Canada said in an email the government provided a timeline to axe the infringing equipment that is in line with phase-out and upgrade cycles.
According to the timeline, companies must cease obtaining equipment from the blacklisted entities by Sept. 1, 2022, must remove any existing infringing 5G equipment by June 2024, and must remove infringing equipment from 4G networks by December 2027.
“The proposed timeframes would allow telecommunications service providers, particularly smaller operators, to take action in accordance with typical industry equipment lifespans and capital upgrade cycles, which would reduce costs and mitigate potential impacts on operations,” the email from Innovation Canada said.
“The proposed restrictions and timelines take into consideration the existing challenges faced by all TSPs, including smaller TSPs and their limited capabilities relative to larger providers,” the email added. “The intent is to enable a manageable transition for TSPs while maintaining the resilience of the networks and limiting potential impacts on telecommunication services.”
When asked about the possibility of a ban on Chinese handsets, ISED said they have “so far not been deemed as high risk to Canada’s telecommunications system.”
Canada is the last country among the security alliance known as the Five Eyes – which includes the United States, the United Kingdom, Australia, and New Zealand – to impose some kind of ban on the entities.
In an emailed statement, a U.S. State Department spokesperson said it welcomes Canada’s decision, as it “supports efforts to ensure countries, companies, and citizens can trust their wireless networks and their operators. We continue to collaborate with allies like Canada to ensure our shared security in a 5G future and beyond.”
“Banning Huawei’s equipment and services will lead to significant economic loss in Canada and drive up the cost of communications for Canadian consumers” – Huawei
In a statement, Huawei said it is “disappointed” by the decision, which it argued was political and “has nothing to do with cyber security or any of the technologies in question.” The company said over the past 13 years of helping Canadian carriers build wireless networks, there have been “zero security incidents caused by Huawei equipment throughout this entire period.
“Banning Huawei’s equipment and services will lead to significant economic loss in Canada and drive up the cost of communications for Canadian consumers,” Huawei added. “Unfortunately, this decision is beyond our control as a business. However, we will do everything in our capacity to protect the legitimate rights and interests of our customers, partners, and ourselves. We thank all of our Canadian partners, customers, and consumers for their ongoing support, and look forward to contributing to future network rollout in Canada when conditions permit.”
ZTE said in an emailed statement the decision is “regrettable” and noted it rejects the “premise” of the announcement, calling it “highly speculative.”
“In developing and implementing our telecommunications infrastructure and services, we have always abided by international standards and best practices, opening up our cybersecurity labs to enable regulators and stakeholders to verify the security of ZTE products. We look forward to continuing to do so,” the company added.
Rural telecom provider Xplornet, which used Huawei equipment in its 4G networks but decided in late 2020 against using the company’s equipment for its 5G network, said it had no comment on the matter.
Huawei had made major in-roads in Canada, building partnerships with telecoms and universities on research projects – even as government-imposed restrictions were in place as to how deep its equipment can go into network builds.
Cartt.ca reached out to universities that have signed partnerships with the company to get some insight into their thinking.
JP Heale, managing director in the industry liaison office of the University of British Columbia, said in an email the 24 research projects funded by Huawei for $6.3 million this past year made up 0.8% of the university’s total annual research funding – out of 2,600 sponsored research projects a year. He said the research is made public and available globally, with the university holding a right to license the intellectual property that comes out of the projects to other companies.
Otherwise, Heale said the university is not in a position to comment on the federal government’s decision.
A spokesperson for the University of Laval said in an email the university is monitoring the situation carefully, noting they do not know the implications for academic research partnerships yet. “The University oversees projects presented to and approved by federal agencies in accordance with established rules, including national security guidelines for research partnerships,” the spokesperson said.
Similarly, a spokesperson for the University of Toronto told Cartt.ca the institution collaborates with, and is sponsored by, firms in Canada and around the world, with Huawei providing funding for research projects developed by the school. It also noted the federal government’s decision only affects the telecoms and not academic partnerships or sponsorships.
“In the event there are changes to government guidance,” the spokesperson added, “we would of course respond and comply.”
