Experts say small independent telecommunications companies will be hardest hit by the federal government’s decision to ban Chinese companies Huawei Technologies and ZTE from involvement in Canada’s 5G wireless network and then possibly ban their products from existing 4G service equipment.
Posted at 8:51 p.m.
Innovation Minister Francois-Philippe Champagne said on Thursday that the government would not reimburse companies that must remove such equipment from their networks by December 31, 2027.
Telecom experts say smaller companies like Ice Wireless, which serves northern Canada and partnered with Huawei in 2019, and rural British Columbia internet provider ABC Communications, which is also associated with Huawei in 2019, could be negatively affected.
“We’re not talking about companies that have a lot of cash. They’re going to have to stop investing in the technology they have in place and somehow find the money to replace the equipment over the next five years,” Mark said in an interview. Goldberg, telecommunications consultant.
“It’s a bigger deal for smaller players, commensurate with their resources,” said former Telus chief financial officer Robert McFarlane.
McFarlane notes that the United States had created a fund to provide subsidies to rural operators working with Huawei when it banned the company, which Canada has not established.
Canada’s largest telecommunications companies, including Telus and Bell Canada’s parent BCE Inc., will likely be able to absorb the costs associated with the retirement of Huawei 4G equipment, experts say.
Telus and BCE each said in 2020 that they would move away from Huawei and work with Sweden’s Ericsson as the provider of their 5G networks.
Experts also said that Rogers Communications, whose partnership with Ericsson began in 2018, is in an even better position.
Even though rural internet service provider Xplornet Communications announced in 2020 that it would no longer depend on Huawei for its equipment, it could face financial obstacles in its transition from 4G to 5G, as it does not does not have the same cash reserves as the big Canadian players, they add.
Huawei Canada reacted to Ottawa’s decision, saying it is “an unfortunate political decision that has nothing to do with cybersecurity or any of the technologies in question.”
Huawei Canada added that banning its equipment and services could cause “significant economic loss in Canada and drive up the cost of communications for Canadian consumers.”
In an interview Thursday, Huawei Canada Vice President Alykhan Velshi said it would be “reckless and irresponsible” for the Canadian government to ask the company to stop supporting its existing equipment in the 5G network, noting that there are approximately 10,000 cell phone sites across Canada that have Huawei technology.
He said more conversations needed to take place between Huawei and Ottawa.
ZTE also shared its thoughts on the decision in a statement saying the company “rejects the proposal for this announcement”, calling it “highly speculative”.
At the same time, the United States welcomes Canada’s decision to ban Chinese Huawei and ZTE technologies from its next-generation mobile networks.