Banning Huawei from building new 5G wireless network won't really hurt Canada's big telecom firms

If thefederal governmentmoves to ban Huaweifrom working to build Canada's new 5G network, it is unlikelyto have a major financial impact on two of thecountry's top communications companies who have partnered with the China-based firm, analysts say.

Huawei'sequipment is already used in telecommunications infrastructurerun by Canada'smajor cellphone carriers, namelyBCEandTelus. Those two companies are currently in 5G pretrial stages withHuawei, a company some western intelligence officials consider a security risk due to its links with China's government.

As the next-generation wireless technology, 5G promises to deliver much faster internet download speeds possibly upto 200 times faster than today's LTE networks.

DesmondLau, a telecommunications analyst with investment research firm Veritas, said BCE and Telushave notput a lot of capital into 5G trials, so the financial hit from a ban onHuawei'sparticipation wouldn't be large.

"It doesn't sound likeall that much has been spent on 5G," Lau said, adding that neither company has disclosed what they have spent so far.

"They also have Nokia as another 5G partner, so they could probably just switch all toward Nokia if they really needed to."

BCEandTelusdid not respondtoinquiries fromCBC News about their relationship withHuaweion building Canada's 5G network.

The Sydney Morning Herald, an Australian newspaper,hasreported that Ottawa couldannounce a formal ban on Huaweibuilding the 5G network within weeks. Public Safety Minister RalphGoodalehascalledthose reports "speculation."

'Not arrived at a conclusion'

"The issues are being very carefully considered by Canadians. We have not arrived at a conclusion," Goodaletold CBC Radio'sThe House.

According to a Scotiabank telecommunications report, both BCE and Telususe radio access networks (RANs),equipment located at the top and bottom of cell sites, produced by Huawei.

"To our knowledge,Huaweidoes not supply the network core, which is software based and considered to be the most sensitive part of the network from a privacy and security perspective," the report states.

For years,Huaweihas been a source of concern for Western security officials,particularlythe U.S., which hastried to convince other countries not to buyequipment from the company.

Huaweidenies allegations that it conducts espionage on behalf of China and has saidit's a market-driven business simply looking to compete internationally.

"Huaweihas been working with Canadian operators on a number of pre-commercial trials in the lead up to 5G," saidScottBradley, a spokesman forHuaweiCanada."These efforts will ensure Canada is well positioned to be one of the early leaders in 5G globally, and will benefit Canadians in applications as diverse as greatly improving rural service, to spurring new innovations requiring increased speeds and capacity."

This next generation technology will also open up what analysts refer to as the"internet of things,"which would allow everyday devices and machines be connected to a wireless network.

'Ground-breaking trials'

"These ground-breaking trials are laying the foundation for 5G, which will enable the likes of driverless cars; smart cities; new innovations in healthcare; as well as yet-to-be-imagined applications, devices and services powered by astonishingly fast and reliable wireless connections," Telus said in a news release.

Butwith 5G, one of the concerns is that the network would be more vulnerable to attack. IfHuaweihas some kind of relationship with the Chinese government, the fear is that the company could install a "backdoor" in the 5G network, possibly allowingaccess to the network, and creating thepotential for widespread disruption.

New Zealand and Australia have banned Huaweifrom working on their 5Gnetworks. And British phone carrier BT said it would not use their equipment for its planned 5G mobile network. The U.K. company is removingHuaweiequipment from the core of its existing 3G and 4Gmobile phone networks.

If a similar move to rip out and replace existingHuaweiinfrastructure were to happen in Canada, it"would obviously be very costly," according to the Scotiabank report.

Replacing Huaweiproducts in Canada's existing3G and 4G mobile networks could cost more than $1.2 billion, Scotiabank's report said.

"If logic prevails, even if a ban was to occur, we think it would be on 5G only," saidthe report. "We believethiswill be more manageable" as there is "limited 5G equipment at thecell sites today."