Monday Market Musings>>> Canada Announces its Decision to Ban Huawei

Picture Credit: Global News website

The Canadian government banned Huawei and ZTE from Canada’s wireless spectrum almost three weeks ago on the May 19th 2022, over security concerns following a review done in 2018. The Innovations Minister, François-Philippe Champagne stated that it would be prohibited after “a thorough review by our independent security agencies and in consultation with our closest allies.”

This news was announced at a news conference in the capital state of Ottawa, Canadian companies have until 2024 to phase out any and all Huawei and ZTE from 4G and 5G equipment and services. Accusations have been made to Huawei for a while about their technology and the possibility for a serious security risk, with the use of a prospective backdoor for possible observation.

Considering the possible economic and security shocks that a breach could cause, Canada’s closest allies share similar concerns, with several nations, including U.K, Australia, U.S and New Zealand, already having putting restrictions on Huawei and ZTE. Canada banning Huawei and ZTE was anticipated, given the fact that Canada and the other nations stated, make up an intelligence-sharing arrangement known as the “Five eyes”. The Canadian government had faced pressure from other nations as well as opposition parties to ban Huawei and ZTE for years now.

Service providers are asked to stop buying new 4G and 5G equipment and services from Huawei and ZTE by September 1st 2022. Companies which have already installed such equipment have been requested to remove it, they have until June 28th 2024 for 5G equipment and December 1st 2027 for 4G. Canada’s leading telecom companies have stated that this will not be a problem, however, smaller providers don’t share the same sentiment. Many have said that the timeline is not fair for the smaller organisations and that the government needs to own up and figure out a course of action which will be accommodating to smaller organisations as well.

It is unclear how this ban would affect Canada’s relationship with China at the moment, since their relationship had already suffered a blow in 2018, when Huawei’s executive Meng Wanzhou had been arrested per request of the U.S, and in retaliation, two Canadians, Michael Kovrig and Michael Spavor had been arrested with days by Chinese authorities. China’s Foreign Ministry Spokesperson Wang Wenbin had stated that Canada’s decision was made, “without any solid evidence” just a day after the announcement, on May 20th 2022, adding that Beijing sees the security concerns brought up by the Canadian government as “pretext for political manipulation.” The spokesperson had also accused Canada of working with the U.S in order to suppress Chinese companies.

Huawei claimed that its equipment had been “closely scrutinized” by the government and that there hadn’t been any security incidents occurred by Huawei. They had said in a statement that, "Banning Huawei's equipment and services will lead to significant economic loss in Canada and drive up the cost of communications for Canadian consumers."

Picture Credit: Bleeping Computer website

Mr. Champagne had stated, “Let me be very clear: We will always protect the safety and security of Canadians and will take any actions necessary to safeguard our telecommunication infrastructure,”

"In a 5G world, at a time where we rely more and more in our daily lives [on] our network, this is the right decision," he added.

This isn’t the first time that Huawei and other telecommunication companies had been banned or restricted from western nations due to security concerns. With the significant increase in demand for streaming services over the last few years (as over half of the Canadian population [56%] have taken to streaming more video content within the last four or so years), the government wanting the general public to have access to safe internet infrastructure is understandable.

Canada’s decision to ban Huawei and ZTE contributes to the gradual incapacitation of their ability to survive and operate in the west. All things considered; it is understandable when seeing the situation from the point of view of the Canadian government. Although it makes one wonder just how long Huawei will be able to persist.

June 6th 2022 | 9:00 PM