Five things you need to know about Ottawa's decision to ban Huawei from 5G networks

On Thursday, the Canadian government announced it was banning China'sHuawei Technologies from 5G wireless development due to security concerns. The Financial Post's Barbara Shecter breaks down five things you need to know about the decision.

How does the ban change things for the Big 3? 

The declaration is not expected to have an effect. The telecom sector was split when the debate began, with Rogers Communications Inc. announcing it was partnering with Swedish tech giant Ericsson and Bell and Telus planning to partner with China'sHuawei on their 5G roll out. Pressure grew on Bell as the federal government began to study whether to ban the Chinese company from wireless network upgrades. In 2020 they both announced that they were dropping other partners. They have had a couple of years to plan for a 5G future.

Will it slow the roll out of 5G? 

Again, not really. The Big 3 have moved ahead with their plans since they changed partners. Rogers confirmed that the ban has no impact on their plans and deployment. The 5G spectrum auction was delayed by six months because of the COVID-19 epidemic.

What does it mean for existing 4G networks? 

This is not easy. The deadline for the de-commission of 4G equipment is in December of 2027. Telus and Bell have relationships with a Chinese provider dating back to 2008. In its latest annual report, Telus noted that it had replaced many of the products from the Chinese company with equipment from 5G suppliers. Telus said some of the components it removed would be used as replacement parts on the rest of the network.

Industry watchers said that since Bell and Telus switched to other network partners, the cost of removing the equipment from them could be as low as $1 billion. One analyst says that getting rid of the remaining 4G equipment isn't expected to change the capital expenditure trajectory of either company. There would be no business case for keeping the equipment in place if it were to be phased out by the year 2027, according to a former telecom executive.

What about smaller telecoms and internet-service providers? 

Mark Goldberg, a telecommunications analyst, says small rural players are most likely to suffer from the ban on 5G gear. In an earlier interview with the National Post, the CEO of iristel said that it would becatastrophic for the company if it was required.

What about Huawei’s other pursuits in Canada, such as R&D funding? 

It's not clear how the research partners will respond to these areas. The company announced a 15 per cent increase in its R&D spending in Canada and 200 new high paying jobs in February of 2019. The company's chairman said the moves were not tied to participation in 5G development in Canada. Through a translator, he said that he had faith in political leaders to make smart decisions and not let good technology go to waste. About 10 per cent of the company's annual R&D investment in Canada went directly to research partnerships with Canadian research institutions, according to the website.

Email: bshecter@nationalpost.com