Telus Corp. is not backing down in its support of Huawei Technologies Co. Ltd. amid rising tensions over the Chinese telecom equipment provider’s future in Canada and other developed markets.
Vancouver-based Telus, Canada’s third-largest wireless carrier, sent a lengthy memo to about 30,000 employees last week defending its decision to use Huawei equipment in Canadian networks. The memo highlighted technological successes Telus says it has achieved in its wireless network in co-operation with Huawei, and also emphasized that Telus has worked closely with the Canadian government to address security concerns and continues to do so.
The memo, which was sent by Eros Spadotto, executive vice-president of technology strategy, concluded by stating: “Clearly, Huawei remains a viable and reliable participant in the Canadian telecommunications space, bolstered by globally leading innovation, comprehensive security measures, and new software upgrades," and thanked employees for their “support and assistance with regards to the positive, transparent and innovative-centric partnership we have enjoyed with Huawei.”
The internal missive from a senior executive at Telus underscores the risks of aligning with Huawei, which could be blocked from supplying equipment to Canadian carriers for next-generation 5G networks. The memo acknowledges that such a ban would undermine investments Telus has already made. The company has used Huawei gear extensively in its current wireless network and could face an expensive bill to swap out that equipment or make it compatible with new 5G technology from a different vendor.
The Canadian government is conducting a cybersecurity review that will determine whether telecom providers will be permitted to use Huawei equipment in their 5G networks. Three of Canada’s Five Eyes intelligence allies – the United States, Australia and New Zealand – have already barred or limited Huawei from 5G, and the other one, Britain, is weighing whether to take similar steps. Germany is the latest country to consider a similar ban.
On Thursday, Chinese Ambassador to Canada Lu Shaye warned that shutting China’s largest private company out of next-generation wireless networks would have consequences. “If the Canadian government does ban Huawei from participating in the 5G networks … I believe there will be repercussions.” Public Safety Minister Ralph Goodale responded on Friday that pressure from China would not affect what Canada does. "This is an important decision for Canada, and we will make it based on what is right for our country,” he said.
Sources told The Globe and Mail about the internal memo, which Telus vice-president of communications Jill Schnarr confirmed on Friday, saying the company prides itself “on having an open and transparent culture.”
Ms. Schnarr said the company regularly communicates with its employees and that, “Whenever an issue involving our company garners public attention, we make sure that team members have a chance to engage with senior executives in an honest and transparent dialogue. … This allows us to ensure that they understand the issue and have access to relevant facts and information, while giving them the opportunity to ask questions and prepare for inquires that may come from customers, family members or friends.”
Will Mitchell, professor of strategic management at the Rotman School of Management, said he thinks the employee memo was a “wise move” on Telus’s part, notwithstanding the negative news swirling around Huawei in recent months. Employees are “undoubtedly” aware of the company’s ties to Huawei and could be nervous about it, he said. “Under those circumstances, it’s important for Telus to say, ‘This is why we believe in the relationship.’”
Telus and BCE Inc. (which is Canada’s second-largest wireless carrier) have built a shared 3G and LTE (4G, or long-term evolution) wireless network, with Telus responsible for most of the west and BCE building most of the network in the east.
Like many smaller Canadian telecom providers, they have used Huawei equipment in their radio networks – the antennas and radios at the top of cell towers – but not in their network cores, which contain more sensitive information.
In 2013, the government established a third-party testing process to monitor the safety of network equipment. The government has also permitted the use of Huawei equipment in less-sensitive parts of wireless networks, but that distinction may be more difficult to maintain with 5G, as industry reports indicate elements of the core technology will be closer to the radio network.
Sources have told The Globe virtually 100 per cent of Telus’s radio equipment comes from Huawei, while BCE has used the Chinese vendor for about 60 per cent to 70 per cent of its radio network.
Marc Choma, a spokesman for BCE, declined to comment on whether his company had sent a similar note to employees.
Canada’s largest carrier, Rogers Communications Inc., installed some Huawei equipment in Western Canada, but has replaced most of it with products from Sweden-based Ericsson, the vendor Rogers says it plans to work with on 5G.
Huawei is the lead sponsor for Hockey Night in Canada, which Rogers owns the rights to and controls. Rogers Media spokeswoman Andrea Goldstein said on Friday that the sponsorship has not changed.
With reports from Susan Krashinsky Robertson and Mike Hager