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The Canadian Security Intelligence Service and the Communications Security Establishment disagree on what to do about Huawei, said an official whose identity the Globe is not revealing.Sean Kilpatrick/The Canadian Press

Canada’s intelligence agencies are at odds over whether Ottawa should block Chinese telecom giant Huawei Technologies Co. Ltd. from supplying equipment for this country’s next-generation 5G wireless networks, according to a Canadian official with knowledge of the matter.

National security agencies have conducted a cybersecurity review to weigh whether or not Huawei’s 5G technology could pose a security risk to Canada. This review also examines the economic costs to consumers and Canada’s major telecom carriers of restricting 5G equipment suppliers.

The official, who The Globe is not identifying because they are not authorized to discuss the subject publicly, said the Canadian Security Intelligence Service and the Communications Security Establishment disagree on what to do about Huawei.

The spy service wants to bar the company from 5G networks, while CSE, the country’s electronic surveillance agency, says robust testing and monitoring of Huawei’s 5G equipment could mitigate potential security risks, the official said.

Earlier this year, the Trudeau government postponed a decision until after the October general election on whether to join the United States, Australia and other allies in blacklisting Huawei.

The Americans and Australians say Huawei answers to China’s ruling Communist Party and could be compelled to help Beijing spy or sabotage Western networks. Chinese law says companies must “support, co-operate with and collaborate in national intelligence work” when asked.

A Canadian cabinet decision on Huawei is unlikely until 2020, the official told The Globe and Mail, citing increasingly strained relations with China as well as the difference of opinion between the intelligence services.

Over the past decade, Canadian wireless companies have added Huawei gear to their cellular networks. The equipment is on the periphery, or the edge of the system, of radio access networks, which can be found in cell towers. It is not in the core of any network, in keeping with a directive to carriers from the Canadian government that was formalized around 2014. This was a decision for security reasons.

The official said the federal cabinet has several options: maintaining the status quo, the status quo plus tougher checks on Huawei’s 5G wireless systems, or an outright ban.

Intelligence and cybersecurity officials in the United States and Australia are adamant that allowing Huawei anywhere in the network is an unacceptable security vulnerability. Washington has threatened to scale back sharing of highly classified intelligence with allies that allow Huawei into their 5G networks.

The official said the first two options would provide increasing oversight to satisfy the United States while allowing Huawei a continued presence in Canada.

A ban could saddle Canadian wireless carriers with hundreds of millions of dollars in extra costs and upgrades, the official said. Bell Canada and Telus Communications, which use Huawei extensively in their existing networks, would have to remove and replace gear to accommodate a different supplier’s equipment. Bell and Telus plan to use Huawei gear in their 5G networks, while rival Rogers will get equipment from Sweden’s Ericsson.

The United States, Australia and New Zealand – who, along with Canada and the United Kingdom form the Five Eyes intelligence-sharing alliance - have blocked wireless carriers from installing 5G mobile technology from Huawei. The U.K. also has yet to decide.

Scott Bardsley, manager of media relations in the office of the Public Safety Minister, would not comment on the review or when the new Liberal cabinet, which will be sworn in on Nov. 20, will decide.

“An examination of emerging 5G technology and the associated security and economic considerations is under way," Mr. Bardsley said. “This review includes the careful consideration of our allies’ advice. We will ensure that our networks are kept secure and will take the appropriate decisions in due course.”

Canada has testing facilities in which labs funded by Huawei but staffed by independent experts test the Chinese company’s equipment and software to prevent security breaches. Britain has similar facilities.

Huawei is not permitted to bid on federal government contracts or provide equipment, such as routers and switches, for the core network of Canada’s telecoms – nor are Huawei technicians allowed to manage the servicing of its equipment from offshore.

The new 5G wireless technology will require many more small cell sites - smaller versions of cell towers - to provide a dense web of coverage to deliver faster downloads and almost no lag time.

It’s not clear limiting the use of Huawei gear to non-core areas would work in 5G networks.

Senior intelligence agency officials in the United States and Australia have long warned that because 5G technology differs from previous generations, it is impossible to fence off parts of the network.

U.S. cybersecurity official Robert Strayer says 5G brings processing power much closer to users, but this means all of the network has to be protected equally. “You cannot mitigate the risk of untrustworthy vendors in 5G networks by placing them in the ‘edge’ because there is no distinction between the edge and the core,” Mr. Strayer wrote on a U.S. government website set up for smart phone users.

Richard Fadden, a former CSIS director who was national security adviser to two prime ministers, said he is not surprised CSIS and CSE are at odds over Huawei.

“CSE is supposed to have a technical mandate. . . and they have formed the view that it’s possible to have Huawei be given some access without endangering national security from a technical perspective,” he said.

“CSIS, I think, has been given a somewhat broader mandate, which is supposed to take into account technical issues, but also the broader issue of what might happen in the long term," he said.

“So I happen to think CSIS is correct in this instance, if what you are telling me is in fact the case,” he said of the information that CSIS and CSE are at loggerheads.

A recent study of Huawei found its devices and telecommunications equipment have security vulnerabilities that could be used to gain access.

“The results of the analysis show that Huawei devices quantitatively pose a high risk to their users,” the report said. "Huawei devices were found to be less secure than those from other vendors making similar devices,” said Finite State, a cybersecurity firm based in Ohio.

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