Huawei Technologies, the mainland's largest phone equipment maker, may face additional restrictions selling its products in Canada as the federal government considers new regulations on foreign wireless suppliers it deems security risks.
Prime Minister Stephen Harper's government is reviewing whether it needs rules to govern the equipment used by the country's biggest mobile phone operators, and has been consulting industry officials, said a person familiar with the matter.
While the review is not singling out any company, Canada's trade minister, Ed Fast, said this month that Huawei, which supplies both Telus and Bell Canada, the country's largest telephone company, has already been barred from providing equipment for government networks.
Ray Boisvert, former assistant director of intelligence at the Canadian Security Intelligence Service, the country's spy agency, said: "It's a manageable risk if you can implement some verification systems and accept that suppliers like Huawei are working to try to be as transparent as possible."
The review comes as Western nations increasingly view cyberattacks as a top security threat. Computer-based sabotage moved past terrorism to take top place in the US intelligence community's annual list of global threats, which also includes Iran's nuclear programme and Syria's chemical arsenal.
Canada could require that suppliers have their software code verified by third parties and be subject to random audits, Boisvert said.
The country's industry minister, Christian Paradis, said Canada was aware of security concerns surrounding foreign wireless equipment providers. "This is something that we clearly have to pay attention to," Paradis said.
A US congressional committee said in October that Huawei and ZTE provided opportunities for Chinese intelligence services to tamper with telecommunications networks for spying. In 2011 the US barred Huawei from taking part in building a nationwide emergency network. However, the company supplies US companies including Clearwire, a Washington-based wireless internet provider.
A decision by Canada to impose tighter security measures could drive up costs for carriers who are already investing billions of dollars to upgrade their networks to accommodate a surge in wireless data traffic. Aside from Bell Canada and Telus, Huawei's customers also include Wind Mobile of Toronto, which began operations in 2009.
Such a review could help suppliers ease concerns about their practices, said Amit Kaminer, an analyst at the Seaboard Group, a Toronto-based telecommunications research firm.