The federal government announced up to $40-million for Finnish telecom giant Nokia Corp. on Thursday to conduct research on 5G wireless technology in Canada.

The funding comes as Ottawa is in the middle of a comprehensive national-security review of the potential involvement of Nokia’s Chinese rival, Huawei Technologies Co. Ltd., in Canada’s eventual fifth-generation mobile network.

Ottawa is also locked in a diplomatic dispute with Beijing following Canada’s Dec. 1 arrest of Huawei executive Meng Wanzhou at the request of the United States.

Huawei, Nokia and Sweden’s Ericsson are among the top contenders to help Canada’s telecom companies, including BCE Inc. and Telus Corp., build the country’s 5G mobile networks.

Three of Canada’s partners in the Five Eyes intelligence-sharing group – the United States, Australia and New Zealand – have banned the use of Huawei products in 5G network development based on fears the company could spy on behalf of China.

Federal Innovation Minister Navdeep Bains, who along with Public Safety Minister Ralph Goodale is responsible for overseeing the 5G security review, has said the analysis is not just about Huawei, and is designed to assess how best to protect Canadians.

Federal Innovation Minister Navdeep Bains, who along with Public Safety Minister Ralph Goodale is responsible for overseeing the 5G security review, has said the analysis is not just about Huawei, and is designed to assess how best to protect Canadians.

Mr. Bains finalized the Nokia deal on Thursday in Davos, Switzerland, where he’s participating in the World Economic Forum.

Canada’s continuing scrutiny of Huawei has created concerns within the Chinese government. Lu Shaye, China’s envoy to Ottawa, warned Canada last week of possible repercussions if the government ultimately decides to bar Huawei from building the country’s 5G networks.

A spokeswoman for the Chinese Foreign Ministry later tried to play down Mr. Lu’s remarks, by saying the ambassador didn’t mean that China intended to interfere in Ottawa’s decision-making process. Hua Chunying also told journalists in Beijing on Monday that losses would be inevitable since Huawei is a leading supplier of 5G technology, according to a transcript on the Foreign Ministry’s website.

Later the same day, Mr. Bains and Mr.Goodale told reporters that Huawei isn’t the only company that can build 5G in Canada. When asked about options, Mr. Bains mentioned Ericsson as an example.

Few details are available about Canada’s 5G security review, but a well-placed source has said a decision is still months away.

The development of 5G – or fifth-generation – mobile networks will give users much faster connections and provide powerful data capacity to meet heavy demand from new applications. The federal funding will back Nokia’s research work in Canada to help telecom networks meet the needs of 5G technology. The company is also developing cybersecurity tools to protect telecom networks.

The government is expected to sell the deal as a way to support more than 2,000 of Nokia’s jobs already in Canada and to create 237 new positions.

Last year, Ottawa announced other 5G investments in support of the private sector as part of a joint, $400-million project with the provinces of Ontario and Quebec.

Each government contributed $66.7-million – amounts that were to be matched by the private sector – toward a partnership involving Ericsson, Ciena Canada, Thales Canada, IBM Canada and CGI.

This week, Ottawa will also announce an investment of up to $35.7-million toward a $92.7-million partnership between the Siemens Canada engineering company and Atlantic Canada utilities Nova Scotia Power and New Brunswick Power. The deal calls for Siemens Canada to conduct research and development on smart-grid technology for power systems in the provinces.

Article Written By: Andy Blatchford