REGULATORY

China Bites Back After FCC China Telecom Order

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By Bevin Fletcher                                                 

The Federal Communications Commission (FCC) on Tuesday released an order revoking China Telecom Americas’ authorization to provide telecom services in the US over national security concerns.

China’s Ministry of Industry and Information Technology (MIIT) the next day released a statement, according to Reuters, opposing the decision and urging a reversal.

“In recent years, the United States has repeatedly sanctioned Chinese companies on the grounds of national security and disregarding facts,” the agency said in a statement published by Reuters. “This is an unreasonable suppression of Chinese enterprises by abuse of state power and a serious breach of international economic trade rules.”

The FCC voted on October 26 to revoke and terminate China Telecom Americas authority based on recommendations from US executive branch agencies and the FCC’s own review, after a process that started in late 2020. With the order released publicly yesterday, China Telecom has 60 days to discontinue any domestic or international services in the US. 

“Our record makes clear that China Telecom Americas operates as a subsidiary of a Chinese state-owned enterprise and as such the Chinese government has the ability to influence and control its actions,” said FCC Chairwoman Jessica Rosenworcel. “That could lead to real problems with our telecommunications networks through surveilling information, misrouting traffic, or disrupting service.”

Additionally, the commission determined that based on the record China Telecom wasn’t candid or trustworthy in its own representations to the FCC and other agencies, and mitigation steps wouldn’t be enough to alleviate the concerns.

Commissioner Geoffrey Starks said in a statement that security risks are not theoretical.

“China Telecom Americas’ US records are already available to its non-US affiliates abroad,” Starks said. “Moreover, according to public accounts, China Telecom Americas’ network has misrouted large amounts of information and communications traffic outside of the United States over long periods, often for several months, and sometimes involving US government traffic.”

In March of this year the regulator moved forward with proceedings to revoke authority of three more Chinese telecom companies operating in the US – China Unicom, Pacific Networks and ComNet.

In Rosenworcel’s statement on China Telecom’s revocation, she said the FCC is moving quickly to complete security reviews for those three similarly situated carriers.

By revoking China Telecom’s authority as a foreign carrier in the US, the FCC established a clear precedent for doing so when there are national security concerns, the chairwoman said.

“Before today, that didn’t exist,” Rosenworcel continued. “Now companies will understand the circumstances under which authorizations could be revoked and what due process is available to challenge potential revocations.”

The FCC had an eye on China Telecom’s status in the US in April 2020 when the Department of Justice led other agencies in recommending the FCC terminate the operator’s license to provide telecom services to and from the US.

Roughly a year earlier in 2019 the FCC unanimously voted to deny the application from another major Chinese operator, China Mobile, to deliver telecom services between the US and foreign destinations. China Mobile USA filed an application in 2011 and had been looking to provide facilities-based and resale services.

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