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China Telecom’s US subsidiary has lost its authorisation to operate in the United States. Photo: Bloomberg

China Telecom America’s operating licence revoked by US FCC, citing national security

  • The order gives China Telecom Americas 60 days to halt US domestic and international service
  • China Unicom Americas and Citic Group’s ComNet (USA) are also under review by the US communications watchdog

The US Federal Communications Commission (FCC) on Tuesday voted to order China Telecom Americas to stop providing telecommunication service in the United States, citing national security concerns.

The move, announced at the start of a virtual open meeting, follows the FCC’s issuance of a “show cause” order last year to the subsidiary of one of China’s largest state-owned firms, and gives the unit 60 days to end its domestic and international service in the US. The order obliged the company to explain why the US government’s national security concerns were unfounded or risk losing its operating licence.

“China Telecom Americas’ ownership and control raised significant national security and law enforcement risks, providing opportunities for China Telecom Americas, its parent entities and the Chinese government to access, store, disrupt and/or … misroute US communications, allowing espionage and other harmful activities against the United States,” said Gabrielle Kim, a legal adviser in the telecommunications and analysis division of the FCC’s international bureau.

“This is not a decision we take lightly,” said Jessica Rosenworcel, who leads the FCC. Photo: Reuters
Acting FCC chair Jessica Rosenworcel, whom President Joe Biden nominated on Tuesday to permanently fill the post, said in the hearing that the Chinese company “has not been forthright in its representations” to the agency.

The FCC “has a long history of working to open American markets to foreign telecommunications companies when doing so is in the public interest”, she said. “We recognise that not every connection is consistent with the national security interest of the United States.”

“Some countries may seek to exploit our openness to advance their own national interests,” Rosenworcel said, citing directives from the departments of State, Defence and Commerce, as well as the Office of the US Trade Representative last year to terminate China Telecom’s US operations.

“When we recognise this is the case and cannot mitigate the risk, we need to take action. … This is not a decision we take lightly.”

Oversight of Chinese telecoms companies is lacking, US lawmakers find

China Telecom Americas has been operating in the US for almost 20 years. The company has said its target customers are “the more than 4 million Chinese Americans; the 2 million Chinese tourists visiting the United States annually; the 300,000 Chinese students at US colleges; and the more than 1,500 Chinese enterprises in America”.

China Unicom Americas and Pacific Networks Corp’s wholly owned subsidiary ComNet (USA), controlled by Chinese government investment firm Citic Group, were given “show cause” orders, separately, at the same time, and may face the same fate as China Telecom Americas, according to Rosenworcel.

“We are moving expeditiously to complete security reviews for similarly situated carriers like China Unicom and ComNet,” she said. “We have a process for revoking existing authorisations when there are national security concerns.”

“Now companies will understand the circumstances under which authorisations could be revoked and what due process is available,” she added.

Chinese telecom firms urge FCC not to block US operations

China Telecom Americas did not immediately respond to a request for comment.

The announcement comes amid growing concerns among both political parties in Washington that Chinese companies operating in America may pose a risk to US consumers, investors and national security.

“The intertwining of the American and Chinese economies has given China‘s substantial power here in the United States,” said Representative Brad Sherman, a California Democrat and chairman of the House Financial Services Subcommittee on Investor Protection, Entrepreneurship and Capital Markets.

“It really hasn’t given America any power, political power, in Beijing.”

This article appeared in the South China Morning Post print edition as: Licence revoked for China Telecom’s US operation