FCC Threatens to Bar 3 Chinese State-Controlled Telecom Firms From Operating in US

FCC Threatens to Bar 3 Chinese State-Controlled Telecom Firms From Operating in US
A woman walks past a China Unicom sign in Beijing on August 17, 2017. (GREG BAKER/AFP via Getty Images)
Cathy He

The Federal Communications Commission (FCC) has threatened to bar three Chinese state-controlled telecom companies from operating in the United States, unless they can show they are free of influence from the Chinese regime.

The agency on April 24 issued “show cause orders” to China Telecom Americas, China Unicom Americas, Pacific Networks Corp, and its wholly-owned subsidiary ComNet (USA) LLC, directing them to explain why the FCC shouldn’t start the process of revoking their authorizations to operate in the country.

The move is the latest effort by the FCC to crack down on national security risks posed by Chinese telecom firms.

“We simply cannot take a risk and hope for the best when it comes to the security of our networks,” FCC Chairman Ajit Pai said in a statement.

Pai added that the order reflects “deep concern” among federal agencies about “these companies’ vulnerability to the exploitation, influence, and control of the Chinese Communist Party, given that they are subsidiaries of Chinese state-owned entities,” Pai said.

Pacific Networks resells international voice service and data to U.S. operators on a wholesale basis and ComNet provides international termination service, global SIM card service, international calling card service, and interexchange service, the FCC said.

China Telecom Americas is the U.S. subsidiary of Chinese state-owned telecommunications company China Telecom. A spokesperson did not immediately respond to a request for comment on Friday.

The other companies named in the show cause orders did not respond to requests for comment.

Earlier this month, the U.S. Justice Department and other federal agencies recommended that FCC revoke China Telecom’s authorization to operate in the United States, citing “substantial and unacceptable national security and law enforcement risks.”

The agencies said the nature of the company’s U.S. operations provided opportunities for Chinese state-backed hackers to conduct economic espionage or disrupt U.S. communications. The firm has denied the allegations.

China Telecom has attracted scrutiny for diverting overseas internet traffic through China in several instances, raising concerns about whether the data was accessed by the Chinese regime.

FCC Commissioner Geoffrey Starks welcomed the agency’s decision, especially given the surge in internet usage during the pandemic.

“With such an unprecedented increase in data traffic, we’ve never had a greater need to ensure the security of these communications,” Starks said in a statement. “That’s why we must pay even greater attention to whom we permit to interconnect with American communications networks.”

Sen. Tom Cotton (R-Ark.) also backed the agency’s efforts in countering threats posed by the regime.

“No matter their cries to the contrary, these firms are beholden to the Chinese Communist Party, and their operation in the United States will continue to pose a threat to our critical networks as long as it continues,” Cotton said in a statement.

The FCC last May voted unanimously to deny another Chinese state-owned telecom company, China Mobile, the right to provide services in the United States, citing risks that the Chinese government could use such approval to conduct espionage against the U.S. government.

FCC Commissioner Brendan Carr recently told The Epoch Times that the agency is scrutinizing all Chinese companies currently participating in U.S. telecom networks.

“I’ve called on the FCC and for the national security agencies to take a look at each and every one of those companies, effectively to do a top-to-bottom review of all companies that may be owned or controlled by the communist regime,” Carr said.

Reuters contributed to this report. 
Cathy He is the politics editor at the Washington D.C. bureau. She was previously an editor for U.S.-China and a reporter covering U.S.-China relations.
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