US Agencies Call on FCC to Bar China Telecom From Operating in US

US Agencies Call on FCC to Bar China Telecom From Operating in US
A pedestrian walks past a China Telecom sign on a street in Shanghai on August 21, 2013. (PETER PARKS/AFP/Getty Images)
Cathy He

The U.S. Department of Justice (DOJ) and other federal agencies on April 9 urged the Federal Communications Commission (FCC) to revoke Chinese state-owned company China Telecom’s authorization to provide international telecommunication services in the United States.

The agencies—which included the Department of Defense, Homeland Security, and Commerce, among others—made this recommendation after a DOJ-led review of the company identified “substantial and unacceptable national security and law enforcement risks” surrounding China Telecom’s operations, according to a DOJ press release. China Telecom is the U.S. subsidiary of Chinese state-owned telecom firm China Telecommunications Corp.

The move comes amid heightening U.S. scrutiny over security threats posed by Chinese companies, including in the area of telecommunications. Last week, President Donald Trump issued an executive order to establish a committee that will review national security concerns arising from foreign-owned companies who wish to participate in U.S. telecommunications networks.

And last May, the administration barred Chinese telecom giant Huawei from doing business with American firms on national security grounds. U.S. officials cited concerns that the company’s equipment could be used by the Chinese regime for spying or to disrupt communication networks.

The DOJ said the latest recommendation was based on a range of concerns, including that China Telecom is “vulnerable to exploitation, influence, and control” by the Chinese regime.

It said that the nature of the company’s U.S. operations provided opportunities for Chinese state-backed actors “to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications.”

The DOJ added that the company had failed to comply with the terms of a 2007 agreement with the department, without providing further details.

China Telecom has also made inaccurate statements to U.S. authorities about where the company stored its U.S. records, raising questions about who has access to those records, the department said. It also made inaccurate public statements about its cybersecurity practices, drawing concerns about whether it complies with U.S. cybersecurity and privacy laws, the DOJ added.

“The security of our government and professional communications, as well as of our most private data, depends on our use of trusted partners from nations that share our values and our aspirations for humanity,“ Assistant Attorney General for National Security John C. Demers said in a statement. ”Today’s action is but our next step in ensuring the integrity of America’s telecommunications systems.”

A spokesperson at the FCC said the agency was looking into the issue. “We welcome the input of the Executive Branch agencies and will review it carefully,” the spokesperson said in an email.

This is not the first time China Telecom has drawn criticism in the United States.

Last September, Senate minority leader Chuck Schumer (D-N.Y.) and Senator Tom Cotton (R-Ark.) asked the FCC to review approvals of China Telecom and China Unicom, another state-owned telecom company, to operate in the United States.

“These state-owned companies continue to have access to our telephone lines, fiber optic cables, cellular networks, and satellites in ways that could give it [China] the ability to target the content of communications of Americans or their businesses and the U.S. government, including through the ‘hijacking’ of telecommunications traffic by redirecting it through China,” the senators wrote at the time.

Last June, a large portion of mobile device traffic in Europe was diverted for two hours through systems controlled by China Telecom. Experts from U.S. tech company Oracle investigated the incident and found that the company “hijacked” the mobile traffic, a type of hacking which is called Border Gateway Protocol (BGP) hijacking.
The company has also been involved in several other BGP hijackings in recent years, including in the United States, according to a 2018 study published in the Journal of the Military Cyber Professionals Association. The report said that the hijackings could be part of the Chinese regime’s new strategy, using more subtle methods to steal data from targeted networks or companies.

The report noted that, through this method, the Chinese regime could access an organization’s network, steal valuable data, add malicious implants to seemingly normal traffic, or simply modify or corrupt data.

The FCC last May also 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 the approval to conduct espionage against the U.S. government.

Joshua Philipp 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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