FCC Begins Process of Halting China Telecom US Operations Over National Security Concerns

The US Federal Communications Commission (FCC) said on Thursday it begun the process of revoking China Telecom's authorisation to operate in the United States as it took further steps to crack down on China's role in US telecommunications.

FCC Chairman Ajit Pai noted several US government agencies had recommended the revocation citing national security concerns.

Pai said there are "significant concerns" that China Telecom will be forced to comply with Chinese government's requests for information, including communications intercepts. China Telecom, the largest Chinese telecommunications company, has had authorisation to provide telecommunications services for nearly 20 years.

China Telecom Americas did not have an immediate comment.

The FCC in April had warned it might shut down the US operations of three state-controlled Chinese telecommunications companies, citing national security risks, including China Telecom Americas as well as China Unicom Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (USA) LLC.

The US Justice Department and other federal agencies in April called on the FCC to revoke China Telecom's ability to operate in the United States.

In May 2019, the FCC voted unanimously to deny another state-owned Chinese telecommunications 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 US government.

The FCC also on Thursday rejected a petition from Huawei asking the agency to reconsider its decision designating the Chinese company as a US national security threat to communications networks.

The FCC said in June it had formally designated China's Huawei and ZTE as threats, a declaration that bars US firms from tapping an $8.3 billion (roughly Rs. 61,100 crores) government fund to purchase equipment from the companies. The FCC affirmed its ZTE designation last month.

The FCC on Thursday also finalised rules that require carriers with ZTE or Huawei equipment to "rip and replace" that equipment and created a reimbursement programme to subsidise smaller carriers to remove and replace those services and equipment.

Pai noted the commission "can't actually implement the reimbursement programme unless and until Congress appropriates the necessary funding."

Huawei said in a statement it "is disappointed with the FCC's decision to force removal of our products from telecommunications networks. This overreach puts US citizens at risk in the largely underserved rural areas – during a pandemic - when reliable communication is essential."

© Thomson Reuters 2020

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