TR Daily Administration Recommends Revocation of China Telecom Authorizations
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Thursday, April 9, 2020

Administration Recommends Revocation of China Telecom Authorizations

The Trump administration today recommended that the FCC revoke and terminate China Telecom (Americas) Corp.’s 2007 authorizations to provide international telecommunications services to and from the U.S., citing national security and law enforcement risks to the U.S.

“Today, more than ever, the life of the nation and its people runs on our telecommunications networks,” John C. Demers, assistant attorney general-national security, said in a news release. “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. Today’s action is but our next step in ensuring the integrity of America’s telecommunications systems.”

“In its recommendation, the Executive Branch agencies identified substantial and unacceptable national security and law enforcement risks associated with China Telecom’s operations, which render the FCC authorizations inconsistent with the public interest,” the news release added.

Specifically, it cited (1) “the evolving national security environment since 2007 and increased knowledge of the PRC’s [People’s Republic of China] role in malicious cyber activity targeting the United States”; (2) “concerns that China Telecom is vulnerable to exploitation, influence, and control by the PRC government”; (3) “inaccurate statements by China Telecom to U.S. government authorities about where China Telecom stored its U.S. records, raising questions about who has access to those records”; (4) “inaccurate public representations by China Telecom concerning its cybersecurity practices, which raise questions about China Telecom’s compliance with federal and state cybersecurity and privacy laws”; and (5) “the nature of China Telecom’s U.S. operations, which provide opportunities for PRC state-actors to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications.”

The news release added, “Some of the foregoing relate to China Telecom’s failure to comply with a 2007 Letter of Assurance, which was a basis for the existing FCC authorizations. The Department’s National Security Division, Foreign Investment Review Section, identified those compliance issues through its mitigation monitoring program. As a result, the Executive Branch agencies concluded that the national security and law enforcement risks associated with China Telecom’s international Section 214 authorizations could not be mitigated by additional mitigation terms.”

The news release said the recommendation was made “under the legacy, ad hoc arrangement of the Departments of Justice, Defense, and Homeland Security, formerly known as Team Telecom, the operation of which was recently formalized by Executive Order dated April 4, 2020, establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” (TR Daily, April 6). The news release said that the State and Commerce departments and Office of the U.S. Trade Representative were also involved in the unanimous recommendation to the FCC.

The National Telecommunications and Information Administration, on behalf of the federal agencies, officially notified the FCC of the administration’s recommendation in redacted and unredacted filings today in file no. ITC-T/C-20070725-00285. “In the current environment, the national security and law enforcement risks associated with China Telecom’s international section 214 authorizations cannot be mitigated,” the filing said.

Last year, the FCC rejected China Mobile (USA), Inc.’s request that it be allowed to carry U.S. telecom traffic to overseas destinations and indicated it would scrutinize other Chinese carriers that had previously been granted such authority (TR Daily, May 9, 2019). Specifically, some Commissioners advocated applying the same analysis to the existing section 214 authorizations that allow China Telecom and China Unicom to operate in the U.S.

Subsequently, Senate Minority Leader Chuck Schumer (D., N.Y.) and Sen. Tom Cotton (R., Ark.) asked FCC Chairman Ajit Pai to open a proceeding to review whether the section 214 authorizations that allow China Telecom and China Unicom to operate in the U.S. should be revoked (TR Daily, Sept. 16, 2019).

“The FCC has been looking at this issue. We welcome the input of the Executive Branch agencies and will review it carefully," an FCC spokesperson said today. —Paul Kirby, [email protected]

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