US wants to ban China Telecom over national cybersecurity risks
Several U.S. Executive Branch agencies are asking the Federal Communications Commission (FCC) to block China Telecom Americas authorization to operate within the United States over significant cybersecurity risks.
The federal agencies behind this joint recommendation include the Departments of Justice, Homeland Security, Defense, State, Commerce, and the United States Trade Representative.
China Telecom Americas is the U.S. and the largest foreign subsidiary of China Telecom Corporation, China's state-owned telecommunications company. Currently, it provides services in over 100 countries, to more than 135 million broadband subscribers and over 255 million mobile subscribers.
It "operates a mobile virtual network operator (MVNO) service under the 'CTExcel' brand name and resells mobile services directly to retail customers," according to an FCC filing.
China Telecom Americas also "targets CTExcel to more than four (4) million Chinese Americans, two (2) million Chinese tourists visiting the United States annually, 300,000 Chinese students at U.S. colleges, and more than 1,500 Chinese businesses in the United States."
National security concerns
"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.
"Today’s action is but our next step in ensuring the integrity of America’s telecommunications systems."
The US agencies said that "China Telecom's U.S. Operations provide opportunities for Chinese state-sponsored actors to engage in espionage, to steal trade secrets and other confidential business information, and to disrupt and misroute U.S. communications traffic," according to the FCC filing.
The Executive Branch agencies also mention in the press release published today that they have identified substantial and inadmissible national security and law enforcement risks connected with China Telecom’s operations, rendering their authorization to provide international telecom services to and from the U.S. "inconsistent with the public interest."
Among the reasons behind the recommendation to block China Telecom's operations within the U.S., the federal agencies highlighted:
- the evolving national security environment since 2007 and increased knowledge of the PRC’s role in malicious cyber activity targeting the United States;
- concerns that China Telecom is vulnerable to exploitation, influence, and control by the PRC government;
- inaccurate statements by China Telecom to U.S. government authorities about were China Telecom stored its U.S. records, raising questions about who has access to those records;
- 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
- 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.
Not the first Chinese telecom security threat
The recommendation comes after, on Saturday, the U.S. President formally established an interagency committee by Executive Order to advise the FCC "on national security and law enforcement concerns related to certain license applications by companies under foreign ownership or control."
"We welcome foreign participation in our communications system, but we must ensure that anyone licensed to do business here is a trusted partner," said Demers on Tuesday.
Also, in February, Huawei and two of its U.S. subsidiaries were charged by the U.S. Department of Justice with conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (RICO) and to steal trade secrets.
According to the DoJ, Huawei and its subsidiaries were able to obtain the nonpublic intellectual property which made it possible to significantly decrease research and development costs, thus gaining an unfair competitive advantage against U.S. telecommunications equipment manufacturers.
In 2019, the FCC also blocked China Mobile, another Chinese telecom giant, from providing international telecommunication services using U.S. networks.
Gloss