The US Federal Communications Commission (FCC) has terminated China Telecom's authority to provide communications services in the USA.
In its announcement of the termination, the government agency explained the decision is necessary because the national security environment has changed in the years since 2002. That was when China Telecom was first allowed to operate in the USA.
The FCC now believes – partly based on classified advice from national security agencies – that China Telecom can "access, store, disrupt, and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States." And because China Telecom is state-controlled, China's government can compel the carrier to act as it sees fit, without judicial review or oversight.
The commission also justified the termination on grounds that:
- In talks with the FCC, China Telecom demonstrated "a lack of candor, trustworthiness, and reliability";
- The FCC doesn't think that mitigation would work, based in part on classified information;
- China Telcom has already violated some terms of its authorizations to operate in the USA.
And let's not forget that time in 2019 when China Telcom made a BGP booboo that rerouted European telco traffic through China and caused an outage. And in 2020 the carrier was accused of sending US government traffic through China on numerous occasions over many years.
FCC chair Jessica Rosenworcel added, in a statement [PDF], that foreign carriers should understand that the ban signals the USA has a process for barring carriers felt to be a national security threat. The FCC is now completing security reviews for China Unicom and other "similarly situated" carriers.
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Rosenworcel wrote that the regulator has also changed policy and will regularly review foreign carriers' authorizations to provide services in the USA. Policy on submarine cable approvals has also changed, so that builds will not be allowed to commence before review of state-owned companies' involvement.
Commissioner Brendan Carr's contribution [PDF] called for the FCC to speed the process that would prevent it from certifying Huawei equipment, and bar Chinese drone-maker DJI.
China Telecom has been given 60 days to wind up its US operations. That means customers must find new service providers before Christmas.
Which will be unpleasant – but for now the greatest unpleasantness is probably being felt in diplomatic circles, because Beijing will be livid.
The USA believes that China's 2017 National Intelligence Law compels Chinese companies to assist all intelligence efforts. In 2020 the United States Department of Homeland Security used that interpretation to advise US businesses not to work in or with Chinese entities.
Chinese vendors like Huawei have argued that interpretation is incorrect, and that it would not install backdoors or monitor networks at Beijing's direction.
Chinese foreign ministry officials have characterised Western governments' dismissal of such protests as wilfully ignorant. It sees them as evidence of attempts to hurt Chinese businesses, impede the nation's economic growth, and curb its rising influence.
- FCC: Remember that confidential paperwork you gave us, China Telecom? Yeah, well, we're handing it over to the Feds
- Facebook and Amazon take over Philippines-to-USA sub cable after China Mobile quits
- Huawei stole our tech and created a 'backdoor' to spy on Pakistan, claims IT biz
In early October the USA and China announced a virtual meeting of their respective leaders, aimed at aimed at easing tensions between the two nations.
The FCC's actions could derail those efforts. But as the regulator has pointed out, its decision was informed by numerous other federal agencies, including the State Department. It's reasonable to conclude that this action has not taken place without consideration of foreign policy implications.
The ban was announced on a big day for China/US tech relations. Made-in-China social network TikTok appeared before US Senate's Commerce subcommittee on consumer protection, product safety and data security, and testified that it does not share data with China's government. Over at the Senate committee on commerce, science and transportation, Republican senators challenged [PDF] disk-maker Seagate over sales of its products to Huawei, alleging it did so without obtaining proper government approval and licences.
At the time of writing, neither China Telecom nor the Chinese government appear to have commented on the news. ®