The U.S. Federal Communications Communication (FCC) has voted to revoke the license of China Telecom’s subsidiary in the United States, thereby halting the firm’s operations. The decision was made due to national security concerns.
China Telecom, the largest Chinese telecommunications company operating in the U.S., has been asked to discontinue operations within 60 days. The company has served customers in the United States for over twenty years.
The firm has offices in Chicago, Los Angeles, San Jose, New York, Dallas, Virginia, Herndon, and Toronto. Its global reach spans 110 nations.
According to the FCC, China Telecom “is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight.”
The fact that China Telecom is owned and controlled by the Chinese Communist Party (CCP) raises “significant national security and law enforcement risks by providing opportunities for China Telecom Americas, its parent entities, and the Chinese government to access, store, disrupt, and/or misroute U.S. communications, which in turn allow them to engage in espionage and other harmful activities against the United States,” the FCC said.
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The agency also pointed out that China Telecom’s conduct towards the FCC and other American agencies lacked “candor, trustworthiness, and reliability.” The company “wilfully violated’ two of the five provisions set out in the 2007 Letter of Assurances with the Executive Branch agencies.
Compliance with these provisions is an “express condition” of the company’s international section 214 authorizations. Section 214 ensures that the American telecommunications market is protected against potential anti-competitive behavior by a carrier that has market dominance in a foreign nation.
The Chinese company had more than 335 million subscribers around the world as of 2019. China Telecom claims to be the largest fixed-line and broadband operator in the world and has also provided services to Chinese government facilities operating in the U.S.
In response to the FCC’s decision, China Telecoms Americas stated, “The FCC’s decision is disappointing. We plan to pursue all available options while continuing to serve our customers.”
Earlier this year, the New York Stock Exchange delisted shares of China Mobile Ltd, China Telecom, and China Unicom Ltd as a result of former President Donald Trump’s investment ban. The Hong Kong exchange continues to trade these shares.
This is not the first time the FCC has highlighted the threat posed by Chinese companies operating on American soil. In April 2020, government agencies, including the Department of Justice, had already recommended that the FCC revoke China Telecom’s operation license in the U.S. In 2020, the FCC classified Huawei Technologies Co and ZTE Corp as security threats to U.S. communication networks.
The decision prevented American businesses from accessing 8.3 billion dollars in government funds for purchasing equipment from these companies. Consequently, the FCC set up rules in December for carriers with ZTE or Huawei equipment to remove or replace the equipment.