USA’s communications regulatory has decided to revoke China Telecom’s licence due to national security concerns. This comes as a latest move by US to counter possible infiltration of its key networks by Chinese companies. The decision was made by the US Federal Communications Commission.
With its licence revoked, China Telecom has 60 days to discontinue it’s US services. For 20 years, China Telecom- the largest Chinese telecommunications company – had the authorization to provide telecommunications services in the United States.
This news alone was enough to send US listed Chinese tech stocks go down sharply. In fact, the Hang Seng index went down more than 1%. Tencent and Alibaba also took a major hit. Shares of China telecom were delisted by the New York Stock Exchange earlier this year following an investment ban ordered by former President Donald Trump. It is clear that even the current administration is not helping China any more.
It should be noted FCC commissioners voted unanimously to make this decision. According to the FCC, China telecom is subject to control, influence and exploitation by the CCP government and it is highly likely that it will be forced to comply with Chinese government illegal requests to acquire data. There’s a good chance it’ll have to fork out customer data if Chinese government asks for it. This could be a huge security concern for the US. With China’s 2017 National security law in place, US actions can only be said to be justified.
The regulator further said that ownership and control of the said entity by the Chinese government raises significant national security and law enforcement risks by providing opportunities for the company and the Chinese government to access, store, disrupt or even misroute US communications. Continuing to give China Telecom access to USA’s market would be equal to inviting espionage. China is known to steal trade secrets and other confidential business information.
In fact, the FCC also added that China Telecom America’s conduct with it and other U.S. government agencies also demonstrated a lack of trustworthiness and reliability.
Even the department of justice had said that China Telecom made “inaccurate” statements about where US records were stored. This also raised the question regarding who all had access to this data?
China Telecom America’s spokesperson responded by saying that FCC’s decision was disappointing and that it would pursue all available options.
USA’s actions, though welcome, are not enough to combat the threat posed by Chinese Telecom firms. The list of dangerous companies needs to be expanded. Equipment authorization rules should be put into effect to ensure no Chinese equipment – which likely carries backdoors for spying – can be used in US networks.
Some may argue that China telecom does not have the kind of reach to potentially become a national security threat. Such thinking is erroneous. The simple fact that it has access to US telecommunications infrastructure is enough for it to be a hazard.
It was just in the May of 2019, when the FCC banned another state owned Chinese Telecom company, China mobile, from providing services in the US.
The actual credit should go to former US President Donald Trump, as he was the one who brought this issue to the political and diplomatic forefront, banning technologies from “foreign adversaries”. He also ensured that American allies such as Australia and United Kingdom ban Huawei from their 5G network.
China Telecom is known to provide services to Chinese government facilities in the US. The FCC had warned previously that it may shut down US operations of three state controlled Chinese telecommunications companies, based on the risks assessed and raised by US security agencies. The firms in question were China Telecom Americas, China Unicom Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (USA) LLC.
Just two months back, a senator from Philippines accused China telecom of espionage. China telecom had recently bought shares in Dito Telco, which, according to the senator, was undertaken deliberately to conduct espionage within the country.
Last year, the FCC designated Huawei Technologies and ZTE Corp as national security threats to communications networks – a declaration that stopped U.S. firms from tapping into an $8.3 billion government fund to purchase equipment from these companies.
The decision to ban China telecom comes at an important time, shortly after U.S. President Joe Biden and his Chinese counterpart Xi Jinping vowed to rebuild communication channels after years of rising tensions.