The US onslaught against Chinese tech companies has claimed another victim. The Federal Communications Commission has voted to revoke authorization for China Telecom’s US subsidiary to operate in the United States, citing national security concerns, Aljazeera and news agencies report.
China Telecom, the largest Chinese telecommunications company, has provided services in the US for nearly 20 years through China Telecom Americas but as of Tuesday must discontinue within 60 days, according to the FCC.
The telco has thus become the biggest victim of China-US rift, a position previously held by Huawei.
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“The FCC’s decision is disappointing. We plan to pursue all available options while continuing to serve our customers,” a China Telecoms America spokesperson told the Reuters news service.
The FCC had warned in 2020 that it might shut down US operations of three state-controlled Chinese telecommunications companies, citing national security risks, including China Telecom Americas, as well as China Unicom Americas, Pacific Networks Corp and its wholly-owned subsidiary ComNet (USA) LLC.
On Tuesday, the FCC found that 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”.
It added that “China Telecom Americas’ ownership and control by the Chinese government raise significant national security and law enforcement risks by providing opportunities” for the company and the Chinese government “to access, store, disrupt, and/or misroute US communications”.
China Telecom is one of the globe’s leading providers of communications and information technology services in more than 110 nations, according to the company website.
China foreign ministry spokeswoman Hua Chunying said at a news conference in January that the US should respect rule of law and market principles after the New York Stock Exchange said it would no longer trade three Chinese telecom giants, according to Reuters.
It has US offices in Chicago, Dallas, Los Angeles, New York, San Jose, Toronto, and Herndon, Virginia. It specializes in providing trans-Pacific connectivity for businesses and organizations including cloud and data centers.
US government agencies including the Department of Justice had recommended in April 2020 that the FCC revoke China Telecom’s authority to operate in the US. Further, the FCC said, “Classified evidence submitted by the Executive Branch agencies further supports the decisions.”
China Telecom’s conduct had demonstrated “a lack of candor, trustworthiness, and reliability that erodes the baseline level of trust that the Commission and other US government agencies require”, the FCC said.
Shares of China Telecom, China Mobile Ltd and China Unicom (Hong Kong) Ltd, were delisted by the New York Stock Exchange earlier this year following an investment ban ordered by former President Donald Trump. Shares continue to be traded on the Hong Kong exchange.
The FCC has taken other actions against Chinese telecoms and other companies on similar “national security” grounds in recent years.
In March, the FCC began efforts to revoke authorization for China Unicom Americas, Pacific Networks and ComNet to provide US telecommunications services.
Last year, the FCC designated Huawei Technologies Co and ZTE Corp as national security threats to communications networks – a declaration that barred US firms from tapping an $8.3bn government fund to buy equipment from the companies.
The FCC in December adopted rules requiring carriers with ZTE or Huawei equipment to “rip and replace” that equipment. In March, the FCC designated five Chinese companies as posing a threat to national security under a 2019 law, including Huawei, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology Co and Zhejiang Dahua Technology Co.
In May 2019, the FCC voted unanimously to deny China Mobile, also a Chinese state-owned company, the right to provide US services.