Executive Branch Agencies Recommend the FCC Revoke and Terminate China Telecom’s Authorizations to Provide International Telecommunications Services in the United States | OPA

Today, the Departments of Justice, Homeland Security, Defense, State, Commerce, and the United States Trade Representative unanimously recommended that the Federal Communications Commission (FCC) revoke and terminate China Telecom (Americas) Corp.’s authorizations to provide international telecommunications services to and from the United States.  China Telecom is the U.S. subsidiary of a People’s Republic of China (PRC) state-owned telecommunications company.

The Department of Justice led the review of China Telecom’s authorizations, and it based the recommendation on developments since the authorizations were last transferred in 2007, including China Telecom’s failure to comply with the terms of an existing agreement with the Department.

“Today, more than ever, the life of the nation and its people runs on our telecommunications networks,” said John C. Demers, Assistant Attorney General for National Security.  “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.  Today’s action is but our next step in ensuring the integrity of America’s telecommunications systems.”

In its recommendation, the Executive Branch agencies identified substantial and unacceptable national security and law enforcement risks associated with China Telecom’s operations, which render the FCC authorizations inconsistent with the public interest. More specifically the recommendation was based on:

• 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 where 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.

Some of the foregoing relate to China Telecom’s failure to comply with a 2007 Letter of Assurance, which was a basis for the existing FCC authorizations. The Department’s National Security Division, Foreign Investment Review Section, identified those compliance issues through its mitigation monitoring program.  As a result, the Executive Branch agencies concluded that the national security and law enforcement risks associated with China Telecom’s international Section 214 authorizations could not be mitigated by additional mitigation terms.

This action was taken under the legacy, ad hoc arrangement of the Departments of Justice, Defense, and Homeland Security, formerly known as Team Telecom, the operation of which was recently formalized by Executive Order dated April 4, 2020, establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. Applications referred by the FCC after the date of the Executive Order will be handled under the process outlined therein.