Team Telecom Recommends that the FCC Deny Pacific Light Cable Network System’s Hong Kong Undersea Cable Connection to the United States | OPA

Team Telecom today recommended to the Federal Communications Commission (FCC), based on national security concerns, that the FCC partially deny the Pacific Light Cable Network (PLCN) subsea cable system application, to the extent it seeks a direct connection between the United States and Hong Kong.

Team Telecom, which is formally known as the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (or the Committee), further recommended that the FCC grant the portions of PLCN’s application seeking to connect the United States, Taiwan, and the Philippines, which do not have any People’s Republic of China (PRC) based ownership and are separately owned and controlled by subsidiaries of Google LLC and Facebook, Inc., on the condition that the companies’ subsidiaries enter into mitigation agreements for those respective connections.  On April 8, 2020, the FCC granted Google’s request for Special Temporary Authority (STA) to commercially operate the segment of PLCN connecting the United States and Taiwan for six months, based on obligations set forth in a Provisional National Security Agreement between Google and the U.S. Departments of Justice, Homeland Security, and Defense.

As submitted to the FCC, the PLCN application would have allowed for the highest capacity subsea cable connection between the United States and Asia and been the first direct connection between the United States and Hong Kong.  This raised national security concerns, because a significant investor in the PLCN is Pacific Light Data Co. Ltd., a Hong Kong company and subsidiary of Dr. Peng Telecom & Media Group Co. Ltd. (Dr. Peng Group), the fourth largest provider of telecommunications services in the PRC.

The Committee’s recommendation was based on:

• The current national security environment, including the PRC government’s sustained efforts to acquire the sensitive personal data of millions of U.S. persons, the PRC government’s access to other countries’ data through both digital infrastructure investments and recent PRC intelligence and cybersecurity laws, and changes in the market that have transformed subsea cable infrastructure into increasingly data-rich environments that are vulnerable to exploitation;
• Concerns about PLCN’s PRC-based owners, Dr. Peng Group and Pacific Light Data, including Dr. Peng Group’s relationship with PRC intelligence and security services and its obligations under PRC intelligence and cybersecurity laws, questions about Dr. Peng Group’s compliance with U.S. laws and regulations stemming from separate acquisitions involving U.S. telecommunications assets, and Pacific Light Data’s connections to PRC state-owned carrier China Unicom; and
• Concerns that PLCN would advance the PRC government’s goal that Hong Kong be the dominant hub in the Asia Pacific region for global information and communications technology and services infrastructure, which would increase the share of U.S. internet, data, and telecommunications traffic to the Asia Pacific region traversing PRC territory and PRC-owned or -controlled infrastructure before reaching its ultimate destinations in other parts of Asia.

Subsea fiber optic cable systems form the backbone of global communications and carry most of the world’s internet, voice, and data traffic between continents.  In recent years, subsea cable systems have become increasingly critical, connecting global data centers and expanding interconnections.

PLCN’s high capacity and low latency would encourage U.S. communications traffic crossing the Pacific to detour through Hong Kong before reaching intended destinations in other parts of the Asia Pacific region.  The Committee’s recommendation specified that it was not in U.S. national security or law enforcement interests to approve subsea cables landing in PRC territory when the PRC government has previously demonstrated the intent to acquire U.S. persons’ data.  The recommendation also explained that PLCN’s proposed Hong Kong landing station would expose U.S. communications traffic to collection by the PRC.  Such concerns have been heightened by the PRC government’s recent actions to remove Hong Kong’s autonomy and allow for the possibility that PRC intelligence and security services will operate openly in Hong Kong.

The Committee also noted that PLCN’s proposed Hong Kong connection was only one of several pending applications seeking direct connections between the United States and Hong Kong, which would raise similar concerns.

The Committee was established pursuant to Executive Order 13913 and is led by the Department of Justice’s National Security Division, Foreign Investment Review Section.  The Department of Homeland Security and the Department of Defense are fellow members of the Committee.  More information concerning the Committee’s recommendation is available on the FCC’s International Bureau Filing System (IBFS), under Docket Number SCL-LIC-20170421-00012.  The Department of Commerce’s National Telecommunications and Information Administration filed the recommendation on behalf of the Committee.