The U.S. Department of Justice (DOJ) announced on April 9 that interested executive branch agencies unanimously recommended that the FCC revoke and terminate authorizations to provide international telecommunications services to and from the United States held by the U.S. subsidiary of a People’s Republic of China (PRC) state-owned telecommunications company, China Telecom (Americas) Corp.
The DOJ 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, including the DOJ, the Departments of Justice, Homeland Security, Defense, State and Commerce, and the U.S. Trade Representative, identified substantial and unacceptable national security and law enforcement risks associated with China Telecom’s operations, which render its 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.
· 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 DOJ’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.
More information concerning the executive branch agencies’ recommendation is available on the FCC’s International Bureau Filing System (IBFS), under Docket Number ITC-T/C-20070725-00285. The Department of Commerce’s National Telecommunications and Information Administration filed the recommendation on behalf of the executive branch agencies.
The DOJ is committed to working with industry to ensure that critical business needs are considered and addressed in a manner that is consistent with the United States’ national security and law enforcement interests. 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 an 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.
Last year, FCC Commissioner Brendan Carr encouraged the national security agencies to examine China Telecom and to recommend whether the FCC should revoke its authority to operate in the United States. The views expressed by these national security officials can help provide the legal basis for the FCC to take action.
“It is time to reconsider our relationship with companies owned or controlled by the PRC,” Carr said in an April 9 news release.
“Years ago, the FCC authorized China Telecom to connect their facilities to networks here in the United States,” he said. “A lot has changed since that authorization, though it continues to allow China Telecom to carry network traffic that originates in the United States. I have encouraged the national security agencies to examine the threats posed by China Telecom’s network access, and I welcome the executive branch agencies’ recommendation that we revoke and terminate China Telecom’s authority.”
Carr said that there is substantial evidence that the Chinese government intends to surveil persons within U.S. borders, either for economic or intelligence advantages. “As the DOJ’s announcement states, China Telecom’s operations provide opportunities for PRC state-actors to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications,” he said. “Indeed, there is evidence that China Telecom has hijacked traffic in the United States and routed it through China before delivering it to destinations back in America.”
The commissioner said he looks forward to working with his FCC colleagues to act on the recommendation “and to further secure America’s networks from bad actors that would do us harm.”
Sources: U.S. Department of Justice and the FCC