FCC eyes cutting off China Telecom from U.S. market

Several U.S. agencies say China Telecom’s operations in the U.S. are inconsistent with the public interest.

The Department of Justice is leading a group of U.S. agencies that are recommending that the FCC revoke and terminate China Telecom’s right to provide international telecommunications services to and from the United States.

China Telecom’s authorizations in the U.S. were last approved in 2007. But the agencies say that because China Telecom is owned by the People’s Republic of China it can be controlled by the government and thus poses a security risk.

In addition to the DoJ, the U.S. agencies include Homeland Security, State, Commerce, and the U.S. Trade Representative. They say they’ve 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.

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They assert that China Telecom has made false statements about where it stores its U.S. records and about its cybersecurity practices.

The FCC is very likely to revoke China Telecom’s authorization. About a year ago, the FCC unanimously voted to deny China Mobile's initial application to provide telecom services between the U.S. and foreign destinations. 

RELATED: FCC denies China Mobile USA application to provide telecom services

FCC Commissioner Brendan Carr said in a statement last week, “It is time to reconsider our relationship with companies owned or controlled by the People’s Republic of China. Years ago, the FCC authorized China Telecom to connect their facilities to networks here in the U.S.  A lot has changed since that authorization.  I welcome the Executive Branch agencies’ recommendation that we revoke and terminate China Telecom’s authority.”

According to analysts at Jefferies, China Telecom’s services in the U.S. focus on VPN, cloud, CDN and leased-line services to Chinese companies operating in the US. It owns no physical networks in the U.S. but instead leases networks from local carriers and invests in its own data center capacity.

The third major Chinese operator China Unicom has a similar operation in the U.S. as China Telecom, and it’s possible the FCC could revoke China Unicom’s authorization as well.

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