The US communications regulator has voted to revoke China Telecom’s license in America over national security concerns in Washington’s latest push against what it sees as possible infiltration of key networks by Chinese companies.
The decision of the US Federal Communications Commission (FCC) means that China Telecom Americas must now terminate US services within 60 days. China Telecom, the largest Chinese telecommunications company, has been licensed to provide telecommunications services in the United States for nearly 20 years.
The news sent shares of US-listed Chinese tech companies plummeting and their Hong Kong stocks also suffered strong sales, pushing the Hang Seng index down more than 1%.
The Hang Seng technology index lost more than 3%, with the likes of Tencent, Alibaba, JD.com and XD.
The FCC found that China Telecom “is subject to exploitation, influence and control by the Chinese government and will most likely be forced to comply with requests from the Chinese government without adequate legal process subject to independent judicial oversight”.
The regulator added that ownership and control of the Chinese government “increase significant risks to national security and law enforcement by providing opportunities” for the company and the Chinese government “to access, store and store American communications. disrupt and/or misdirect.”
In response, a spokesperson for China Telecom America said the FCC’s decision was “disappointing” and that it would “pursue all options available while continuing to serve our customers.”
Former US President Donald Trump put the issue at the top of the political and diplomatic agenda in 2019 when he declared a national emergency to ban technology from “foreign adversaries” and subjected Chinese telecommunications company Huawei to strict export controls. In May 2019, the FCC banned another Chinese state telecommunications company, China Mobile, from providing US services.
Trump then successfully pressed US allies like the UK and Australia to follow suit and ban Huawei from their 5G networks.
China Telecom served more than 335 million subscribers worldwide as of 2019 and claims to be the largest fixed-line and broadband operator in the world, according to a Senate report. It also provides services to Chinese government facilities in the United States.
The US government said in April 2020 that China Telecom targeted its mobile virtual network to more than 4 million Chinese Americans; 2 million Chinese tourists a year visiting the United States; 300,000 Chinese students at US colleges; and the more than 1,500 Chinese companies in America.
At the same time, the FCC warned it could halt the US operations of three state-controlled Chinese telecommunications companies, citing national security risks raised by US agencies. They were China Telecom Americas, China Unicom Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (US) LLC.
The FCC Commissioner, Brendan Carr, a Republican, said the regulator must “remain vigilant about threats” from China. The Chinese embassy in Washington did not respond to a request for comment.
US Senators Rob Portman and Tom Carper, who released a 2020 report on US operations of Chinese telecom companies, praised the FCC decision in a joint statement citing “significant and serious national security and law enforcement risks”.
In March, the FCC began canceling authorization for China Unicom Americas, Pacific Networks and its wholly-owned subsidiary, ComNet, to provide U.S. telecommunications services. It also identified five Chinese companies as a threat to national security under a 2019 law, including Huawei, ZTE, Hytera Communications, Hangzhou Hikvision Digital Technology and Zhejiang Dahua Technology.