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US Regulator Bans China Telecom Subsidiary

FCC says unit’s ownership and control by the Chinese government raises “significant” security risks


China Internet Conference in Beijing
Eight months after being kicked off the NYSE – China Telecom raised US$7.3 billion in a stock offering. Photo: Reuters

 

The US Federal Communications Commission on Tuesday said it would revoke the authorisation for the local subsidiary of China Telecom to operate in the country, citing “potential security threats”.

The FCC notice of the order, published on the regulator’s website, directs China Telecom (Americas) Corporation, which was set up about 20 years ago, to “discontinue any domestic or international services that it provides” within 60 days.

The regulator said the company’s ownership and control by the Chinese government raises “significant” security risks by providing opportunities “to access, store, disrupt, and/or misroute US communications”.

The FCC said its ruling was based “in part on the recommendation of the Executive Branch agencies”. The agency found that “China Telecom Americas failed to rebut the serious concerns of the Executive Branch about its continued presence” in the US.

The move signals that the administration of President Joe Biden is building on the tough stance against Chinese companies taken by the previous administration of Donald Trump.

The Trump administration ratcheted up pressure on Chinese companies such as telecom giant Huawei Technologies by restricting their business operations, citing potential threats to US national security.

 

Executive Order

In November 2020, Trump signed an executive order prohibiting American citizens and corporations from investing in companies related to China’ military forces. The country’s three major telecom players – China Mobile, China Unicom and China Telecom – were included on the prohibited list.

The FCC said it would later issue a guide to explain its action and options consumers might consider for alternative mobile services.

Although China Telecom Americas is the company’s largest subsidiary of China Telecom Corporation, its US business is not considered significant, according to analysts.

According to its corporate website, the unit owns stakes in China-US and Japan-US trans-Pacific cables.

The headquarters of China Telecom Americas is located in Herndon, Virginia, near Washington. It has additional offices in Chicago, Dallas, Los Angeles, New York and San Jose.

The unit also covers Canada and South America through offices in Toronto and São Paulo.

 

• By George Russell.

 

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

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