April 24, 2020 / 3:40 PM / 4 months ago

FCC may halt U.S. operations of three state-controlled Chinese telecom firms

WASHINGTON (Reuters) - The Federal Communications Commission (FCC) on Friday said it may shut down the U.S. operations of three state-controlled Chinese telecommunications companies, citing national security risks.

FILE PHOTO: The Federal Communications Commission (FCC) logo is seen before the FCC Net Neutrality hearing in Washington February 26, 2015. REUTERS/Yuri Gripas

The FCC issued so-called show cause orders to China Telecom Americas, China Unicom Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (USA) LLC, directing them to explain why it should not start the process of revoking authorizations enabling their U.S. operations.

The FCC’s action represents the latest sign of President Donald Trump’s administration taking a hard line toward China.

“We simply cannot take a risk and hope for the best when it comes to the security of our networks,” FCC Chairman Ajit Pai said in a statement.

The FCC granted its approvals to the firms more than a decade ago. Since then, it said, “the national security and law enforcement risks linked to the Chinese government’s activities have grown significantly.”

The agency’s show cause orders referred to the “sophistication and resulting damage of the Chinese government’s involvement in computer intrusions and attacks against the United States,” but did not elaborate.

The U.S. Justice Department and other federal agencies this month called on the FCC to revoke China Telecom’s ability to operate in the United States.

In May 2019, the FCC voted unanimously to deny another state-owned Chinese telecommunications company, China Mobile Ltd, the right to provide services in the United States, citing risks that the Chinese government could use the approval to conduct espionage against the U.S. government.

China Telecom Americas is the U.S. subsidiary of a Chinese state-owned telecommunications company. A spokesman for China Telecom said on Friday the company “has been operating in good standing in the United States for nearly 20 years. We look forward, in the coming weeks, to sharing information with the FCC that speaks to our role as a responsible telecom company.”

The other companies named in the show cause orders did not respond to requests for comment.

Pacific Networks resells international voice and data to U.S. operators on a wholesale basis and ComNet provides international termination service, global SIM card service and international calling card service and interexchange service, the FCC said.

Senator Tom Cotton, a Republican and ally of Trump, praised the review and said the firms’ “operation in the United States will continue to pose a threat to our critical networks as long as it continues.”

China’s telecommunications networks and companies have come under heightened scrutiny by U.S. agencies. The FCC this month agreed to allow Alphabet Inc unit Google to use part of an U.S.-Asia undersea telecommunications cable but not a part that connected with Hong Kong.

Google agreed to operate only a portion of the 8,000-mile (12,875-km) Pacific Light Cable Network System between the United States and Taiwan. Google and Facebook Inc helped pay for construction of the now completed telecommunications link but U.S. regulators have blocked its use.

Reporting by David Shepardson; Editing by Chizu Nomiyama, Tom Brown and Will Dunham

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