Rosenworcel starts off tough, by banning China Telecom

Rosenworcel and China Telecom 2.jpg

Jessica Rosenworcel’s first task after her official nomination as chair of the Federal Communications Commission (FCC) has been to implement a Trump-era policy to ban China Telecom from the US.

Hours after President Joe Biden said Rosenworcel (pictured), acting chair since January, should chair the FCC, she said that China Telecom (Americas) would lose its US licence within 60 days – that means, on or before 24 December.

The FCC first proposed this in April 2020, when Donald Trump was president and Ajit Pai chaired the regulator. It said then that China Telecom, China Unicom and two CITIC subsidiaries would lose their licences to operate in the US and to provide international services into and out of the country.

That 2020 decision by the US government followed the May 2019 decision to reject China Mobile’s application for a licence to provide services to and from the US – a rejection that came eight years after China Mobile first applied for a licence under section 214 of the Communications Act of 1934.

Rosenworcel confirmed in March 2021 that the FCC was continuing the action against China Unicom and the two CITIC offshoots – Pacific Networks and ComNet.

Last night she said those three were next on the list after China Telecom: “We are moving expeditiously to complete our security reviews for similarly situated carriers like China Unicom Americas, Pacific Networks, and ComNet.”

She said of China Telecom, “this is not a decision we make lightly. It has support from each of my colleagues. It has support across the federal government.”

China Telecom Americas, whose US headquarters (pictured, from Google Streetview) is in Herndon, Virginia, said the decision was “disappointing” and that the company would “pursue all available options while continuing to serve our customers”.

However, that option seems to have long expired: back in April 2020 the FCC told it and the other companies to show within 30 days why their licences should not be revoked. Since then, China Telecom has had 550 days.

In April 2021, facing exclusion from the US, China Telecom said it would expand in Latin America. The company has announced plans to develop IP backbone infrastructure that connects its existing global network to new PoPs in Fortaleza, Brazil; Buenos Aires, Argentina; Santiago, Chile; Lima, Peru; Panama City, Panama; and Mexico City, Mexico, over the next three years.

Rosenworcel said last night that “a broad group of Executive Branch agencies, including the Department of Justice, Department of Defense, Department of State, Department of Commerce, and the United States Trade Representative formally recommended that we terminate FCC authorisation for China Telecom Americas to provide interstate and international telecommunications services in the United States”.

The FCC’s official statement said that “classified evidence submitted by the Executive Branch agencies” supported the decisions and said there were “substantial national security and law enforcement risks”. But it did not go into detail.

However, it said: “China Telecom Americas, a US subsidiary of a Chinese state-owned enterprise, is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight.”

The regulator said that “ownership and control by the Chinese government raise significant national security and law enforcement risks by providing opportunities for China Telecom Americas, its parent entities, and the Chinese government to access, store, disrupt, and/or misroute US communications”.

It also complained about “a lack of candour, trustworthiness, and reliability”, and said “further mitigation would not address these significant national security and law enforcement concerns”.

China Telecom is the first foreign operator to lose its licence, and China Unicom and two CITIC subsidiaries are likely to be next on the list.

But Rosenworcel warned other foreign carriers and subsea carriers that it will scrutinise them more closely.

“We have established a clear standard and process for revoking a foreign carrier’s existing authorisations when there are national security concerns,” she said. There will be a “periodic review of foreign carriers’ authorisations”, from now on.

And she warned submarine cable operators that the FCC will no longer give “special temporary authority” to projects “while their applications were pending, even if those applications reflected ownership by state-owned companies that could represent a national security risk”.

Now, said the new FCC chair, “that’s no longer the case”. Under Rosenworcel the FCC now sends requests for special review on security risks.

That will be seen as bad news for companies planning cables from Chinese territory, including Hong Kong and Macau, to US territory – not just the continental US, but Hawaii and Pacific islands such as Guam, where the FCC has authority.

Meanwhile, Rosenworcel’s move to the top of the FCC is not yet complete: she has been designated to lead the regulator, but her appointment needs approval by Congress. Her decision on China Telecom, and her threatened decision on China Unicom and CITIC, are sending messages about China that senators and representatives will be happy to receive.

Biden also nominated Giga Sohn to serve on the FCC. She was a staff member there from 2013, when Tom Wheeler was chairing the regulator, leaving after Trump’s election victory in 2016. Since then she has been with Georgetown Law’s Institute for Technology Law and Policy, Open Society Foundations, and Mozilla.

Biden’s decision means that the FCC is back up to full strength, with five members and – as is usual in US politics – with three of them representing the serving president’s party, giving the Democrats a majority.

However, as Rosenworcel pointed out last night, all four current FCC members supported the move against China Telecom. There is no comfort for China in a Democrat-run FCC.