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CITIC Telecom’s US operations ‘must close by 16 May’ says FCC

Jessica Rosenworcel FCC.jpg
Jessica Rosenworcel, FCC.

The US has revoked the licences to operate of two subsidiaries of China’s CITIC Telecom International Holdings

Pacific Networks has had a licence since 2001 and its wholly owned subsidiary, ComNet (USA), has had a licence since 2003.

Jessica Rosenworcel (pictured), chairwoman of the Federal Communications Commission (FCC), said the action followed similar moves against China Telecom Americas and China Unicom Americas.

“Today, we continue that work and do the same for two additional companies identified by our national security colleagues,” she said.

“As before, we take this action after providing the companies with appropriate due process, including multiple opportunities to explain why we should not revoke their domestic and international authorities.”

Capacity has contacted CITIC Telecom for a comment on the action, which started in April 2020, when Donald Trump was president and Ajit Pai chaired the FCC. The company has not so far replied to Capacity.

CITIC Telecom is owned by the Chinese state, via the Ministry of Finance and what used to be the China International Trust Investment Corporation but is now simply CITIC. Some shares are floated on the Hong Kong stock exchange.

The FCC said that the two CITIC units must “discontinue any domestic or international services that they provide” within 60 days – which sets a deadline of 16 May.

Pacific Networks, with offices in Dallas, Seattle and Spokane, says it specialises in “phone system installation, low voltage wiring, and security camera installation”.

Its website makes no mention of its Chinese ownership, but it lists customers as including the Boys’ and Girls’ Clubs of America, Kentucky Fried Chicken, Walgreens and Wells Fargo Bank.

ComNet (USA) provides calling cards and SIM cards in Los Angeles and New York in the US and in Vancouver and Toronto in Canada.

ComNet’s website advertises cards specifically aimed at Chinese customers, with cards branded ChinaOne – but all were out of stock this morning.

The FCC said that it had “found that Pacific Networks and ComNet had failed to dispel serious concerns regarding their retention of their authority to provide telecommunications services in the United States”.

It gave the companies, as well as government agencies and the public, the chance “to present any remaining arguments or evidence in the matter”.

Its statement says that the two companies are “subsidiaries of a Chinese state-owned entity, and therefore they are subject to exploitation, influence, and control by the Chinese government and are highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight”.

The FCC adds that the “companies’ ownership and control by the Chinese government raise significant national security and law enforcement risks by providing opportunities for the companies, their parent entities and affiliates, and the Chinese government to access, monitor, store, and in some cases disrupt and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States”.

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