FCC’s ban on Chinese telcos comes into force this weekend

Update: China Unicom granted week-long extension to respond to FCC on ban of Chinese telcos

22 May 2020 | Alan Burkitt-Gray

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Days before the US regulator’s threat to withdraw the licences from four Chinese operators, the operators themselves are refusing to comment on the implication for them and their customers.

UPDATE, Friday afternoon, 22 May: The FCC has given China Unicom an extension to 1 June, a week on Monday, to submit its arguments. China Unicom asked for a 30 day extension, to 23 June, but the FCC said no, and granted just a week. Capacity has heard nothing from China Telecom or CITIC Telecom International. 

The story as posted earlier was: 

The Federal Communications Commission (FCC) said in late April that China Telecom, China Unicom and two subsidiaries of CITIC Telecom International Holdings had 30 days to show why their licences should not be revoked.

That 30-day period ends on Sunday, which means – failing a last-minute reprieve – all four will lose their right to operate within US territory and to and from the US.

Capacity contacted China Telecom, China Unicom and CITIC Telecom for an update on their status. Two did not reply and one emailed: “We have no further comment at the moment. Thanks for your concern.”

The two CITIC subsidiaries are Pacific Networks and its wholly owned subsidiary, ComNet (USA).

The April decision by the US government follows 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.

It is the section 214 licences that the four other operators face losing this weekend, though this will not stop them exchanging traffic via intermediaries in the wholesale telecoms industry.

However it is still unclear whether the FCC will allow subsea cables to land on US territory if they have Chinese interests.

Meanwhile one industry figure commented to Capacity earlier this month, while we were researching a two-page analysis on the situation, that the US government is starting to consider Hong Kong in the same way that it regards mainland China. The comment was made as background information, but came from someone well placed in the telecoms regulatory field.

Hong Kong is a special administrative region (SAR) of China, and for the last 23 years has largely been able to pursue its own way economically.

However yesterday China said it wanted to amend Hong Kong’s Basic Law – its constitution – to give the Beijing government more power in the SAR. According to the reports, China’s intelligence and security agencies will be able to operate in Hong Kong – something that is likely to be looked on with concern by the US, given that many international telecoms companies operate from the SAR, and many subsea cables land there.