Democrats back FCC’s action against China Telecom and Huawei

Democrats back FCC’s action against China Telecom and Huawei

11 December 2020 | Alan Burkitt-Gray

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Hopes that the incoming US administration will reverse Donald Trump’s strategy on China faded last night when the two Democrats on the US regulator approved moves against China Telecom and Huawei.

The Federal Communications Commission (FCC) voted to deny Huawei’s application for a review of June’s action to declare the company a national security threat.

And the FCC also took the next step in its action to remove China Telecom’s licence to provide services in the US and internationally to and from the US.

Both moves were supported by the two Democrat commissioners on the FCC, Jessica Rosenworcel and Geoffrey Starks, as well as Ajit Pai, Brendan Carr and Michael O’Rielly, all Republicans.

O’Rielly was making one of his last appearances as a member of the FCC, as Trump refused to nominate him for another term of office. This week the US Senate confirmed Nathan Simington as a new Republican commissioner in O’Rielly’s place.

After 20 January 2021, when Pai steps down from the chairmanship of the FCC, he will be replaced by a Democrat — membership of the regulator traditionally giving a three-to-two majority to the ruling president’s party. That will not be immediate, as his successor will need to be confirmed after a Senate hearing.

The FCC determined at its meeting yesterday that there is “overwhelming evidence of Huawei’s close ties to the Chinese Communist Party and China’s military and intelligence apparatus”.

The FCC said it agreed with the stance “that Huawei poses a threat to the security and integrity of the nation’s communications networks or the communications supply chain”.

Huawei has always denied that it is a threat or that its activities can be directed by Chinese authorities. The UK government’s security establishment, which has taken apart and analysed Chinese telecoms hardware and software for many years, has never reported a deliberate security issue.

Yesterday’s order means that “money from the FCC’s $8.3 billion a year Universal Service Fund may not be used to purchase, obtain, maintain, improve, modify, or otherwise support any equipment or services produced or provided by Huawei”.

Action against China Telecom, plus China Unicom and two subsidiaries of CITIC Telecoms, started in April, some months after the FCC refused to grant a licence to their rival, China Mobile. The FCC said the four had to show cause why their existing licences should not be cancelled.

Now the FCC has taken the next step in its action against China Telecom Americas, the subsidiary that holds a licence under section 214 of the US Communications Act.

The FCC said: “China Telecom Americas is indirectly and ultimately owned and controlled by the government of the People’s Republic of China. Moreover, the corporate governance documents of China Telecom Americas’ parent company give the Chinese Communist Party substantial control over its management and business operations.”

Yesterday’s decision was a formal start to the process of revoking China Telecom’s licence to operate in the US. The FCC has made no statement about China Unicom or the CITIC Telecoms subsidiaries.