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FCC Threatens to Bar China Telecom and Others Over Security

Todd Shields

(Bloomberg) -- The Federal Communications Commission threatened to bar four telecommunications operators unless they can show they’re independent from the Chinese government, the latest in the agency’s efforts to limit Beijing’s role in U.S. networks.

The agency named China Telecom Americas, China Unicom Americas, Pacific Networks and its subsidiary ComNet, and told them to respond within 30 days. The companies need to explain why the agency shouldn’t move to revoke their authorizations, according to the FCC.

The action reflects “deep concern” among U.S. government agencies, FCC Chairman Ajit Pai said in an emailed statement.

Pai said the companies are vulnerable “to the exploitation, influence, and control of the Chinese Communist Party, given that they are subsidiaries of Chinese state-owned entities. We simply cannot take a risk and hope for the best when it comes to the security of our networks.”

The U.S. and China are at odds over a suite of issues such as the spread of the novel coronavirus, trade, and security of telecommunications networks. U.S. officials have moved to bar Chinese equipment maker Huawei Technologies Co. as a security threat, an assertion the company denies.

China Telecom “has been operating in good standing in the United States for nearly 20 years,” Ge Yu, a spokesman, said in an email. “We look forward, in the coming weeks, to sharing information with the FCC that speaks to our role as a responsible telecom company.”

Emails to China Unicom weren’t immediately returned, and the telephone system at ComNet’s California offices didn’t accept a voicemail. ComNet and Pacific Networks are owned by Citic Group Corp., a Chinese state-owned limited liability company, according to the FCC. An email to Citic’s telecommunications unit wasn’t immediately returned.

In an earlier filing by U.S. security agencies, the FCC told China Telecom to respond to concerns the Beijing-based telecommunications provider is a national security threat. China Telecom said it “unequivocally” denied the allegations.

The FCC barred China Mobile from the U.S. market last year and said it would review other companies’ record.

Senator Tom Cotton, an Arkansas Republican, said he supports the FCC’s action.

“No matter their cries to the contrary, these firms are beholden to the Chinese Communist Party, and their operation in the United States will continue to pose a threat to our critical networks as long as it continues,” Cotton said in a news release. “Chairman Pai has rightly identified the magnitude of the Chinese telecom contamination.”

(Updates with statement from China Telecom in sixth paragraph)

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