Highlighting the diminished opportunities for Chinese telecom and technology providers in the US, the Department of Justice (DOJ) announced last week that the Trump Administration would seek to revoke and terminate the licenses of mobile operator China Telecom. China Telecom is authorized to provide communications, data, television and business services in the US as a facilities-based common carrier. It obtains spectrum licenses from the Federal Communications Commission (FCC) under what is called international Section 214 authorizations.

The DOJ announcement said relevant executive branch agencies unanimously recommended that the FCC revoke the telco’s licenses because it is an arm of the Chinese government and therefore poses “substantial and unacceptable national security and law enforcement risks.” Those agencies collectively represent an ad hoc arrangement of the Departments of Justice, Defense, and Homeland Security, formerly known as Team Telecom, which was established to ensure that the FCC defers to the executive branch when it comes to, among other things, matters of foreign ownership of communications assets in the US.

The redacted legal filing containing the agencies’ recommendation was submitted to the FCC’s International Bureau Filing System (IBFS)  by the Department of Commerce’s National Telecommunications and Information Administration (NTIA), which filed on the agencies’ behalf. NTIA’s filing was the first that followed a somewhat unexpected April 4 Executive Order, which formalized or codified for the first time the Team Telecom arrangement.

Non-compliance with state and federal cybersecurity, privacy laws

In their filing, the agencies said that China Telecom poses risks to security and law enforcement because of inaccurate public representations by China Telecom concerning its cybersecurity practices and inaccurate statements by China Telecom to US government authorities about where China Telecom stored its US records. According to the filing, this latter point raises significant questions about whether China Telecom is complying with federal and state cybersecurity and privacy laws.

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The agencies expressed particular concern about the nature of China Telecom’s US operations, which, they argue, could give China Telecom the ability to engage in economic espionage and sabotage, mainly through the re-routing of US internet traffic through Chinese servers using something called BGP (border gateway protocol) hijacking. The filing contains a string of links to allegations about China Telecom as a source of BGP hijacking, which, although the filing doesn’t emphasize this fact, often results from simple error and not malign intent.

The recommendation filed by the agencies redacts all the evidence of China Telecom’s cybersecurity wrongdoings. On the federal front, the agencies say specific redacted cybersecurity weaknesses place the company in violation of federal law by allowing customers to believe they received a higher level of cybersecurity than they did, a deceptive practice that the Federal Trade Commission has found in other circumstances to be a violation of the Federal Trade Commission Act. (FTCA).

Copyright © 2020 IDG Communications, Inc.



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