Team Telecom Returns Negative Recommendation On China Telecom

The “Team Telecom” agencies recommended that the Federal Communications Commission (FCC) “revoke and terminate China Telecom (Americas) Corp.’s authorizations to provide international telecommunications services to and from the United States.” This action comes a week after the White House issued an executive order, reorganizing the process by which the U.S. government will review foreign investment in the telecommunications. In this case, the executive branch agencies that form Team Telecom called on the FCC to terminate and revoke the application of a company from the People’s Republic of China (PRC) to operate in the U.S.

The Department of Commerce’s National Telecommunications and Information Administration (NTIA) “filed on behalf of the Executive Branch of the United States Government a recommendation that the FCC terminate and revoke the Section 214 international authorizations of China Telecom (Americas) Corporation (China Telecom) to provide international voice traffic between the United States and foreign countries” per the agency’s press release. The NTIA continued, “[f]or purposes of this recommendation, the Executive Branch represents agreement among the Departments of Justice (DOJ), Homeland Security (DHS), Defense (DOD), State, Commerce, and the U.S. Trade Representative (USTR).”

The DOJ’s press release provided additional details on Team Telecom’s recommendation, and the agencies “identified substantial and unacceptable national security and law enforcement risks associated with China Telecom’s operations, which render the FCC authorizations inconsistent with the public interest.” DOJ explained, “[m]ore specifically the recommendation was based on:

• the evolving national security environment since 2007 and increased knowledge of the PRC’s role in malicious cyber activity targeting the United States;
• concerns that China Telecom is vulnerable to exploitation, influence, and control by the PRC government;
• inaccurate statements by China Telecom to U.S. government authorities about where China Telecom stored its U.S. records, raising questions about who has access to those records;
• inaccurate public representations by China Telecom concerning its cybersecurity practices, which raise questions about China Telecom’s compliance with federal and state cybersecurity and privacy laws; and
• the nature of China Telecom’s U.S. operations, which provide opportunities for PRC state-actors to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications. 

DOJ added

Some of the foregoing relate to China Telecom’s failure to comply with a 2007 Letter of Assurance, which was a basis for the existing FCC authorizations. The Department’s National Security Division, Foreign Investment Review Section, identified those compliance issues through its mitigation monitoring program.  As a result, the Executive Branch agencies concluded that the national security and law enforcement risks associated with China Telecom’s international Section 214 authorizations could not be mitigated by additional mitigation terms. Earlier this month, President Donald Trump has issued an executive order creating an inter-agency review body to determine whether foreign investment in U.S. telecommunications companies presents national security issues. However, the executive order merely formalizes and change the longstanding “Team Telecom” process through which proposed foreign investment in the U.S. telecommunications industry have been evaluated. Like the previous body, the new body will consist of representatives from the Departments of Defense, Homeland Security, and Justice and other agencies in an advisory role.