U.S. opposes China Telecom’s bid to continue U.S. operations

12:22 pm Wednesday, November 24th, 2021

By David Shepardson

WASHINGTON (Reuters) -The U.S. Federal Communications Commission (FCC) on Wednesday asked a federal appeals court to reject China Telecom Corp’s bid to continue providing services in the United States, after the telecommunications regulator revoked its authorization to operate last month.

The U.S. arm of China’s largest Chinese telecommunications company asked the U.S. Appeals Court for the District of Columbia this month to block the order.

“China Telecom has no likelihood of succeeding on its claims,” lawyers for the Justice Department and FCC wrote in a court filing Wednesday.

China Telecom Americas, which declined to comment Wednesday, was ordered on Oct. 26 by the FCC to discontinue U.S. services by early January over national security concerns.

The FCC said China Telecom “is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight.”

The FCC added, “It is undisputed that China Telecom is wholly owned by a Chinese entity, which is in turn majority-owned and controlled by a Chinese state-owned enterprise.”

China Telecom, which has been authorized for the past 20 years to provide telecommunications services in the United States, had more than 335 million subscribers worldwide in 2019. It also provides services to Chinese government facilities in the United States and has warned that FCC action would force it “to end its entire resold mobile resale service in the U.S.”

The FCC said China Telecom’s resold mobile phone service “gives the company access to sensitive customer information, including call detail records and metadata about communications.”

China Telecom said it must notify customers of the decision by Dec. 4 and said that without a temporary halt to the FCC action it “will be forced to cease significant operations, irreparably harming its business, reputation, and relationships.”

The FCC rejected the arguments saying there is “little basis” to speculate China Telecom’s “reputation for reliable service is fatally undermined by a government order requiring it to cease providing services.”

In March, the FCC began efforts to revoke the authorization for China Unicom Americas, Pacific Networks and its wholly owned subsidiary ComNet to provide U.S. telecommunications services.

In May 2019, the FCC voted unanimously to deny state-owned Chinese telecom firm China Mobile Ltd the right to provide U.S. services.

Last year, the FCC designated Huawei Technologies and ZTE Corp as national security threats to communications networks.

(Reporting by David Shepardson; Additional reporting by Susan Heavey and Ismail Shakil; Editing by Edmund Blair and Mark Porter)