A Commerce Department agency recommended Monday that the Federal Communications Commission reject China Mobile’s bid for a license to operate in the U.S. market, saying Beijing could use the state-owned Chinese telecom giant to spy on U.S. government agencies and businesses.
The verdict from the National Telecommunications and Information Administration (NTIA), which gathered input from the law enforcement and intelligence communities, all but kills the Chinese company’s hopes of winning approval to handle Americans’ international calls after a nearly seven-year quest.
“Granting the authorization poses an unacceptable risk to U.S. national security and law enforcement,” the NTIA said. “…This assessment rests in large part on China’s record of intelligence activities and economic espionage targeting the United States, along with China Mobile’s size and technical and financial resources.”
Amid rising trade tensions between Washington and Beijing, the 205-page report offered a blunt summary of the U.S. government’s doubts about cooperating with China. Although the United States has previously granted such licenses to Chinese state-owned enterprises, growing awareness of Beijing’s involvement in economic espionage against the United States makes it too risky to do so with China Mobile, the NTIA said.
“The national security environment has changed as the sophistication and resulting damage of the Chinese government’s involvement in computer intrusions and attacks against the United States has evolved over time,” the report said.
The FCC is expected to consider the NTIA verdict — which is based on assessments by White House agencies and the departments of Justice, Homeland Security, Defense, and State — later this summer. To save its application, China Mobile three years ago proposed several measures designed to mitigate the risks associated with it operating in the United States. But executive branch officials determined that those measures were insufficient, the report said.
“The application should have been denied years ago,” said Michael Wessel, a member of the U.S.-China Economic and Security Review Commission, a congressionally chartered advisory body. “…For those in the U.S. following communications security issues, the denial of the license is long overdue.”
At the time of its September 2011 application, China Mobile said the Chinese government indirectly owned nearly three-quarters of the company, the world’s largest cellphone operator, with more than 649 million subscribers and about 164,000 employees. The company did not ask for authorization to provide domestic telephone service in the United States.
But if it had been approved to carry Americans’ international calls, it would have enjoyed access to the U.S. telecommunications network, including telephone lines, cellular networks, fiber-optic cables and communications satellites. That would give it the ability to “target, alter, block, and re-route traffic,” including from U.S. government agencies, the report said.
The company would have been “expected to comply with any requests or orders for assistance from the Chinese government, including its security services,” the NTIA report concluded, pointing specifically to the danger of cyberattacks against U.S. targets.
Despite a 2015 agreement between President Barack Obama and Chinese President Xi Jinping to swear off cyberespionage aimed at commercial secrets, U.S. businesses continue to suffer electronic break-ins traced to Chinese hackers, the paper said.
Along with its public assertions about Chinese government espionage, the report included a classified attachment that described “additional, more recent assessments of cybersecurity breaches and economic espionage and theft involving the Chinese government that threaten, among other things, the United States’ national security and telecommunications network infrastructure.”