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U.S. blocks Chinese state-owned telecom giant out of security concerns, threatens more scrutiny

Federal Communications Commission Chairman Ajit Pai (Jacquelyn Martin/AP)

U.S. officials on Thursday blocked a Chinese state-owned telecom company from operating in the United States and offering phone services to American customers, expressing fresh fears that Beijing seeks to snoop on U.S. communications networks.

The unanimous decision by the Federal Communications Commission targets China Mobile, a telecom giant with a U.S. subsidiary incorporated in Delaware. Since 2011, China Mobile has sought federal permission to provide services connecting phone calls between people in the United States and other countries, operating as a critical nexus for international phone traffic.

But Republican FCC Chairman Ajit Pai charged that the firm is "owned and controlled by the Chinese government," a tie that raised a "significant risk" that authorities there could "conduct activities that would seriously jeopardize the national security, law enforcement and economic interests of the United States."

The agency’s Republicans and Democrats largely agreed, and some encouraged the FCC to take additional, future steps to block Chinese-tied telecom giants from operating in the United States or selling their equipment here. Their calls for further scrutiny come at a moment of tense talks between the White House and Chinese officials over tariffs the U.S. has imposed in response to the president’s claims that the existing bilateral trade relationship is unfair.

China Mobile did not respond to a request for comment.

How China’s Huawei took the lead over U.S. companies in 5G technology

For Pai and the FCC, the decision to deny China Mobile access to U.S. networks marks the Trump administration’s latest salvo against China over security concerns. Broadly, top U.S. officials have raised alarms about the potential for snooping when the country’s top carriers begin deploying the infrastructure for 5G, the next generation of ultra-fast wireless service.

Most of the equipment that makes 5G wireless possible is manufactured internationally, including in China by its top telecom company, Huawei. Its worldwide scale, its backing by China’s state-owned development bank, and its perceived ties to a government known for espionage have fueled fears that U.S. networks could be at risk if more of Huawei’s equipment is deployed here. U.S authorities, however, have never offered a full accounting of the security risks Huawei poses — and Huawei has rejected the charges.

Still, the White House for more than a year has considered issuing an executive order that could allow the government to prevent American businesses from working with certain foreign suppliers — a move that could have the effect of barring Chinese firms. A spokesman for the president did not respond to a request for comment Thursday.

At the same time, the FCC has opened debate on rules that would withhold billions of dollars in critical federal funding from U.S. telecom carriers that purchase and install equipment from countries deemed to be security risks — another effort that would deal a major blow to Huawei. Many U.S. carriers in rural areas rely on Huawei’s equipment because it is cheaper than the alternatives, and they’ve warned they could become “collateral damage in a larger national security and trade debate.”

Ahead of Thursday’s vote to block China Mobile, Democratic FCC Commissioner Geoffrey Starks urged his peers to return to the Huawei matter “quickly to resolve any uncertainties” involving carriers who have already deployed that equipment.

Commissioner Brendan Carr, a Republican, urged the FCC to take aim at two other Chinese carriers, China Telecom and China Unicom, that already have been granted waivers to operate in the United States. “The evidence I’ve seen in this case calls those existing authorizations into question,” he said in prepared remarks, pointing to reports that China Telecom “has been hijacking U.S. traffic and redirecting it through China.”

Pai, the commissioner’s chairman, later said the agency is reviewing authorizations the agency has granted those two companies.

In a statement, China Telecom said it long has “operated according to the same standards and rules governing all telecom companies in the United States. We are a company that has always maintained an excellent standing in the U.S., and will continue to demonstrate the same values and results in the years to come.” A spokesman for China Unicom did not respond to a request.

And Democratic Commissioner Jessica Rosenworcel — who voted to block China Mobile — still criticized the agency’s efforts as “performative security,” noting it did little to change the status quo. She pointed to other vulnerabilities in U.S. networks, including recent reports about the misuse of Americans’ location data, in calling on the FCC to redouble its efforts to protect Americans’ sensitive information.

“Here’s a hard truth: Today no communications system is ever fully secure,” she said.