FCC Moves to Rescind Permits of More Chinese Telecom Operators

The Federal Communications Commission initiated the process to revoke the operating authority of three companies because of ties to the Chinese government after consulting with key federal agencies.

“We know some countries may seek to exploit our openness to advance their own national interests,” Acting FCC Chairwoman Jessica Rosenworcel said at a commission meeting Wednesday. “And when we cannot mitigate that risk, we need to take action to protect the networks that are important to our national security and economic prosperity.”

To decide on granting foreign companies permits to operate within the U.S., the FCC consults with a group of executive agencies—the departments of Defense, Homeland Security and Justice, with input from others including the director of national intelligence—generally referred to as Team Telecom. The group advised risks presented by the three companies under consideration cannot be mitigated, commissioners said after voting to start the revocation process. 

Because China Unicom, Pacific Networks and its subsidiary ComNet are “indirectly and ultimately owned and controlled by” the Chinese government, they are vulnerable to exploitation, the FCC said. 

In similar decisions designating Huawei and ZTE national security threats, the FCC pointed to Chinese laws they say compel companies headquartered in China to cooperate with the government’s intelligence services.

This was also the reason cited for denying the application of China Mobile to provide services within the U.S. and the start of a revocation process for China Telecom, which is currently under litigation in the Fourth Circuit Court of Appeals.

In April of last year, the FCC sent "show cause" orders to the companies asking why their permissions to operate shouldn’t be yanked given the national security concerns. The agency was not satisfied with their responses.

“The evidence that was compiled in our proceedings confirms these are companies that are indirectly owned or controlled by the Chinese government,” Rosenworcel told reporters after the vote. “And that means, as a matter of fact, that they will have to comply with requests from the Chinese government to advance the government's goals and policies, and executive branch agencies have concluded this is true.”

The FCC also voted to issue a notice of inquiry into open radio access network technology, which is seen as a way to reduce reliance on any individual telecommunications provider by virtualizing equipment interfaces.

“At the FCC, we are starting the first-ever inquiry into open RAN,” Rosenworcel said. “Today, the RAN is the most restrictive and most expensive part of the network, in part because all of its major components have to come from the same vendor.  There is no way to mix and match. But if we can unlock the RAN and diversify the equipment in this part of our networks, we may be able to increase security, reduce our exposure to any single foreign vendor, lower costs, and push the equipment market to where the United States is uniquely skilled—in software.” 

The notice seeks comment on the risks and benefits of O-RAN, the current status of its deployment and how the FCC might help advance its development.