New Team Telecom Recommendation Doesn’t Bode Well for U.S.-China Connections

A plan to build a network of submarine fiber optic cables, which would include the first ever direct connection to Hong Kong, presents too great a threat to national security, a collection of executive branch agencies known as Team Telecom said this week.

The decision follows Beijing’s recent moves toward undoing Hong Kong’s governing autonomy, which Team Telecom said suggests intelligence and security services from the mainland would operate openly there.

Team Telecom, the subject of a recent executive order, is chaired by the Justice Department and includes input from the departments of Homeland Security, Defense, Treasury, State and others. The group has come under pressure from members of Congress to more actively review applications foreign telecommunications providers make to the Federal Communications Commission for national security threats.  

On Wednesday, the Justice Department issued a press release announcing Team Telecom’s recommendation that the FCC deny requests to build the Pacific Light Cable Network due to the amount of U.S. data that would flow across the cables and concerns the main investor in the project would be under control of the Chinese government. 

The “application would have allowed for the highest capacity subsea cable connection between the United States and Asia and been the first direct connection between the United States and Hong Kong,” the press release reads. “This raised national security concerns, because a significant investor in the PLCN is Pacific Light Data Co. Ltd., a Hong Kong company and subsidiary of Dr. Peng Telecom & Media Group Co. Ltd., the fourth largest provider of telecommunications services in the PRC.”

The recommendation has implications for the ability of a number of other Chinese entities to traffic U.S. data.  

The full executive branch recommendation sent to the FCC by the National Telecommunications and Information Administration notes Pacific Light Data Co. is also associated with China Unicom. 

“Pacific Light Data’s significant connections to PRC state-owned carrier China Unicom raise concerns that the PRC government could exercise significant control over Pacific Light Data through new laws that allow it to compel assistance, support, or cooperation from any PRC citizen or organization connected to Pacific Light Data,” the recommendation reads. 

China Unicom is one of four entities the Federal Communications Commission wrote to on April 24 asking why their permissions to operate in the U.S. shouldn’t be revoked, given their connections to the People’s Republic of China. 

These “show cause” orders have industry representatives on high alert. Lawyers for the information and communications technology industry warn what the FCC does next, could negatively affect businesses well beyond the telecommunication space. 

“China controls landing rights of access for telephone and internet traffic entering or originating in China,” reads a post from the law firm Venable. “So, even if you do not purchase services directly from one of the four companies subject to the FCC Show Cause Orders, and regardless of your U.S. carrier, all electronic roads into China lead to a Chinese company. This derivative risk should be of particular concern to companies engaged in transactions with China and Hong Kong through the internet.”

Responses from the companies were due to the FCC earlier this month. The FCC did not respond to a request for comment on next steps.