Page:2020-06-09 PSI Staff Report - Threats to U.S. Communications Networks.pdf/98

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risks to national security and law enforcement equities arising from ComNet's operations in the United States and similarly situated telecommunications companies operating pursuant to similar mitigation agreements.[1]}}

In July 2018, Team Telecom provided a "feedback letter" to ComNet, summarizing the March 2018 site visit.[2] Team Telecom officials and ComNet. representatives informed the Subcommittee that Team Telecom has had no substantive engagement with ComNet since the site visit.[3]

5. ComNet Shares Characteristics Team Telecom Highlighted regarding China Mobile USA and CTA

ComNet has been providing international telecommunications services pursuant to Section 214 authorizations granted over a decade ago with little oversight by the U.S. government. As described above, Team Telecom highlighted concerns about China Mobile USA's proposed and CTA's actual operations in the United States. ComNet shares similar characteristics as the other Chinese carriers.[4] It is ultimately majority-owned by the Chinese government; its parent company reviews its budget and locations in the United States; it provides a range of telecommunications services in the United States; and it has built relationships with U.S. carriers. Without proper oversight by Team Telecom, these risks have gone unmitigated.

ComNet is ultimately majority-owned by the Chinese government. As noted above, ComNet became a wholly-owned subsidiary of Pacific Networks as part of its acquisition by CITIC. CITIC is majority-owned by CITIC Group Corporation ("CITIC Group"),[5] "a wholly state-owned company in the [People's Republic of China]."[6] According to CITIC's website, CITIC Group was "established in 1979 . . . with the support of late Chinese leader Deng Xiaoping" and "since its inception, CITIC Group has been a pilot for national economic reform and an

  1. ↑ Id. at TT-DOJ-522-23.
  2. ↑ TT-DOJ-481-83.
  3. ↑ See Email from the Dep't of Homeland Sec. to the Subcommittee (Feb. 14, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  4. ↑ In discussions with the Subcommittee and in its response to the FCC's Order to Show Cause, ComNet distinguished its operations from China Mobile USA and CTA. According to ComNet, the companies differ in terms of company size, scope of business operations, corporate ownership structure, history of operations in the United States, and employment of U.S. citizens. See Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee); In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at 19-26 (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199.
  5. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  6. ↑ CITIC Telecom International, Annual Report 248 (2019), https://www.citictel.com/wp-content/uploads/2020/03/EW01883_AR_20200327.pdf.

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