Threats to U.S. Networks/Section 5

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Section IV, C
Threats to U.S. Networks: Oversight of Chinese Government-Owned Carriers
by the Permanent Subcommittee on Investigations
Section V, A
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​V. CHINESE STATE-OWNED TELECOM COMPANIES OPERATED IN THE UNITED STATES WITH MINIMAL OVERSIGHT FROM THE FCC AND TEAM TELECOM

The FCC's and Team Telecom's limitations described above resulted in a lack of oversight of Chinese state-owned carriers operating in or seeking to operate in the United States. In 2018, Team Telecom acknowledged that Chinese state-owned telecommunications carriers providing international telecom services between the United States and foreign points raise national security concerns.[1] This occurred in connection with Team Telecom's first ever recommendation to deny Section 214 authorization because of national security concerns: the application of Chinese state-owned carrier China Mobile USA.[2] The recommendation, however, came seven years after the application was submitted.[3] The FCC waited another year before denying the application in 2019.[4]

Three Chinese state-owned carriers currently possess international Section 214 authorizations: (1) China Telecom (Americas) Corporation ("CTA"); (2) China Unicom (Americas) Operations Limited ("CUA"); and (3) ComNet (USA) LLC ("ComNet") (and its immediate parent company Pacific Networks Corp.). All three companies received Section 214 authorizations nearly two decades ago and have operated in the United States since.[5] Team Telecom officials acknowledged to the ​Subcommittee that there is no meaningful difference between the services for which China Mobile USA sought authorization to provide and the services currently being provided by the three other Chinese state-owned carriers.[6] Further, the officials stated that CTA, CUA, and ComNet were also susceptible to the same national security and law enforcements concerns Team Telecom raised when recommending the FCC deny China Mobile USA's application.[7] Nevertheless, until recently, Team Telecom conducted minimal oversight of these entities, despite having entered into security agreements with CTA and ComNet more than a decade ago.[8] During that time, Team Telecom conducted only two site visits to each company.[9] Team Telecom, by contrast, never entered into a security agreement with CUA, meaning it has had no interaction with the company.[10] Only since April 2020, when the Subcommittee was nearing the end of its investigation, did Team Telecom and the FCC take steps to fully assess whether the companies' existing authorizations continue to serve the public interest.[11]

    Notice—International Authorizations Granted, Rep. No. TEL-00151, DA No. 99-2328, 14 FCC Red 17862, 17864 (Oct. 28, 1999) (ComNet authorization).

  1. ↑ See Executive Branch Recommendation re China Mobile USA, supra note 56, at 3; In the Matter of China Mobile Int'l (USA) Inc., FCC No. 19-38, 34 FCC Red 3361 (May 10, 2019).
  2. ↑ See Executive Branch Recommendation re China Mobile USA, supra note 56, at 3; In the Matter of China Mobile Int'l (USA) Inc., FCC No. 19-38, 34 FCC Red 3361, 3365 (May 10, 2019); Press Release, Fed. Commc'ns Comm'n, FCC Denies China Mobile USA Application to Provide Telecommunications Services (May 9, 2019), https://docs.fcc.gov/public/attachments/DOC-357372A1.pdf ("This is the first instance in which Executive Branch agencies have recommended that the FCC deny a section 214 application due to national security and law enforcement concerns.").
  3. ↑ See Int'l Bureau Selected Applications Listing, File No. ITC-214-20110901-00289, FED. COMMC'NS COMM'N, http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+Number/%3D/ITC2142011090100289&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/File+Number.
  4. ↑ See id. During the year period, China Mobile USA and Executive Branch agencies were provided opportunities to file arguments in favor of and against denial. The FCC told the Subcommittee that staff "actively worked on the recommendation to deny from July 2018, when it was received" until the May 2019 order. It also suggested that it took longer to reach a decision because the "denial of an international Section 214 application on national security grounds was a case of first impression." See Email from the Fed. Commc'ns Comm'n to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  5. ↑ See Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00581, DA No. 02-2500, 17 FCC Red 19181, 19182 (Oct. 3, 2002) (CUA authorization); Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00567, DA 02-2060, 17 FCC Red 16199, 16201 (Aug. 22, 2002) (CTA authorization); Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00423, DA No. 01-1794, 16 FCC Red 14695, 14696 (July 26, 2001) (China Telecom authorization); Fed. Commc'ns Comm'n, Public
  6. ↑ Briefing with the Dep't of Justice (Apr. 3, 2020); Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020).
  7. ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep't of Justice (Aug. 1, 2019).
  8. ↑ See Letter from Yi-jun Tan, President, China Telecom (USA) Corp., to Sigal Mandelker, Deputy Assistant Att'y Gen., Dep't of Justice, Elaine Lammert, Deputy Gen. Counsel, Fed. Bureau of Investigation, & Stewart Baker, Assistant Sec'y for Policy, Dep't of Homeland Sec. (July 17, 2007); Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) LLC to Stephen Heifetz, Deputy Assistant Sec'y for Policy Dev., Dep't of Homeland Sec. & Matthew Olsen, Acting Assistant Att'y Gen., Nat'l Sec. Div., Dep't of Justice (Mar. 3, 2009).
  9. ↑ See DHS00472PSI-76; DHS00477PSI-89; DHS00460PSI-65; DHS00466PSI-71; TT-DOJ-521-73; TT-DOJ-495-99; TT-DOJ-500-06; TT-DOJ-507-20.
  10. ↑ Briefing with China Unicom Americas (Apr. 16, 2020); Briefing with the Dep't of Justice (Apr. 3, 2020); Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep't of Justice (Aug. 1, 2019).
  11. ↑ See Executive Branch Recommendation re CTA, supra note 56; Press Release, Fed. Commc'ns Comm'n, FCC Scrutinizes Four Chinese Government-Controlled Entities Providing Telecommunications Services in the U.S. (Apr. 24, 2020), https://www.fcc.gov/document/fcc-scrutinizes-four-chinese-government-controlled-telecom-entities. Team Telecom officials stressed to the Subcommittee that, although it did not file its recommendation to revoke CTA's authorizations until April 2020, it was reviewing CTA's authorizations long before that. Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
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