FCC Chairman Ajit Pai will vote to reject China Mobile USA’s request to provide telecommunications services in the United States, finding the Chinese government-owned entity poses serious national security risks.
A draft order denying China Mobile USA’s 2011 application and finding the company vulnerable to exploitation and influence of the Chinese government is currently being circulated. The order will be up for vote by the commissioners at the FCC’s May 9 open meeting.
“Safeguarding our communications networks is critical to our national security. After reviewing the evidence in this proceeding, including the input provided by other federal agencies, it is clear that China Mobile’s application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks. Therefore, I do not believe that approving it would be in the public interest. I hope that my colleagues will join me in voting to reject China Mobile’s application,” Pai said in a statement.
The FCC stance follows review and recommendations from Executive Branch agencies in 2018 to reject the application, also determining that national security risks could not be fixed through a voluntary mitigation agreement. This marks the first time the executive branch has asked the FCC to deny an application based on national security concerns.
Broadly, China Mobile USA is seeking authority to provide international telecommunications services, for example voice phone calls between the U.S. and other countries, using their own facilities and via interconnection agreements with U.S. carriers. Authorization under section 214 is broad and once approved, applicants can build their network as they see fit, be it through wired facilities or reselling wireless services from another provider.
Through these interconnection agreements, the company could have access to large amounts of U.S. traffic and the FCC is concerned about the potential for espionage or network exploitation at the hand of the Chinese government.
After the executive branch first made its recommendation to deny in July 2018, China Mobile USA presented the agencies with a detailed mitigation agreement but that was rejected in September as ineffective.
The FCC sends every application where ownership is greater than 10 percent to the executive branch for review, so mitigation agreements are not unheard of and have been negotiated with a number of companies in the past. For example, Sprint and T-Mobile both have these types of agreements in place.
The issue here, according to senior FCC officials, is that there must be a baseline of trust in order for agreements to work. As a state-owned entity, even if the agreement was breached, under Chinese law China Mobile USA may not be able to report it.
The FCC is concerned that there aren’t significant checks in place that would prevent the Chinese government from influencing China Mobile USA to comply with espionage and intelligence requests and therefore it poses too great a risk to grant the company access to U.S. networks.
The order does not directly identify risky activities undertaken by China Mobile USA itself, but rather evidence of how Chinese state-owned businesses have previously participated in acts like espionage in line with Chinese policy.
The U.S. is currently working to persuade global allies to keep equipment from Chinese vendor Huawei (which has different ownership than China Mobile USA) out of 5G networks, also citing security threats. The FCC is also awaiting guidance from the executive branch as to how to identify which companies might not be eligible for Universal Service Fund (USF) funding because they buy communications equipment from vendors that post national security threats.
If the Commission adopts the order rejecting China Mobile USA’s application, then the company’s only course of action is to file for a judicial review, asking a court to assess the order.
