To absolutely no one's surprise, the US Federal Communications Commission (FCC) has completed the hat trick and voted to ban Chinese state-owned telecoms company China Unicom from the US market.

Rival operator China Telecom was kicked out in October 2021, while China Mobile was denied access to the US market by the FCC in May 2019.

Once again, the reason given was security concerns, as the US regulator continues to clamp down on Chinese telecoms and technology companies.

Figure 1: Shut the door: Following rivals China Mobile and China Telecom, China's third-largest operator has fallen foul of the FCC, banned from the US due to security concerns.
(Source: Reuters / Alamy Stock Photo)

The commission voted 4-0 to revoke the service provider's authorization to operate, which dates back to 2002. The order gives China Unicom (Americas) Operations Limited 60 days from publication to stop all domestic interstate and international telecommunications services.

The FCC believes the service provider "is subject to exploitation, influence, and control by the Chinese government and is highly likely to be forced to comply with Chinese government requests without sufficient legal procedures subject to independent judicial oversight."

The Commission added that "China Unicom Americas' ownership and control by the Chinese government raise significant national security and law enforcement risks by providing opportunities for China Unicom Americas, its parent entities, and the Chinese government to access, store, disrupt, and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States."

Right to reply

In remarks published with the FCC's decision, FCC Chair Jessica Rosenworcel said China Unicom had been offered the opportunity to respond to the commission's concerns.

"At each stage, China Unicom Americas' responses were incomplete, misleading, or incorrect," Rosenworcel noted.

She prefaced this by saying "the national security landscape has shifted and there has been mounting evidence – and with it, a growing concern – that Chinese state-owned carriers pose a real threat to the security of our telecommunications networks."

According to Reuters, a lawyer for the operator released a statement saying the FCC decision was "without any justifiable grounds and without affording the required due process," and that China Unicom "will proactively protect the rights and interests of the company and its customers."

The telco also told the BBC its US unit "has a good record of complying with relevant US laws and regulations and providing telecommunication services and solutions as a reliable partner of its customers in the past two decades … China Unicom (Hong Kong) Limited will closely follow the development of the situation."

Rosenworcel said that in 2021, the FCC published the first-ever list of communications equipment and services that pose an unacceptable risk to national security.

China's operators may find their problems don't end here. FCC Commissioner Geoffrey Starks voiced concerns that China Unicom was still free to run data centers in the US, as the commission does not have jurisdiction over them.

"The Department of Homeland Security has warned that these data centers leave their customers vulnerable to data theft for one of the same reasons underlying our decision today," he said.

"These companies are legally required to secretly share data with the Chinese government or other entities upon request, even if that request is illegal under US law."

Starks added that the FCC should work with the government and Congress to potentially expand their remit to include this and other network security threats.

In the hot zone

This is the latest chapter in a trade war between China and the US that ramped up under former President Trump, and shows no signs of slowing under President Biden.

In November 2021, Biden signed into law the Secure Equipment Act of 2021, which prevents China's Huawei and ZTE from receiving federal approvals to sell their equipment in the US market.

The US also added another 12 Chinese companies to its "entity list", including three quantum communications companies (for their role in supporting the military) and New H3C, a JV between HPE and Tsinghua University.

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They join a lengthy list that includes IT, AI and electronics manufacturers deemed to have military links. From the telecom sector, Huawei and state-owned optical manufacturer Fiberhome are the notable inclusions, although neither ZTE nor any of the telcos have been added.

In June, Biden issued a list of companies that US investors are banned from investing in.

The first 59 - which Biden says are linked to China's defense or surveillance industries - included China Mobile, China Telecom, China Unicom and Huawei, with US investors given a year from August 2 to divest their holdings.

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— Fiona Graham, Editorial Director, Light Reading