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China Mobile May Be Barred From US Telecom Market Under FCC Proposal

Mike Dano
4/17/2019
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The FCC is planning to vote on a proposal that would prevent China Mobile from building telecom facilities in the US. Agency officials explained that they are taking action based on a recommendation from the Trump administration that China Mobile poses "substantial national security and law enforcement risks."

China Mobile submitted a request to enter the US telecom market in 2011, a request that requires a response from the executive branch of the US government before the FCC can act on it. FCC officials said China Mobile's 2011 request gathered dust until last year when the Trump administration urged the FCC to reject the request on national security and law enforcement grounds. China Mobile responded with a proposal to enter mitigation negotiations with US officials, a relatively standard move taken by foreign firms looking to enter the US telecom market, but Trump officials flatly rejected that request.

FCC officials said they reviewed the 2018 filings from the Trump administration and China Mobile on the issue and have now decided to bar China Mobile from the US telecom market. FCC Chairman Ajit Pai plans to circulate a proposal to that effect to the rest of the commission in the coming weeks, and then the full commission will vote on the proposal during its open meeting next month.

China Mobile was looking to build interconnection facilities in the US, not necessarily a full-blown wireless network. Such facilities would be connected to domestic networks operated by the likes of AT&T and Verizon. Those facilities would then route calls from China Mobile customers to recipients in the US and vice versa. That would be a change from the way US-China calls are currently routed: AT&T and other US telecom companies now route their domestic traffic to interconnection facilities that are outside of the US, where they can then be sent into China or other locations.

FCC officials argued that allowing a company owned by the Chinese government to build interconnection facilities in the US would potentially allow the Chinese government to access US network traffic and potentially disrupt that traffic.

The FCC is concerned that the Chinese government would tap China Mobile's facilities in a similar way that AT&T's domestic interconnection facilities have been tapped by the US government's cyber spying agency, the NSA. The NSA's tap into AT&T's facilities was initially detailed by former NSA contractor Edward Snowden.

In explaining its decision, FCC officials cited ongoing cyber attacks by Chinese hackers into the US government and US companies. According to a variety of reports, such attacks -- reportedly backed by the Chinese government -- have occurred for years. However, China isn't alone in maintaining a near-constant state of cyberwarfare; according to a variety of reports, the US government along with Russia, Iran and a wide range of other countries are also conducting various global cyber attacks and hacks to varying degrees.

Why this matters
FCC officials explained that this is the first time the agency is using Section 214 of the Communications Act and Section 63.18 of its rules to prevent a foreign telecom company from entering the US market. This shows the government is working hard to find ways to antagonize the Chinese government and Chinese companies.

The Trump administration's souring relations with China over trade, intellectual property licensing, cyber warfare and other issues loom large here. China Mobile is the latest in a long line of Chinese firms to be affected by the issue -- Huawei, ZTE and others have either been barred from business in the US or hindered in some way.

Mike Dano, Editorial Director, 5G & Mobile Strategies, Light Reading | @mikeddano

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