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US continues push to keep China out of its telecom networksUS continues push to keep China out of its telecom networks

Telecom companies including Huawei, Pacific Networks and ComNet are among those in heated legal disputes with US officials, who are aiming to turn the world against China.

Mike Dano

June 2, 2020

5 Min Read
US continues push to keep China out of its telecom networks

The US government's battle to keep Chinese companies out of its communications networks rages on.

This week, Pacific Networks and its subsidiary ComNet urged the FCC not to shut down their US operations.

Separately, lawyers from the FCC laid out their legal argument for banning US telecom companies from using Huawei equipment.

And America's anti-China influence is being felt in the UK, where that government's ongoing debate over whether to bow to US demands and ban Huawei outright from that country's telecom market.

A response from Pacific Networks and ComNet
"Neither company has been asked by the Chinese government or the Chinese Communist Party to take any action that would 'jeopardize the national security and law enforcement interests of the United States' or would suggest that the companies are vulnerable 'to the exploitation, influence, and control of the Chinese government,'" wrote Pacific Networks and ComNet in a filing to the FCC. "To the contrary, Pacific Networks and ComNet have provided valuable services to their customers, and consistently demonstrated compliance with Commission regulations and cooperation with both national security and law enforcement authorities."

Pacific Networks and ComNet are two of the four companies targeted by the FCC as potential risks to national security. After banning China Mobile from building telecom facilities in the US, the FCC in April opened a new proceeding against China Telecom Americas, China Unicom Americas, Pacific Networks and ComNet. The agency asked the companies "to explain why the Commission should not start the process of revoking their domestic and international section authorizations enabling them to operate in the United States."

In their 92-page response, Pacific Networks and ComNet argued that the FCC's threat to ban them from the US market was "unnecessary and unwarranted."

And they took issue with the basic premise of the FCC's inquiry.

"The [FCC] bureaus propose these actions for the sole reason that an investment company owned by the People's Republic of China holds an indirect ownership interest in the companies in excess of 50% – not because they are aware of any intervention by the Chinese government or vulnerabilities in the Companies' operations and networks," the companies wrote. "The bureaus do not refer to any specific wrongdoing on the part of either company that would warrant authorization revocation and consequent prohibition from providing telecommunications services to the public, but rather cite to the Commission's action in its 2019 China Mobile Order and assert the general concern – not specific to Pacific Networks or ComNet – that national security and law enforcement risks posed by China have grown since the companies received their authorizations."

The firms also offered a detailed look at their operations and ownership structure.

Reuters reported that the other two other companies targeted by the FCC – China Telecom Americas and China Unicom Americas – haven't yet filed their response to the agency's proceeding.

Huawei's fight back
In a separate proceeding this week, the FCC's lawyers filed a 122-page argument with the US Court of Appeals for the Fifth Circuit detailing why the agency has the legal authority to prevent US telecom companies from using Universal Service Fund money to buy Huawei equipment.

That particular topic is simply one of many proceedings by US government agencies against China's Huawei. For example, the FCC is conducting a separate proceeding into whether it can pay smaller US wireless network operators to replace their existing Huawei equipment. And the US Commerce Department has extended its ban on US business with Huawei for another 12 months.

But the FCC's fight against Huawei over the USF program is noteworthy because it has involved a lengthy back-and-forth between lawyers for the FCC and Huawei. This week, FCC officials cheered the agency's latest filing on the topic, with FCC Chairman Ajit Pai arguing on Twitter that FCC-administered funds can't be spent "on equipment/services from companies that threaten communications supply chain/integrity."

In their filing, FCC lawyers argue that "several provisions of the Communications Act require the Commission to consider the potential impact on network security or the public interest of permitting foreign-owned or -controlled entities access to different components of American communications networks."

They pointed to a 2012 report from the House Permanent Select Committee on Intelligence highlighting threats from Huawei, and argued that "the concern that Huawei or other foreign entities could compromise the nation's network security has grown since."

Officials from Huawei have loudly and repeatedly rejected those concerns.

An international push
But US officials haven't been satisfied with domestic movements against Huawei and other Chinese companies. They've been urging their counterparts in other countries to enact similar bans.

The topic has caught fire in the UK recently, where officials initially moved to ban Huawei equipment from 65% of mobile networks in the country. Now, though, there's a debate underway about whether to issue a total ban on Huawei.

The UK parliament this week held a hearing on the topic, where US officials including US Senator Tom Cotton and former US Representative Mike Rogers (the author of the US government's 2012 report against Huawei) testified remotely.

"I fear China is attempting to drive a high tech wedge between us using Huawei," Cotton told UK lawmakers.

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

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About the Author(s)

Mike Dano

Editorial Director, 5G & Mobile Strategies, Light Reading

Mike Dano is Light Reading's Editorial Director, 5G & Mobile Strategies. Mike can be reached at [email protected], @mikeddano or on LinkedIn.

Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.

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