China Telecom has lost its bid to stay open in the US, while it fights an October FCC order taking away its ability to operate there in court.

The FCC order, issued October 26, now takes effect in early January. In a short ruling December 2, a three-judge panel of the US Court of Appeals for the District of Columbia ruled China Telecom "has not satisfied the stringent requirements for a stay pending court review".

Figure 1: Signage on the China Telecom offices in Beijing, China.
(Source: Newscom / Alamy Stock Photo)

The FCC justified withdrawing China Telecom's permission to offer telecoms services in the US by citing national security risks, including its potential for control and influence by China's government. For its part, China Telecom is going to court to argue the FCC had rejected its request for a hearing, and that the regulator doesn't have grounds to conclude it poses an imminent threat to national security.

The DC Circuit will, though, hear the company's legal challenge to the FCC for canceling its 20 year-old licence. But that case is likely to drag on for several months, with the operator now needing to close up shop beforehand.

China Telecom has a resold mobile resale service in the US, which it says it will need to end, and also provides telco services for Chinese government facilities located in America. The company's parent, China Telecommunications Corporation, is China's largest fixed-line service and its third largest mobile provider.

The State-owned Assets Supervision and Administration Commission, which oversees state-owned enterprises, owns 100% of its stock.

Well, if you say share our data…

On its home front, China Telecom has joined a new Shanghai Data Exchange, which opened on November 25. The argument for the data exchange is that it will permit small companies to have access to data owned by bigger ones, while also giving larger companies access to new revenue streams.

The Shanghai data bourse features flight information from China Eastern Airlines, together with logistics and shipping information from COSCO (the China Ocean Shipping Company), and data from telecoms operators which also include China Mobile and China Unicom. E-commerce firm JD.com and Alibaba's ride-hailing app AutoNavi have also created data products for the exchange. These companies' presence is significant because it appears to make Shanghai's the first data exchange with large amounts of non-state data.

Didiing another IPO

Meanwhile, in another sign of the ever more yawning chasm widening between China and the US, Didi Global, a ride-hailing giant, announced it will delist from the New York Stock Exchange in favor of Hong Kong. A death knell for Chinese IPOs in the US, it's being called.

This announcement came just six months after it listed, in a $4.4 billion IPO which was the biggest by a Chinese company in the US since Alibaba in 2014. But Chinese regulators had not been all that enthusiastic about the listing.

And less than a week later, the company found its Didi Chuxing app chucked out of China's app stores, on the basis of violating data protection laws.

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Meanwhile, back at China Telecom, Luis Fiallo, president of China Telecom Americas, has said that with his company facing being barred from the US, it would instead redouble its efforts to offer IP backbone infrastructure in Argentina, Brazil, China, Mexico, Panama, and Peru.

The model has worked for the company so far in Brazil, says Fiallo. So the company's current US crisis may, its president hopes, be replaced by opportunity elsewhere.

Even if, as it turns out, crisis and opportunity actually aren't the same word in Mandarin after all.

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— Pádraig Belton, contributing editor special to Light Reading