China Telecom is given 60 days to exit the US market

China Telecom is given 60 days to exit the US market

The US Federal Communications Commission (FCC) has voted to revoke the authorization for China Telecom's United States subsidiary to operate in the country.

The FCC gave national security concerns as its reason, notably the assumption that the company is influenced and controlled by the Chinese government, meaning it could be forced to comply with Chinese government requests without independent judicial oversight. This in turn, the FCC suggests, could allow the Chinese government to access or disrupt US communications.

China Telecom Americas has made it clear that it intends to respond to this judgement, but the likelihood is that it will now be forced to discontinue its US services – which it has provided for almost 20 years – within 60 days. 

This is clearly no small matter. China Telecom claims to be the largest fixed line and broadband operator in the world, with tens of millions of customers. Its services range from broadband internet to mobile and landline telephone networks.

While a large amount of its business is in its home market, it is present in 110 countries. In the US it provides services to Chinese government facilities and has a large reach among Chinese Americans, Chinese tourists, Chinese students and Chinese businesses, so one can assume it will be taking a big financial hit.

Other state-owned Chinese companies have also been targeted by the US regulator in recent years. As Reuters points out, in May 2019, the FCC voted to deny China Mobile the right to provide US services. In March, Reuters adds, the FCC began efforts to revoke authorization for China Unicom Americas, Pacific Networks and its wholly-owned subsidiary ComNet to provide US telecommunications services.

In the equipment area, Huawei Technologies and ZTE are among companies now seen in the US as national security threats to communications networks. The FCC in December adopted rules requiring carriers with ZTE or Huawei equipment to "rip and replace" that equipment.

This is a pattern replicated in a number of other countries. Nor is telecoms the only industry in which China is viewed with suspicion. According to the UK’s Financial Times, following the UK government’s moves to ban Huawei from its 5G mobile phone network last year plans are now under way to bring in new investors into the UK nuclear energy programme and shut out Chinese companies.

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