The Department of Justice (DOJ) has advanced important and overdue law enforcement efforts related to China, including racketeering charges against Huawei and its subsidiaries, indictments against Chinese military personnel for the hacking of Equifax, and cracking down on espionage by Chinese-government-funded academics in American universities. Last week, it recommended (as part of a group of executive branch agencies including the Departments of Homeland Security, Defense, State, and Commerce and the Office of the US Trade Representative) that the Federal Communications Commission (FCC) revoke state-owned China Telecom’s authorizations “to provide international telecommunications services to and from the United States.”
A recent executive order formalized “Team Telecom,” a previously informal collaboration between the “Departments of Defense, Homeland Security, and Justice (along with affiliated agencies) [which] has for years been quietly tasked with evaluating and maintaining the security of America[n] telecom infrastructure in concert with the FCC.” The FCC does not have the authority, resources, or expertise to conduct national security reviews of transactions involving key telecom assets with foreign entities by itself, so this order formalizes Team Telecom’s leadership and processes. This is an essential reform to improve cyber defenses that have lagged for years, to streamline administrative processes, and to ensure interagency activities do not devolve into turf wars.
The order improves due process for foreign entities applying for FCC licenses by adopting a 120-day shot clock for national security reviews. For example, state-owned China Mobile applied for an operating license in 2011, but it took until 2019 for the review of its application to be completed and for the FCC to deny the license. Thereafter Sens. Chuck Schumer (D-NY) and Tom Cotton (R-AR) asked the FCC to review China Telecom and China Unicom for similar concerns. Importantly, the order allows for retroactive review, hence the DOJ’s recommendation to revoke China Telecom’s 2007 license. The recommendation is supported by 35 documents, assiduously compiled and made public, a demonstration of transparency unknown to US firms operating in China.
The DOJ press release accompanying its China Telecom recommendation notes that things have changed since 2007: the national security environment has evolved, knowledge of China’s role in malicious cyber activity targeting the US has increased, and concerns exist that China Telecom is vulnerable to the exploitation, influence, and control of the Chinese government. Moreover, it states that the recommendation was based on the fact that the company has made inaccurate statements and public representations about its records and operations in the US.
While the executive order’s jurisdiction is limited to applications and licenses granted by the FCC, it does not diminish the fact that proliferation of technology in the US by Chinese state-owned firms presents potentially serious security vulnerabilities such as backdoors and kill switches. Moreover, Chinese law allows Beijing to confiscate Americans’ data collected by these products and services, without regard for US law. The National Vulnerabilities Database details the technical deficiencies of such firms, and the federal government has restricted the use of products from firms such as ZTE Corporation (network equipment); Hangzhou Hikvision Digital Technology Co., Ltd. (surveillance cameras); Lenovo (laptops); Lexmark (printers); and TCL Corporation (smart televisions). Additionally, my recent report, Stealing from the States: China’s Power Play in IT Contracts, documents how some of these firms are embedded in state government networks, which are home to treasure troves of sensitive government data but overseen with fewer controls and resources than federal networks.
There are a multitude of foreign firms that would like to operate in the United States; most are sincere and could add value to the American economy. However, when a firm abuses the privilege of operating in the US, they should lose that privilege. The recent Team Telecom executive order and DOJ recommendation are important for national security and timely reminders that the FCC grants licenses only for the public interest, convenience, and necessity. In the meanwhile, the FCC can also move quickly to close the 5G spectrum gap with China; Beijing has already deployed some 500 MHz of essential mid-band frequencies for 5G, and the US is behind. Holding an expeditious C-band auction and is essential for the US, both to take the lead on spectrum and for our national security.
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