China syndromeFears of cyber espionage hinder U.S. license to China Mobile

Serious concerns over cyberspying have fueled a debate among U.S. national security agencies about whether communications giant China Mobile should be granted a Federal Communications Commission (FCC) license to provide international service to American customers.

The world’s largest mobile provider, China Mobile applied last October to offer service between the United States and China and to build facilities on American soil.

Officials from the FBI, DHS, and the Justice Department’s national security division worry that granting the license would allow China access to U.S. infrastructure, which would allow China to spy more easily on the U.S. government and make easier the theft of intellectual property from American companies.

The group of officials, known as Team Telecom, is tasked with reviewing  all FCC applications from foreign companies. The team can advise the FCC to deny the application, or, as they have done in the past, demand a signed agreement that addresses and satisfies security concerns.

China Mobile, which provides services to 670 million subscribers, is not seeking to offer mobile services to U.S. customers, but traffic from domestic providers, such as AT&T and Verizon, could be routed through China Mobile’s network, should the license be granted.

The prospects for the China Mobile license are muddied by the fact that two other Chinese companies, China Telecom and China Unicom, were granted FCC licenses in 2002 and 2003 to carry phone and Internet traffic between the United States and China. That was before Chinese cyberespionage came to be considered a grave threat to U.S. national security. China-originating hacking has stolen tens of billions of dollars in U.S. intellectual property, U.S. intelligence officials have said. In addition, China has obtained national defense information, according to officials.

On 8 April 2010, China Telecom, China’s largest fixed-line telephone company, rerouted 15 percent of the world’s Internet traffic through Chinese servers for eighteen minutes, according to the U.S.-China Economic and Security Review Commission. China Telecom denied hijacking the traffic, but never explained how “erroneous” instructions were placed into the world’s Internet routing system, a system based largely on trust.

Last month, Australia blocked Chinese-owned Huawei Technologies, citing security concerns, and U.S.-based Symantec disengaged from a joint venture with Huawei, reportedly over concerns that the U.S. government would stop sharing information with Symantec.

The House intelligence committee is investigating the role of Chinese telecommunications companies in espionage, with a focus on Huawei and ZTE Corp., which makes switches, routers, and other products.

According to Sean McGurk, a former DHS cybersecurity official, China Mobile’s entry into the U.S. physical infrastructure, “would pose a concern to most people. We’re not really sure, not only where the information is flowing, but what potentially is being left behind.”