China syndromeChina Telecom Poses “Unacceptable” Espionage, Sabotage Risk in Providing U.S.-International Links: U.S. Govt. Agencies

The U.S. Department of Defense, Homeland Security, and several other government agencies have urged the Federal Communication Commission (FCC) to revoke China Telecom’s license to provide links between the United States and foreign countries.

CSO Online reports that a U.S. investigation of China Telecom’s operations found “substantial and unacceptable national security and law enforcement risks,” the U.S. Justice Department said last week. Based on the review, DOJ recommended revoking the company’s license to provide international telecommunication to and from the United States.

The DOJ recommendation was endorsed by the U.S. Departments of Defense, State, Homeland Security, Commerce, as well as the U.S. Trade Representative.

China Telecom is a U.S. subsidiary of China’s state-owned telecommunications company.

In their filing, the agencies said that China Telecom poses risks to security and law enforcement because of inaccurate public representations by China Telecom concerning its cybersecurity practices and inaccurate statements by China Telecom to US government authorities about where China Telecom stored its U.S. records. According to the filing, this latter point raises significant questions about whether China Telecom is complying with federal and state cybersecurity and privacy laws.

“The agencies expressed particular concern about the nature of China Telecom’s U.S. operations, which, they argue, could give China Telecom the ability to engage in economic espionage and sabotage, mainly through the re-routing of U.S. internet traffic through Chinese servers using something called BGP (border gateway protocol) hijacking” CSO Online notes. “The filing contains a string of links to allegations about China Telecom as a source of BGP hijacking, which, although the filing doesn’t emphasize this fact, often results from simple error and not malign intent.”

“Today, more than ever, the life of the nation and its people runs on our telecommunications networks,” said John C. Demers, Assistant Attorney General for National Security. “Today’s action is but our next step in ensuring the integrity of America’s telecommunications systems.”

Demers noted that data security “depends on our use of trusted partners from nations that share our values and our aspirations for humanity.”

The decision on whether or not to revoke the license, granted in 2007, would be made by the FCC.

The US Justice Department said that one of the factors behind the recommendation from the various U.S. agencies involved was the “increased knowledge of [China’s] role in malicious cyber activity targeting the United States.”

They also noted “concerns that China Telecom is vulnerable to exploitation, influence, and control” from Beijing, and said “the nature” of the firm’s U.S. operations provided opportunities for China’s state actors “to engage in malicious cyber activity enabling economic espionage and disruption and misrouting of U.S. communications.”

Reuters notes that Chinese telecommunications companies have recently come under scrutiny in the United States. Last May, the FCC denied an application by China Mobile to provide telecommunications services between the United States and foreign destinations “due to several factors related to China Mobile USA’s ownership and control by the Chinese government.”

CSO Onlineadds that “last November, the FCC barred the use of its $8.5 billion universal service fund for the purchase of equipment from Chinese tech giants ZTE and Huawei. (On March 12, this ban was codified in the Secure and Entrusted Communications Act, which prohibits federal subsidies from going toward the purchase of communications equipment or services that pose a national security risk). Huawei has separately been subjected to two executive orders that bar the sale of their gear in the US and bar US companies from selling essential technology to the Chinese telecom supplier.”

In September last year, Democratic Senator Chuck Schumer (New York) and Republican senator Tom Cotton (Arkansas) urged the FCC to review the authorizations issued for China Telecom and China Unicom, a mobile service provider. The two lawmakers raised concerns that the companies “have access to our telephone lines, fiber optic cables, cellular networks and satellites in ways that could give it (China) the ability to target the content of communications of Americans or their businesses and the U.S. government.”