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US Looks to Oust Chinese Telecommunication Firms


Four Chinese firms are on the chopping block as the United States looks to shore up its telecommunications industry amid security concerns with China. In a report published earlier today by the US Federal Communications Commission (FCC), Chinese firms China Telecom America, China Unicom America, Pacific Network and ComNet will have 30 days to prove their operational independence and that they “are not subject to the influence and control of the Chinese government”, or they will face expulsion from the United States.

FCC Chairman, Ajit Pai

Given the nature of the telecommunications industry and its intrinsic vulnerability to being hijacked, the lack of operational transparency of these Chinese firms has raised concerns amongst US regulators, as has already been seen with Chinese telecommunications giant Huawei. In addition to this, China’s history of corporate espionage, data collection, and fraud has prompted FCC Chairman, Ajit Pai to state: “We simply cannot take a risk and hope for the best when it comes to the security of our networks.”. Although the aforementioned firms will have 30 days to provide a response to the FCC’s inquiry, the ability and willingness of these companies to prove their operational autonomy is unlikely as they are subsidiary companies of much larger Chinese State-Owned Enterprises (SOE). Whilst, from a business perspective, Chinese telecommunications firms would perhaps like to run a clean, transparent operation abroad, it's widely believed that a full investigation of these firms will indeed lead to the exposing of a "back door" that allows for sharing of data with the Chinese government.



Today’s events are just one instance of an ongoing decoupling of telecommunication services as US regulators look to prevent China from exploiting its free markets, democratic freedoms and national security. Last May, US regulators voted unanimously to oust China Mobile from its US market, and the Chinese firms Huawei and ZTE were blocked from receiving federal funds in a vote last November. Finally, US regulators have recently restricted US firm Google from operating its own trans-pacific data cable that connected with Hong Kong (still part of China, remember), citing: “there is a significant risk that the grant of a direct cable connection between the United States and Hong Kong would seriously jeopardize the national security and law enforcement interests of the United States”. Whilst much of the world's regular business is paralysed at the present moment, the telecommunications war between these two superpowers rages on.

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