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China tech

US rejects China Mobile entry bid, eyeing other state telecoms

FCC cites national security risks in first decision of its kind

The Federal Communications Commission voted unanimously to deny China Mobile's bid to provide telecom services in the U.S.   © Reuters

NEW YORK -- The U.S. Federal Communications Commission voted unanimously on Thursday to deny state-owned China Mobile's bid for market entry on national security grounds.

China's largest telecom company had sought approval in 2011 to provide international calling and other services in the U.S. This marks the first time the commission dismissed an application in response to national security risks.

One of the FCC commissioners went even further, calling for investigations into China Unicom and China Telecom, both of which are state-owned and currently operating in the U.S.

The FCC's rejection of China Mobile comes amid rising tensions between the world's two largest economies. President Donald Trump has threatened to raise punitive tariffs on Friday after accusing China of reneging on its commitments toward a trade deal, roiling global equity markets.

China Mobile joins a list of Chinese companies blocked by Washington on espionage fears. American government agencies have been banned from buying devices from telecom equipment makers Huawei Technologies and ZTE, for which Huawei has launched legal action against the U.S.

FCC Chairman Ajit Pai said at Thursday's hearing that granting the telecom's application could allow Beijing to use China Mobile to exploit telephone networks for intelligence collection against U.S. government agencies and other sensitive targets.

"In the current security environment, which features Chinese government involvement in computer intrusion and economic espionage, there is a significant risk the government would use China Mobile to conduct activities to jeopardize security law enforcement and economic interests of the United States," Pai said.

"I would put it plainly: When it comes to national security, we cannot afford to make risky choices and just hope for the best," he said.

In 2018, the FCC received a recommendation from the Commerce Department and the National Telecommunications and Information Administration to deny China Mobile's application on national security grounds, the first request of its kind by executive branch agencies, according to the commission.

Brendan Carr, the commissioner who raised the subject of China Unicom and China Telecom, urged national security agencies to examine whether the FCC should revoke the authorizations that the two companies received to operate.

"Security threats have evolved over the many years since those companies were granted interconnection rights to U.S. networks in the early 2000s," he said at the hearing.

"Much, if not all, of the reasoning behind today's decision appears to apply with equal or greater force to those legacy authorizations," Carr said. "Let's ensure that our decisions from decades past don't inadvertently endanger American interests."

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