THREATS TO U.S. NETWORKS:
OVERSIGHT OF CHINESE GOVERNMENT-OWNED CARRIERS
I. EXECUTIVE SUMMARY
Information and telecommunications technologies bring the world closer together, allowing individuals and businesses nearly everywhere in the world to communicate with each other. The expansion of global telecommunications networks, in particular, acts as a driving force of economic development by affording individuals unprecedented access to information and opportunities. Understanding the increasing interconnectedness of society, the Federal Communications Commission ("FCC")—the federal agency tasked with regulating the U.S. telecommunications industry—strives to open U.S. markets to foreign telecommunications carriers, where doing so is in the country's public interest. As a result, foreign-owned carriers have established operations within the United States.
Not all international expansion of telecommunications carriers, however, is in the United States' national security interests. Some foreign governments seek to exploit the openness of America's telecommunications market to advance their own national interests. One such country is China. The Chinese government views telecommunications as a "strategic" industry. It has expended significant resources to create and promote new business opportunities for its state-owned carriers and has established barriers to market entry for foreign carriers seeking to operate in China. Today, three state-owned carriers dominate the Chinese telecommunications market: China Mobile, China Telecom, and China Unicom, commonly referred to as the "Big Three." In addition to shoring up a stable domestic market for these carriers, the Chinese government has encouraged its carriers to expand into global markets, including the United States. This expansion, however, raises national security concerns. U.S. government officials have warned that Chinese state-owned carriers are "subject to exploitation, influence, and control by the Chinese government" and can be used in the Chinese government's cyber and economic espionage efforts targeted at the United States.
The operation of Chinese state-owned telecommunications carriers in the United States garnered public attention in May 2019 after the FCC denied China Mobile International (USA) Inc. ("China Mobile USA") the authority to provide international telecommunications services between the United States and foreign locations. The FCC premised its denial on national security concerns. This marked the first instance in which the FCC denied an application on national security grounds. Following that denial, the Subcommittee launched an investigation into how the U.S. federal government guards against risks posed by Chinese state-owned carriers already authorized to provide international telecommunications services between the United States and other points.
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