By David Shepardson
WASHINGTON (Reuters) - The U.S. Federal Communications Commission (FCC) said on Thursday it begun the process of revoking China Telecom (NYSE:CHA)'s authorization to operate in the United States as it took further steps to crack down on China's role in U.S. telecommunications.
FCC Chairman Ajit Pai noted several U.S. government agencies had recommended the revocation citing national security concerns.
Pai said there are "significant concerns" that China Telecom will be forced to comply with Chinese government’s requests for information, including communications intercepts. China Telecom, the largest Chinese telecommunications company, has had authorization to provide telecommunications services for nearly 20 years.
China Telecom Americas did not have an immediate comment.
The FCC in April had warned it might shut down the U.S. operations of three state-controlled Chinese telecommunications companies, citing national security risks, including China Telecom Americas as well as China Unicom (NYSE:CHU) Americas, Pacific Networks Corp and its wholly owned subsidiary ComNet (USA) LLC.
The U.S. Justice Department and other federal agencies in April called on the FCC to revoke China Telecom's ability to operate in the United States.
In May 2019, the FCC voted unanimously to deny another state-owned Chinese telecommunications company, China Mobile (NYSE:CHL) Ltd, the right to provide services in the United States, citing risks that the Chinese government could use the approval to conduct espionage against the U.S. government.
The FCC also on Thursday rejected a petition from Huawei Technologies Co Ltd asking the agency to reconsider its decision designating the Chinese company as a U.S. national security threat to communications networks.
The FCC said in June it had formally designated China’s Huawei and ZTE Corp (HK:0763) as threats, a declaration that bars U.S. firms from tapping an $8.3 billion government fund to purchase equipment from the companies. The FCC affirmed its ZTE designation last month.
The FCC on Thursday also finalized rules that require carriers with ZTE or Huawei equipment to "rip and replace" that equipment and created a reimbursement program to subsidize smaller carriers to remove and replace those services and equipment.
Pai noted the commission "can’t actually implement the reimbursement program unless and until Congress appropriates the necessary funding."
Huawei said in a statement it "is disappointed with the FCC’s decision to force removal of our products from telecommunications networks. This overreach puts U.S. citizens at risk in the largely underserved rural areas – during a pandemic - when reliable communication is essential."