China has expressed its strong opposition to a new US Federal Communications Commission (FCC) decision to ban three Chinese telecom companies from selling equipment to its internet development fund.
On Tuesday, the FCC said it had put Chinese telecom firms China Unicom (Americas), Pacific Networks Corp and its wholly-owned subsidiary ComNet (USA) on its “Covered List” of potential threats to national security.
The designation means the companies will be barred from selling equipment to the FCC’s Universal Service Fund, a system designed to increase access to telecommunications for rural residents and the underprivileged in America. The fund’s budget ranges from US$5-8 billion per year.
China’s Foreign Ministry said the US should immediately reverse the decision and stop hobbling and suppressing Chinese companies. The move marks an extension of earlier FCC bans on big Chinese telecom players.
In November 2019, the FCC prohibited the use of federal subsidies to buy telecommunications equipment made by Huawei Technologies and ZTE Corp.
Citing Attorney General William Barr, the order said as long as Huawei and ZTE were subject to the legal and extralegal influence and control of the Chinese government and the Chinese Communist Party there would be doubts that they could be trusted to comply fully with US law.
In June 2020, the US Department of Commerce’s National Telecommunications and Information Administration (NTIA) informed the FCC in a letter that Huawei and ZTE posed national security threats to the US.
In March last year, the FCC added Huawei, ZTE, China Mobile International USA Inc, China Telecom (Americas) Corp and Russia’s cybersecurity firm Kaspersky Lab to its Covered List.
Earlier this year, the FCC also revoked China Unicom, Pacific Networks and ComNet’s ability to provide telecom services in America. On Tuesday, the three firms were added to the FCC’s Covered List.
Jessica Rosenworcel, chairwoman of the FCC, said: “Working with our national security partners, we are now taking additional action to close the door to these three companies by adding them to the FCC’s Covered List. This action demonstrates our whole-of-government effort to protect network security and privacy.”
She said, based on the recommendations in letters filed by the NTIA, that the three Chinese companies were subject to the exploitation, influence and control of the Chinese government and the national security risks associated therewith.
Wang Wenbin, a spokesperson at China’s Foreign Ministry, retorted: “This is yet another example of the US over-stretching the concept of national security and abusing state power to suppress Chinese companies.
“What the US did violates the rules of the market economy, undermines international economic and trade order and seriously hurts the interests of Chinese companies. China firmly rejects this.”
Wang said China will continue to take measures to uphold the lawful rights and interests of Chinese companies.
Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, was quoted by the Global Times as saying that Chinese telecom companies were not seriously affected by the FCC’s decisions as they had most of their businesses based in mainland China and only provided services with local partners in the US.
Xiang said the FCC’s suppression of Chinese firms would only hurt the US as a lot of small and medium-sized telecom operators would no longer be able to use China’s low-cost and high-performance equipment. He said as US mobile operators had already spent more than US$100 billion to develop their own 5G technology, local consumers would have to pay the higher costs.
China Unicom said in a statement on Thursday that it had operated its businesses in the US in accordance with local law for two decades and been a trustworthy telecommunication solution provider for American customers.
China Unicom said the FCC’s allegations that the company’s unit had threatened national security in the US were groundless. It also said the allegations undermined its reputation and lawful rights and that it would take action to protect its rights.
On Thursday, a Chinese columnist wrote in an article that it made no big difference whether Chinese telecom companies were on the FCC’s Covered List or not as China Telecom, China Mobile and China Unicom had already been delisted from US stock markets last year.
He said Chinese telecom companies would survive as long as they had their own 5G technologies. However, he added that Chinese telecom and equipment providers might face heavy fines and legal costs if they wanted to fight for their rights in the US.
As of the end of August, China Mobile had 539 million 5G users, while China Telecom had 243 million and China Unicom 195 million. The three firms’ total 5G users numbered 977 million, compared to 580 billion a year ago.
According to Statista.com, the number of 5G mobile phone service subscriptions in the US is expected to grow to 74 million at the end of 2022 from 41.3 million last year.
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