FCC bars Chinese carriers from offering broadband services in US

  • US agency FCC gives 60 days to Chinese service providers to stop offering broadband services in the country

  • The move reflects the growing hostility between the two countries

  • The new order will also impact Pacific Networks and its wholly-owned subsidiary, ComNet

In a significant development, the US Federal Communications Commission (FCC) has asked the US units of Chinese carriers, China Telecom, China Unicom, and China Mobile to discontinue offering fixed or mobile broadband internet operations in the country.

The service providers would be required to stop offering services within 60 days of the order being passed on April 25, 2024. The new order will also impact Pacific Networks and its wholly-owned subsidiary, ComNet.

“The Commission will have the ability to revoke the authorizations of foreign-owned entities who pose a threat to national security to operate broadband networks in the US. The Commission has previously exercised this authority under section 214 of the Communications Act to revoke the operating authorities of four Chinese state-owned carriers to provide voice services in the US,” says the recent FCC order.

Section 214 of the Communications Act allows the FCC to act on applications “filed by carriers to provide international telecommunications service and to transfer or assign existing authorizations pursuant to section 214 of the Communications Act of 1934.” It “ensures that the US market is protected against potential anti-competitive behavior by a carrier with market power in a foreign country.”

Banning history

In 2021, the FCC barred China Telecom’s US subsidiary, China Telecom Americas, from offering telephone services in the country on grounds of national security. At the time, the US regulator had said that the Chinese government ownership and control “raise significant national security and law enforcement risks by providing opportunities” for the company and the Chinese government “to access, store, disrupt and/or misroute US communications.”

Before being barred, China Telecom was offering services to Chinese Americans, Chinese students, businesses and tourists visiting the country. Chinese vendors Huawei and ZTE were also banned from operating in the US in 2019, and the Government ordered the telcos to replace the Chinese telecom gear from the American communications network. This was followed by several countries, including the UK, deciding not to use the Chinese gear.

While the ban impacted Huawei initially, it emerged as the biggest global telecom vendor in 2023 and recorded a profit of $97.53 billion and commands 30% of all telecom revenue share. It achieved this by focusing on other regions, like the Middle East and Latin America.

Huawei also started focusing on developing its own operating system HarmonyOS after being blacklisted by Google from using the Android operating system.

Now, the FCC claims that the commission had evidence that the Chinese service providers continue to offer broadband services in the country. It alleged that China Telecom’s website shows that the service provider operates 26 points of presence (PoPs) in the US, apart from offering co-location, IP transit and data center services in the country.

“They are interconnecting with other networks and have access to important PoPs and data centers,” FCC Commissioner Geoffrey Starks said during the agency’s April 2024 Open Commission Meeting

Regarding the ban, Deepak Kumar, founder analyst and chief research officer at BMNxt Business and Market Advisory told Fierce that “Barring vendors or service providers unnecessarily complicates geopolitical equations. It is high time that governments, businesses, and other stakeholders work together for a long-term resolution.

"One possible approach could be to put a global monitoring agency such as the ITU in charge. The agency could be given the right to inspect, audit, and encrypt all data flowing through any global network. The details could be worked out by an empowered task force comprising technically competent representatives of various stakeholders," he added.

The move is unlikely to have any major implications for the Chinese service providers as they have a limited presence in the US. However, this latest ban reflects the growing animosity between the U.S. and China.

Recently, the Chinese government asked the same three telcos to remove U.S.-made chips from their networks. In addition, Huawei also recently shut down its lobbying operations in the U.S.