Spying Company

President Trump expected to sign order paving way for U.S. telecoms ban on Huawei
By David Shepardson

WASHINGTON -- President Donald Trump is expected to sign an executive order this week barring U.S. companies from using telecommunications equipment made by firms posing a national security risk, paving the way for a ban on doing business with China’s Huawei, three U.S. officials familiar with the plan told Reuters.
The order, which will not name specific countries or companies, has been under consideration for more than a year but has repeatedly been delayed, the sources said, asking not to be named because the preparations remain confidential. 

It could be delayed again, they said.
The executive order would invoke the International Emergency Economic Powers Act, which gives the president the authority to regulate commerce in response to a national emergency that threatens the United States. 

The order will direct the Commerce Department, working with other government agencies, to draw up a plan for enforcement, the sources said.
If signed, the executive order would come at a delicate time in relations between China and the United States as the world’s two largest economies ratchet up tariffs in a battle over what U.S. officials call China’s unfair trade practices.
Washington believes equipment made by Huawei Technologies Co Ltd, the world’s third largest smartphone maker, could be used by the Chinese state to spy. 

Huawei did not immediately comment.
The White House and Commerce Department declined to comment.
The United States has been actively pushing other countries not to use Huawei’s equipment in next-generation 5G networks that it calls “untrustworthy.” 

In August, Trump signed a bill that barred the U.S. government itself from using equipment from Huawei and another Chinese provider, ZTE Corp.
In January, U.S. prosecutors charged two Huawei units in Washington state saying they conspired to steal T-Mobile US Inc trade secrets, and also charged Huawei and its chief financial officer with bank and wire fraud on allegations that the company violated sanctions against Iran.
The Federal Communications Commission in April 2018 voted to advance a proposal to bar the use of funds from a $9 billion government fund to purchase equipment or services from companies that pose a security threat to U.S. communications networks.
Federal Communications Commission chairman Ajit Pai said last week he is waiting for the Commerce Department to express views on how to “define the list of companies” that would be prohibited under the FCC proposal.
The FCC voted unanimously to deny China Mobile Ltd’s bid to provide U.S. telecommunications services last week and said it was reviewing similar prior approvals held by China Unicom and China Telecom Corp.
The issue has taken on new urgency as U.S. wireless carriers look for partners as they rollout 5G networks.
While the big wireless companies have already cut ties with Huawei, small rural carriers continue to rely on both Huawei and ZTE switches and other equipment because they tend to be cheaper.
The Rural Wireless Association, which represents carriers with fewer than 100,000 subscribers, estimated that 25 percent of its members had Huawei or ZTE equipment in their networks, it said in an FCC filing in December.
At a hearing Tuesday, U.S. senators raised the alarm about allies using Chinese equipment in 5G networks.
The Wall Street Journal first reported in May 2018 that the executive order was under review. 

Reuters reported in December that Trump was still considering issuing the order and other media reported in February that the order was imminent.

Chinese Espionage

FCC Blocks China Mobile's Bid For International Phone Services In The U.S.

By SASHA INGBER

Federal Communications Commission Chairman Ajit Pai said Thursday that the commission has rejected China Mobile USA's application to provide phone services between the United States and other countries because of national security risks.

The Federal Communications Commission has blocked a Chinese company from providing international phone services in the United States, citing national security concerns as tensions persist between Washington and Beijing.
China Mobile USA, though a Delaware corporation, is ultimately owned and controlled by the Chinese government. 

The company filed an application in 2011 to provide international communications services.
"There is a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement, and economic interests of the United States," FCC Chairman Ajit Pai said.

"Among other things, if this application were granted, the Chinese government could use China Mobile to exploit our telephone network to increase intelligence collection against U.S. government agencies and other sensitive targets that depend on this network."
China Mobile USA does not provide domestic services in the United States, an FCC spokesperson says.
If the application had been granted, the company would have been able to connect to the U.S. network, receiving greater access to telephone lines, cellular networks, fiber-optic cables and communication satellites — heightening the risk of communications being monitored, degraded and disrupted.
In 2018, the U.S. Department of Commerce communicated with the company and the U.S. intelligence community before recommending the application be denied. 

Last month, the FCC indicated that it intended to follow through with that recommendation in a draft order.
Thursday's announcement came after a unanimous 5-0 vote from the FCC's Republican and Democratic commissioners.
After the vote, Mr Pai said the agency was also examining authorizations that had been previously granted to two other Chinese firms, China Telecom and China Unicom.
China Mobile USA is a subsidiary of China Mobile Limited, which did not immediately respond to NPR's request for comment.
Lawyers representing China Mobile USA said the drafted order to reject the company's application was guided "more by tensions in the bilateral U.S.-China relationship than an absence of effective mitigation options."
The denied application is the latest indication of a growing rift between the United States and China. Amid a trade war, the Trump administration has insisted that Chinese telecom company Huawei has ties to the government and that its equipment could be used to spy on people or commit economic espionage.

Congress has banned government agencies and contractors from buying Huawei equipment.
Reuters reported that for more than a year, President Trump has also been considering an executive order that would block American companies from using equipment manufactured by Huawei and its competitor, ZTE.
In March, U.S. authorities warned allies in Europe to ban Huawei from their 5G communication networks or face the possibility of receiving less intelligence from U.S. agencies. 

Germany declined to exclude the company.
A FCC spokesperson told NPR that ownership of China Mobile USA traces to the China Mobile Communications Corporation, which is "subject to the supervision of the State-Owned Assets Supervision and Administration Commission," a part of the Chinese government managed under the State Council.

Ajit Pai proposes blocking China-owned telecom from US phone market

China Mobile could be used by Chinese government to attack phone network.
By JON BRODKIN

Federal Communications Commission Chairman Ajit Pai has proposed denying China Mobile USA's application to offer telecom services in the US, saying the Chinese government-owned company poses a security risk.
The FCC is scheduled to vote on an order to deny the application at its open meeting on May 9, and Pai yesterday announced his opposition to China Mobile entering the US market.
"After reviewing the evidence in this proceeding, including the input provided by other federal agencies, it is clear that China Mobile's application to provide telecommunications services in our country raises substantial and serious national security and law enforcement risks," Pai said. 

"Therefore, I do not believe that approving it would be in the public interest. I hope that my colleagues will join me in voting to reject China Mobile's application."
We contacted China Mobile and one of its attorneys today about Pai's proposal and will update this story if we get a response.
China Mobile filed its application in 2011, and has repeatedly complained about the government's lengthy review process. 

According to Pai's announcement, China Mobile's application sought authority "to provide international facilities-based and resale telecommunications services between the US and foreign destinations."
In simpler terms, the company was seeking "a license to connect calls between the United States and other nations" and "was not seeking to provide domestic cell service and compete in the country with businesses like AT&T and Verizon," The New York Times wrote yesterday. 

An FCC official told reporters that such calls "could be intercepted for surveillance and make the domestic network vulnerable to hacking and other risks," the Times wrote.

Chinese state-owned firm “subject to exploitation”
The executive branch—which includes the Departments of Justice, Homeland Security, Defense, State, Commerce, and other federal bodies—recommended denial of the application in July 2018.
"[B]ecause China Mobile is subject to exploitation, influence, and control by the Chinese government, granting China Mobile's international Section 214 application, in the current national security environment, would pose substantial and unacceptable national security and law enforcement risks," the National Telecommunications and Information Administration (NTIA), which represents the executive branch in telecom issues, told the FCC.
The filing said that US officials believe that "China Mobile would comply with requests by the Chinese government for information, access to its network, and any other assistance, including activities involving cyber intrusions and attacks."
In another filing, the executive branch noted that granting China Mobile's application "would afford it the ability to interconnect and have greater access to telephone lines, fiber-optic cables, cellular networks, and communication satellites throughout the United States' telecommunications network." Allowing this would not be in the public interest, the executive branch concluded, saying it reached the decision after "a thorough review of the concerns raised by the application, and China Mobile's proposals to mitigate them."
While China Mobile is incorporated in Delaware, "its majority owner is China Mobile Hong Kong (BVI) Limited, which is wholly owned by China Mobile Communications Corporation, which in turn is wholly owned by a foreign state, the People's Republic of China, and is subject to the supervision of the State-Owned Assets Supervision and Administration Commission (SASAC) of the State Council of the People's Republic of China," the executive branch said.
China Mobile acknowledged in filings that "the Chinese government indirectly holds a majority ownership interest in China Mobile USA," but argued that the executive branch "inappropriately conflates" the company with the Chinese government. 

Under FCC rules, the burden of proof is on China Mobile to prove that granting its application is in the public interest, the executive branch noted. 

The executive branch said it is concerned about the Chinese government's ownership of China Mobile because of ample evidence that the Chinese government "has engaged in extensive intelligence collection activity against the United States for national security and economic espionage purposes."
Pai agreed with the executive branch's concerns. 

The FCC said that Pai's draft order to deny the application "would find that, based on the public record, China Mobile had not demonstrated that its application for international Section 214 authority is in the public interest" and that "China Mobile is vulnerable to exploitation, influence, and control by the Chinese government."