US expels another Chinese phone carrier on security grounds

By Associated Press AP

PUBLISHED 4:48 AM ET Mar. 17, 2022

BEIJING (AP) — Washington has expelled another state-owned Chinese phone carrier from the U.S. market over national security concerns amid rising tension with Beijing.

The Federal Communications Commission revoked authorization for Pacific Networks Corp. to provide domestic and international service under an order issued Wednesday.

The U.S. government is reducing Chinese access to American markets and investment over possible spying and Beijing’s military development.

The FCC cited “significant national security and law enforcement risks” that Pacific Networks could monitor or disrupt U.S. communications. It said there were no steps that could eliminate those risks while the company operated in the United States.

President Joe Biden has extended efforts begun under his predecessor, Donald Trump, to limit access to U.S. technology, investment and markets for Chinese companies due to concern they are security risks or helping military development.

In October, a unit of China Telecom Ltd., one of China’s three main state-owned carriers, was expelled by the FCC from the U.S. market on similar grounds.

The FCC said in 2019 it planned to revoke licenses granted two decades earlier to China Telecom and another state-owned carrier, China Unicom Ltd. It rejected a license application by the third carrier, China Mobile Ltd.

The FCC also cited unspecified “conduct and representations” by Pacific Networks to regulators and Congress that “demonstrate a lack of trustworthiness and reliability.”

A Chinese foreign ministry spokesman accused American regulators of improperly invoking national security to hurt Chinese companies without providing evidence they broke any law.

Regulators are “abusing national power” to hurt Chinese companies and “severely destroying international economic rules and harming the legitimate rights of consumers including American consumers,” said the spokesman, Zhao Lijian.

Zhao said Beijing would help Chinese companies protect their “rights and interests” but gave no indication of possible retaliation.

Pacific Networks owns an American company, ComNet (USA) LLC, which provides international service, calling cards and global SIM cards, as well as network management, business phone systems and website services, according to a U.S. Senate report in 2020.

The companies ultimately are owned by the Chinese Cabinet’s main holding company, CITIC Group, which “may be able to access U.S. customer records,” said the report by the Senate’s Permanent Subcommittee on Investigations.

The companies are obligated by Chinese law to “support the Chinese government’s intelligence work,” the report said.