# Threats to U.S. Networks/Section 5B

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​B. China Telecom Corporation and China Telecom Americas
China Telecom Corporation ("China Telecom"), a Chinese company and one of the Big Three providers in China, is an integrated information technology ("IT") services company that provides wireline, mobile telecommunications, Internet access, information and other telecommunications services. It served more than 335 million subscribers worldwide as of December 31, 2019 and claims to be the largest fixed line and broadband operator in the world.
China Telecom has been operating in the United States for nearly 20 years through its U.S. subsidiary, China Telecom Americas ("CTA"), a Delaware corporation. CTA was founded in 2001 and obtained Section 214 authorization in 2002. According to its website, CTA provides "a comprehensive range of high quality telecommunications services" with the mission of delivering "high-quality data and voice solutions and services between the Americas and China to businesses and carriers."
Team Telecom recently recommended the FCC revoke and terminate CTA's Section 214 authorizations. Although Team Telecom has recently begun exercising ​oversight of CTA's operations in the United States, it comes after years of minimal activity. When China Telecom applied for Section 214 authorization in 2001 and CTA separately applied for Section 214 authorization in 2002, Team Telecom did not object or raise concerns about either's proposed services. Not until 2007 did Team Telecom enter into a security agreement with the company. Since entering the security agreement, Team Telecom conducted just two site visits in 13 years.
The lack of oversight and monitoring is concerning given that it occurred at a time when China Telecom and CTA were publicly alleged to have hijacked and rerouted data through China. The incidents allegedly affected customers across major carriers, including Qwest Communications, Level 3 Communications, AT&T, and Verizon, and impacted both civilian and U.S. government customers. The reported incidents involving CTA stretch back to 2010. Team Telecom, however, did not raise these issues with CTA until 2019.
1. The FCC Streamlined and Approved China Telecom's and CTA's Initial Section 214 Authorizations within Two Weeks
China Telecom applied for international Section 214 authorization in June 2001, before the establishment of CTA. China Telecom sought to provide "facilities-based and resale services between the [United States] and permissible international points, except China." Although the FCC referred the application to Team Telecom, neither the FCC nor Team Telecom had records demonstrating that Team Telecom reviewed the application. Because Team Telecom did not object to the application, the FCC streamlined the application and approved it two weeks ​after accepting it for filing. In June 2002, after establishing CTA, China Telecom assigned its Section 214 authorization to its American subsidiary.
The 2001 authorization limited CTA to providing international services between the United States and international points, other than China. A month after receiving the authorization from China Telecom, CTA separately applied for international Section 214 authorization to serve as a facilities-based carrier between the United States and China. Again, the FCC sought Team Telecom's input on the application, directly stating that CTA was "100% owned by [a People's Republic of China] state-owned entity. . . ." As with the 2001 application, neither the FCC nor Team Telecom had records of Team Telecom responding to the FCC's request. The FCC streamlined and approved CTA's application within two weeks of accepting the application for filing.
2. After a Change in Ownership in 2007, Team Telecom Sought a Security Agreement with CTA
Team Telecom did not interact with CTA between 2002 and 2007. In fact, documents suggest that Team Telecom may not have understood that, prior to 2007, CTA was providing services between the United States and China. In 2007, ​China Telecom restructured its operations, with China Telecom Corporation Limited ("CTCL")—also a Chinese company—acquiring full equity interest in CTA from China Telecom. The stated purpose of the ownership change was for China Telecom to "structure its business and operations in an efficient manner." But, the change had no impact on CTA's ultimate ownership.
Pre-Transaction Structure
Post-Transaction Structure
As required under FCC regulations, CTA notified the FCC of the change in ownership on July 25, 2007. The notification stated that CTA had "conferred with the Executive Branch with respect to the [change of ownership] transaction" and "[b]y letter dated July 17, 2007 to the U.S. Department of Justice, the Federal Bureau of Investigation, and the U.S. Department of Homeland Security, [CTA had] agreed to abide by certain commitments and undertakings." According to current officials, Team Telecom learned of CTA's change in ownership through the FCC's public notice of the change and then decided to engage the company to assess potential national security risks.
Around May 2007, Team Telecom sent CTA written inquiries regarding the types of services CTA was then providing in the United States and those it ​anticipated providing in the future. CTA informed Team Telecom that it was providing and anticipated continuing to provide international voice and data. services, including wholesale voice traffic, private line, internet protocol ("IP"), and virtual private network ("VPN") services to China, Asia, and other international locations. Notably, CTA stated that it did not market domestic U.S. voice or data services; rather, it was focused on international data services. To transmit data internationally, CTA indicated that it maintained switches and routers in various U.S. cities and from these locations connected to U.S. carrier networks. CTA "[took] traffic that is delivered to [its points of presence in the United States] through leased private circuits to [CTA's leased] submarine cable landing stations . . . where the traffic is routed to China and other foreign destinations."
CTA's responses also indicated that, as of May 2007, its customers were split among enterprise customers and other telecommunications carriers throughout the United States. While CTA stated that it had no government customers, it did note that it was a subcontractor to Qwest (subsequently acquired by CenturyLink) to provide services to the U.S. Embassy in Mongolia. CTA told the Subcommittee that it ceased subcontracting with Qwest to serve the U.S. Embassy in Mongolia in 2012, and that, as of May 2020, it does not serve as a subcontractor to any entity that provides services to a U.S. governmental facility.
​In the May 2007 submission, CTA provided Team Telecom with a list of its top three executives—all of whom were Chinese nationals. The only American CTA mentioned was its external legal counsel, who it also designated as the point of contact for law enforcement officials. CTA indicated that all U.S. business records are stored in the United States and agreed to alert Team Telecom prior to storing such records abroad.
Based on these responses, Team Telecom determined that security measures were warranted before it agreed to recommend that the FCC maintain CTA's Section 214 authorizations despite the change in ownership. The parties negotiated a three-page security agreement. Among other commitments, CTA agreed to (1) make U.S. customer records available in the United States in response to lawful U.S. process; (2) ensure that U.S. records are not made subject to mandatory destruction under foreign laws; (3) take all practicable measures to prevent unauthorized access to, or disclosure of the content of, communications or U.S. records; (4) maintain one or more points of contact within the United States with the authority and responsibility for accepting and overseeing compliance with a lawful demand by U.S. law enforcement authorities; and (5) notify the FBI, DOJ, and DHS of any material changes in any of the facts in the security agreement or if it undertakes any action that requires notice or application to the FCC.
On August 9, 2007, after executing the agreement, Team Telecom informed the FCC that it "ha[d] no objection to the [FCC] granting its consent [to the pro forma change of control], provided that the [FCC] condition [ed] the grant on [CTA] abiding by the commitments and undertakings contained in its July 17, 2007 letter to [Team Telecom]."The FCC approved transfer of control on August 15, 2007, ​conditioned on CTA abiding by the commitments and undertakings contained in the July 2007 security agreement.
3. Team Telecom's Oversight of CTA Since 2007 Has Consisted of Two Site Visits and Intermittent Email Communication
Team Telecom had limited engagement with CTA for nearly a decade after entering into the security agreement. Between 2007 and 2016, Team Telecom's oversight was limited to written correspondence in which CTA informed Team Telecom of changes to the company's law enforcement point of contact, among other information. Documents provided to the Subcommittee by DOJ mention a meeting with CTA, the FCC, and Team Telecom sometime in 2014, during which CTA briefed the government officials on an anticipated China Telecom corporate restructuring. Neither the FCC nor Team Telecom, however, could locate any contemporaneous records detailing the meeting.
When asked to explain the lack of oversight during this period, despite the security agreement being in effect, Team Telecom officials pointed to the security agreement, noting that because it was broadly written, demonstrating compliance was straightforward. Officials also pointed to Team Telecom's lack of a compliance process before 2010. Further, one official noted that Team Telecom's understanding of the risks associated with China and its state-owned entities evolved over time. Still, even after 2011, Team Telecom believed it should complete review of China Mobile USA's pending application, as those deliberations ​would be applicable to the existing authorizations of other Chinese state-owned carriers.
Not until 2017 did Team Telecom begin to engage in substantive oversight of CTA. Team Telecom officials explained that, by this time, Team Telecom and the Executive Branch agencies were finalizing its recommendation to deny China Mobile USA's application. Thus, it was a logical sequence to then assess Chinese state-owned carriers with existing authorizations. This began with a site visit to CTA's Herndon, Virginia headquarters on March 10, 2017, during which Team Telecom officials spoke with company officials about its (1) corporate organization; (2) products and services; (3) telecommunications infrastructure; (4) data and voice networks; (5) data storage locations; and (6) law enforcement request and Commission on Accreditation for Law Enforcement Agencies ("CALEA") processes. During that visit, CTA explained that its budget was subject to approval by China Telecom Global ("CTG") and that CTG consulted on "technical matters that relate to the establishment of network points of presence . . . within the United States." In fact, CTA noted that it established "a [new] Dallas [point of presence]" after "discussion" with CTG. When asked, a current Team Telecom official described this as a traditional relationship between a state-owned enterprise and its subsidiary. Although the official believed that CTA exists to conduct traditional and legitimate telecommunications business, he also noted that it was a Chinese state-owned entity and there is a latent risk that CTA's business interests may be overridden by geostrategic interests.
During the 2017 site visit, Team Telecom also identified concerns related to CTA's storage of U.S. customer data. Team Telecom records indicate that, for a period of time, CTA's records were stored in China; they were transferred back to ​the United States in 2014. CTA also acknowledged that, "in 2015, CTA new customer information began to be ported onto a web-based platform located in China, with some existing customer data duplicated on this platform," although it eventually established a U.S-based data storage system. Team Telecom, however, noted that CTA passed certain customer data to CTG staff "at overseas network operations centers to manage enterprise data services . . ." and that CTA "store[d] [U.S.] customer data in the [United States] and Hong Kong." Team Telecom also flagged that CTA relied on China Telecom's network operations centers located in Beijing and Shanghai. CTA informed the Subcommittee that customer information has always "remained available in the United States," with CTA being able to access the information.
According to records of the site visit, one Team Telecom official concluded that CTA appeared to be "generally in compliance" with the security agreement, despite finding that CTA was not CALEA compliant and had "limited capability" of assisting law enforcement. Officials acknowledged that Team Telecom needed to review CTA's equipment lists for potential security risks and, if needed, pursue modifications to the security agreement. DHS indicated to the Subcommittee that DOJ—as the lead of Team Telecom—did not send a feedback letter to CTA following the March 2017 site visit to request the equipment list. Nevertheless, one official explained that, even if such documents had been received and risks were identified, Team Telecom had limited recourse to force a renegotiation of the security agreement.
Team Telecom conducted a second site visit in April 2018. During that visit, CTA confirmed that it had no substantive or material changes since the 2017 visit, with the exception of elimination of wholesale voice services, which was deemed no longer profitable. Handouts provided during the visit indicate CTA ​had points of presence in 11 U.S. cities, as well as eight data centers in four U.S. cities.
Following the meeting, Team Telecom requested additional information about CTA's security policies and procedures, including whether Chinese security agencies had inspected or otherwise required information concerning CTA's operations. Although CTA informed Team Telecom that no security agencies had inspected or required information gathering regarding CTA's operations, it did acknowledge that its procurement processes, including that of network equipment and software, are led by China Telecom.
4. Team Telecom Did Not Engage CTA regarding Public Allegations that China Telecom and Its Affiliates Hijacked and Rerouted Data through China
As described above, hijacking communications is easier with the support of a complicit and preferably largescale carrier. Public reports allege that China Telecom and its affiliates have hijacked and rerouted data through China on multiple occasions for more than a decade. Nevertheless, Team Telecom did not address the allegations until early 2019.
a. Allegations of China Telecom Hijacking Communications Data Date Back to 2010
In April 2010, online reports alleged that China Telecom originated approximately 37,000 false routes in less than 20 minutes. Customers of Telefonica, Qwest, Deutsche Telekom, Level 3 Communications, AT&T, and NTT allegedly had their communications hijacked and rerouted through China. According to analysts, "China absorbed 15% of the traffic from U.S. military and civilian networks." According to the U.S.-China Economic and Security Review Commission,
   This incident affected traffic to and from U.S. government (".gov") and military ("mil") sites, including those for the Senate, the army, the navy, the marine corps, the air force, the office of secretary of Defense, the National Aeronautics and Space Administration, the Department of Commerce, the National Oceanic and Atmospheric Administration, and many others.
The Commission also noted that the disruption could allow the carrier to "compromise the integrity of supposedly secure encrypted sessions." There was no consensus, however, on the motives underlying the false routes. Some saw it as an unintentional error, while others concluded it was likely a "deliberated [sic] attempt to capture as much data as possible."
Just a year later, new reports circulated about a similar incident in which AT&T and other U.S. carriers routed Facebook traffic through China. The routing was allegedly the result of China Telecom advertising false routes for approximately nine hours. Subsequent reports claimed that in December 2015, China Telecom hijacked traffic by advertising more than 300 false routes associated with Verizon's Asia Pacific ("APAC") region; the advertised routes were picked up by SK Broadband, a China Telecom transit partner. SK Broadband then promoted those false routes to other carriers, including Telia, Tata, GTT, and Vodafone. Networks around the world that accepted these routes inadvertently sent traffic to Verizon APAC through China Telecom. Verizon informed the Subcommittee that its investigation into the alleged hijacking found no link to China Telecom, the Chinese government, or malicious activity. Rather, it determined that the "hijack" was the result of human error by one of Verizon's peering partners.
​More recently, a 2018 paper from researchers at the U.S. Naval War College and Tel Aviv University detailed a series of incidents between 2016 and 2017 in which the Chinese government allegedly used China Telecom to hijack telecommunications traffic. The incidents outlined included diversion of (1) traffic from Canada that was intended for Korean government sites; (2) traffic from various U.S. locations directed to a large Anglo-American bank based in Milan; (3) traffic from Sweden and Norway intended for the Japanese network of a large American news organization; (4) traffic from a large Italian financial company to Thailand; and (5) traffic from providers in South Korea. The Director of Oracle's Internet Analysis Division confirmed the researchers' findings, although he stopped short of addressing claims about the motivations underlying the hijacks.
The authors of the 2018 paper noted that all of the incidents involved routing of the diverted communications to China through CTA's points of presence in the United States. They explained that China Telecom was in a unique position to engage in this activity because it had "strategically placed, Chinese controlled internet points of presence across the internet backbone of North America." One of the authors informed the Subcommittee that he believed China Telecom could not have carried out such hijacking attacks if it had not established operations within the United States.
The events described above all occurred prior to Team Telecom's first site visit to CTA. Alleged incidents, however, continued after Team Telecom's site visits. For example, in November 2018, for over an hour, China Telecom allegedly erroneously advertised routes from a Nigerian ISP that resulted in traffic being routed through China. "This incident at a minimum caused a massive denial of service to G Suite and Google Search . . . . Overall [analysts] detected over 180 prefixes affected by this route leak, which covers a vast scope of Google services." ​In connection with its recommendation to revoke CTA's Section 214 authorizations, Team Telecom noted that, despite CTA not being involved in the misdirection, the Nigerian-China Telecom error was "amplified" by China Telecom's presence in the United States, as it promoted false routes to U.S. carriers, thereby causing U.S. communications to be routed through China.
When asked about these allegations, CTA explained to the Subcommittee that the allegations were "misleading" and "lack [ed] context about the reality of internet routing today." CTA added that routing problems are common and occur on all networks, despite the best efforts of responsible operators. Further, CTA maintained that "erroneous route information propagated to [China Telecom] by other networks was the cause of several [of the] incidents" referenced above and in Team Telecom's recommendation to revoke and terminate CTA's Section 214 authorizations.
b. Despite Nearly a Decade of Allegations, Team Telecom Did Not Probe the Issue until January 2019
Allegations of hijacking involving China Telecom date back to 2010; however, Team Telecom did not question CTA about these reports until January 2019. Almost a year after its last site visit, Team Telecom sent written interrogatories to CTA, asking it to formally respond to the hijacking allegations, particularly those detailed in the 2018 paper from researchers at the U.S. Naval War College and Tel Aviv University. CTA denied the allegations, arguing that it had never engaged in hijacking and had no incentive to do so. CTA also noted that the public allegations contained no evidence of intentional or malicious wrongdoing. As it did in conversations with the Subcommittee, CTA informed Team Telecom that certain of the public allegations were caused by other networks' erroneous route information that passed through China Telecom's networks.
Team Telecom appears to have relied on CTA's written representations regarding the alleged incidents. Team Telecom provided no records or explanation of it conducting further interviews, requesting or reviewing additional documentation, or otherwise questioning CTA's assertions.
​5. Nearly Two Decades after Obtaining Section 214 Authorization, Team Telecom Recommended CTA's Authorizations Be Revoked and Terminated
Nearly 20 years after CTA obtained Section 214 authorization, 13 years after entering into a security agreement, and two years after its last site visit, Team Telecom recommended the FCC revoke and terminate CTA's Section 214 authorizations because of "substantial and unacceptable" national security risks. Team Telecom argued that the national security environment had changed significantly since 2007 and the national security concerns associated with CTA's operations could no longer be mitigated. Team Telecom's arguments for revocation generally fell into the following categories.
CTA's Section 214 authorization allows it to expand services without further FCC approval. Team Telecom explained that CTA uses its Section 214 authorizations to provide "regulated and unregulated services as a 'one-stop' provider of a 'full suite of communications services." Team Telecom warned that, with its facilities-based authorization, CTA does not require further FCC approval to expand its network or upgrade its equipment. "The potential for [CTA] to increase its capabilities . . . heightens the national security and law enforcement concerns . . . ."
CTA's Section 214 authorization allows it to build relationships with U.S. carriers. Team Telecom also warned that CTA's facilities-based authorizations allow it to request interconnections with U.S. carriers. CTA has already established relationships with major U.S. carriers, including Verizon, CenturyLink, ​and AT&T. These relationships primarily include the provision of network or other retail services. Verizon maintains an interconnection agreement and peering arrangement with CTA, as well as separate agreements with its Chinese parent companies. Although CenturyLink does not maintain any formal partnership or arrangement with CTA, it does have a limited commercial relationship with the company. CenturyLink did not specify the nature of its commercial relationship with CTA; rather, it generally described the relationship as involving the sale of network services, circuits, or collocation services. These services allow CTA to deliver traffic from a CTA point of presence through CenturyLink's network to a CTA customer located in the United States.
AT&T sells CTA voice and data transport services, which CTA uses to provide services to its customers in the United States. 410 AT&T has also established relationships with China Telecom. The two companies maintain a free-of-charge peering arrangement. Further, the companies established a joint venture Shanghai Symphony Telecommunications-in 2001. While China. Telecom is the majority stakeholder, AT&T owns a 25 percent stake in the venture. The joint venture only provides services within the Pudong district of Shanghai; however, it has separately entered into contractual agreements with China Telecom, China Unicom, and China Mobile to provide VPN and other IP-based services throughout China. The joint venture is set to expire in 2039. Neither Verizon, AT&T, nor CenturyLink maintains any mitigation or other agreement focused on network security with CTA or its parent company. The ​contractual service agreements with the Chinese state-owned carriers contain standard provisions indicating that the parties agree to deliver traffic to the intended recipient. All three U.S. carriers, however, noted that they maintain company-wide cybersecurity defenses that apply to all external traffic, regardless of whether service or interconnection agreements exist.
CTA is untrustworthy. Team Telecom highlighted CTA's delayed response to its document and information requests following the April 2018 site visit, which called into question CTA's willingness to comply with the security agreement. When CTA finally produced the requested documents and information, Team Telecom identified what it viewed as prior inaccurate statements about where CTA stored its U.S. records.Team Telecom also found that CTA's lack of trustworthiness negated the effectiveness of the security agreement and any further mitigation efforts. Team Telecom added that CTA had breached the security agreement by failing to implement a formal written information security policy prior to December 1, 2018, and failing to notify Team Telecom of two 2010 FCC applications related to signaling point code.
CTA is ultimately owned by the Chinese government. Team Telecom highlighted CTA's ownership structure and that CTA is ultimately owned and controlled, through CTCL and China Telecom, by SASAC:
Due to this ownership, Team Telecom warned that CTA "is vulnerable to exploitation, influence, and control by the Chinese government." Team Telecom indicated that CTA will be forced to comply-and has complied-with Chinese government requests, including those made pursuant to China's recent cybersecurity and national security laws.
In addition to its Chinese government ownership, CTA provides services to Chinese government facilities in the United States.
CTA's U.S. operations provide opportunities for China to engage in economic espionage against the United States. Team Telecom reiterated warnings of other U.S. government officials concerning the Chinese government's cyber and economic espionage efforts against the United States. Through its Section 214 authorizations, Team Telecom noted that CTA has greater "access to more customers, communications traffic, and interconnections with other U.S. common ​carriers than it would have otherwise." Team Telecom pointed specifically to CTA's managed service provider services, as well as China Telecom's ability to access CTA's U.S. customer records. Team Telecom also highlighted allegations that China Telecom hijacked data on a number of occasions dating back to 2010.
The FCC is currently considering Team Telecom's recommendation to revoke and terminate CTA's Section 214 authorizations. The FCC has ordered CTA to respond to Team Telecom's allegations and demonstrate why its Section 214 authorizations should not be revoked. That order is currently pending; CTA is required to submit its response by June 8, 2020.
* ↑ Overview, China Telecom, https://www.chinatelecom-h.com/en/company/company_overview.php.
* ↑ See China Telecom FY2019 Form 20-F, supra note 96, at 23; Company Overview, China Telecom Americas, https://www.ctamericas.com/company/company-overview/.
* ↑ See China Telecom FY2019 Form 20-F, supra note 96, at F-64. The company was originally named China Telecom USA, but changed its name to China Telecom Americas in October 2007 due to the company's expansion into Canada and Latin America. See FAQ's, China Telecom Americas, https://www.ctamericas.com/faqs/.
* ↑ See China Telecom FY2019 Form 20-F, supra note 96, at F-64; Briefing with Morgan, Lewis & Bockius LLP, counsel to CTA (May 7, 2020).
* ↑ Global Network, China Telecom Americas, https://www.ctamericas.com/company/global-network/. CTA informed the Subcommittee that it does not provide all services listed on its website in the United States. Its U.S. services are limited to "data/connectivity services between the Americas, China, and primarily Asia and Mobile Virtual Network Operator ('MVNO') services via the CTExcel brand name." Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Company Overview—Mission, China Telecom Americas, https://www.ctamericas.com/company/company-overview/.
* ↑ Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00417S, at 2 (July 6, 2001).
* ↑ Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00558S, at 2 (Aug. 7, 2002).
* ↑ Letter from Yi-jun Tan, President, China Telecom (USA) Corp., to Sigal Mandelker, Deputy Assistant Att'y Gen., Dep't of Justice, Elaine Lammert, Deputy Gen. Counsel, Fed. Bureau of Investigation, & Stewart Baker, Assistant Sec'y for Policy, Dep't of Homeland Sec. (July 17, 2007).
* ↑ CTA informed the Subcommittee that, in recent years, it has interacted with Team Telecom on as many as 90 occasions. Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee). The majority of these occasions were through written correspondence.
* ↑ See, e.g., Toonk, supra note 121; Madory, supra note 121; Shavitt & Demchak, supra note 109.
* ↑ See, e.g., Toonk, supra note 121; Madory, supra note 121; Diaz, supra note 121.
* ↑ See Int'l Bureau Selected Applications Listing, File No. ITC-214-20010613-00346, FED. COMMC'NS COMM'N, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+Number/%3D/ITC2142001061300346&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/File+Number; FCC-PSI-000019-20; Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00417S, at 2 (July 6, 2001).
* ↑ See FCC-PSI-000019-20 (emphasis added); Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00417S, at 2 (July 6, 2001) (emphasis added).
* ↑ See FCC-PSI-000019-20.
* ↑ Compare Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00417S, at 2 (July 6, 2001) with Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00423, DA No. 01-1794, 16 FCC Red 14695, 14696 (July 26, 2001) (listing the authorization "date of action" as July 20, 2001-14 days after the public notice of acceptance of filing).
* ↑ See Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00576, DA No. 02-2234, 17 FCC Red 16825, 16829 (Sept. 12, 2002) (listing the consummation date of the transfer as June 7, 2002).
* ↑ See Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00423, DA No. 01-1794, 16 FCC Red 14695, 14696 (July 26, 2001). The authorization specifically noted that China Telecom was "prohibited from using its authorized U.S. international facilities or services to provide direct or indirect service to or from China unless and until it secures additional specific authority for such service. . . ." See id.
* ↑ See Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00558S, at 2 (Aug. 7, 2002).
* ↑ FCC-PSI-000040-41.
* ↑ Compare Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00558S, at 2 (Aug. 7, 2002) with Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00567, DA 02-2060, 17 FCC Red 16199, 16201 (Aug. 22, 2002) (listing the authorization "date of action" as August 21, 2002-14 days after accepting the application for filing).
* ↑ Team Telecom's report detailing its March 2017 site visit states, "CTA was established in the U.S. in 2002 with the transfer to CTA of an FCC Section 214 license originally issued to China Telecommunications Corporation. In 2007, CTA applied for FCC authorization to modify the 2002 license to provide direct data service between the U.S. and China for the first time. This service was explicitly prohibited under the 2002 license. The request was approved in 2007. . . . See DHS00473PSI. This, however, misstates the distinction between China Telecom's June 2002 transfer of its Section 214 authorization to CTA and CTA's separate Section 214 authorization, granted in August 2002. See supra Part IV.B.1. Team Telecom officials informed the Subcommittee that they were aware of CTA's August 2002 authorization and the 2002 license described in the March 2017 site visit report refers to CTA's August 2002 authorization. See Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee). As evidenced above, however, the report only references the authorization China Telecom transferred to CTA; it makes no reference to CTA's August 2002 authorization.
* ↑ China Telecom (USA) Corp. Application for International Section 214 Authorization for Assignment or Transfer of Control, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17&filing_key=-133273.
* ↑ Id. at Attach. 1.
* ↑ Id. According to Team Telecom's records, CTA informed Team Telecom that China Telecom had the ability to control the election of CTCL's directors; approve CTCL's budget; approve mergers and acquisitions; amend the Articles of Association; determine the timing and amount of dividend payments; and determine the issuance of new securities. See TT-DOJ-001-10, at TT-DOJ-003. In discussions with the Subcommittee, CTA stressed that CTCL and China Telecom both have their own corporate governance safeguards and transparency controls. Further, as a publicly listed company, CTCL is "subject to rigorous legal regulation and public oversight." CTA told the Subcommittee that CTCL has a board of directors and senior management to run the company independently, with SASAC acting only as a capital contributor. Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ See TT-DOJ-001-10, at TT-DOJ-012.
* ↑ See id. at TT-DOJ-013.
* ↑ See China Telecom (USA) Corp. Application for International Section 214 Authorization for Assignment or Transfer of Control, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+Number/%3D/ITCT/C2007072500285&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/File+Number. The pro forma notice itself is not dated; however, an attachment to the notice indicates that the transfer of control occurred on July 12, 2007. The FCC's International Bureau Application database provides a filed date of July 25, 2007. See Int'l Bureau Selected Applications Listing, File No. ITC-T/C-20070725-00285, Fed. Commc'ns Comm'n, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+Number/%3D/ITCT/C2007072500285&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/File+Number.
* ↑ China Telecom (USA) Corp. Notification of International Section 214 Authorization Assignment or Transfer of Control, at Attach. 1, p.4, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17&filing_key=-133273.
* ↑ See Briefing with the Dep't of Justice (Aug. 1, 2019). However, the pro forma notice and the FCC's application database suggest that the pro forma notice was not filed—at least publicly—until July 2007. See supra note 316.
* ↑ See TT-DOJ-001-10. The Department of Justice was unable to locate the correspondence in which it transmitted questions to China Telecom Americas.
* ↑ See id. at TT-DOJ-001.
* ↑ Id.
* ↑ Id. at TT-DOJ-006.
* ↑ Id. See also DHS00475PSI ("CTA does not provide last mile service to customers in the U.S., nor does it operate its own transmission infrastructure within the U.S. Instead, CTA uses its U.S. points of presence in major U.S. cities to aggregate customer data traffic for transmission across Tier 1 U.S. networks to its software switch with access to the Los Angeles endpoint of a trans-Pacific consortium submarine cable.").
* ↑ The diagram is derived from information contained at TT-DOJ-001-10.
* ↑ TT-DOJ-001-10, at TT-DOJ-001.
* ↑ Id. at TT-DOJ-002.
* ↑ Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee); Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (May 22, 2020) (on file with the Subcommittee).
* ↑ TT-DOJ-001-10, at TT-DOJ-003-04.
* ↑ Id. at TT-DOJ-004.
* ↑ Id. at TT-DOJ-005.
* ↑ See, e.g., In the Matter of China Telecom (USA) Corporation—Pro Forma Transfer of Control from China Telecommunications Corporation to China Telecom Corporation Limited (File No. ITC-2014-20010613-00346; ITC-214-20020716-00371)—Petition to Adopt Conditions to Authorizations and Licenses (dated Aug. 9, 2007), https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17&filing_key=-133273; Letter from Yi-jun Tan, President, China Telecom (USA) Corp., to Sigal Mandelker, Deputy Assistant Att'y Gen., Dep't of Justice, Elaine Lammert, Deputy Gen. Counsel, Fed. Bureau of Investigation, & Stewart Baker, Assistant Sec'y for Policy, Dep't of Homeland Sec. (July 17, 2007).
* ↑ See Letter from Yi-jun Tan, President, China Telecom (USA) Corp., to Sigal Mandelker, Deputy Assistant Att'y Gen., Dep't of Justice, Elaine Lammert, Deputy Gen. Counsel, Fed. Bureau of Investigation, & Stewart Baker, Assistant Sec'y for Policy, Dep't of Homeland Sec. (July 17, 2007).
* ↑ Id.
* ↑ See In the Matter of China Telecom (USA) Corporation—Pro Forma Transfer of Control from China Telecommunications Corporation to China Telecom Corporation Limited (File No. ITC-2014-20010613-00346; ITC-214-20020716-00371)—Petition to Adopt Conditions to Authorizations and Licenses (dated Aug. 9, 2007), https://licensing.fcc.gov/cgi- bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17&filing_key=-133273.
* ↑ See Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01179, DA 07-3632, 22 FCC Red 15266, 15268 (Aug. 16, 2007) (listing the authorization "date of action" as August 15, 2007).
* ↑ See TT-DOJ-155-59. In addition to updating its point of contact, in November 2016, CTA informed Team Telecom of a 2014 corporate reorganization, during which, for a brief period, records of U.S. persons were stored outside of the United States. CTA also informed Team Telecom that it launched mobile virtual network operator ("MVNO") services under the brand name CTExcel in 2015; CTA resold T-Mobile services. See TT-DOJ-157-59.
* ↑ See TT-DOJ-157-59, at TT-DOJ-158.
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020).
* ↑ Id.; Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee). The official referenced the House of Representatives Permanent Select Committee on Intelligence's 2012 Report on Huawei as evidence of the evolving understanding across the U.S. government. U.S. House of Rep. Permanent Select Comm. on Intelligence, Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE (Oct. 8, 2012).
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
* ↑ See generally DHS00473PSI-76; TT-DOJ-495-99; TT-DOJ-500-06.
* ↑ In 2012, CTCL acquired China Telecom Global Limited, a Hong Kong company. See China Telecom Corp. Ltd., Annual Report (2016), https://www1.hkexnews.hk/listedco/listconews/sehk/2017/0406/ltn20170406631.pdf. China Telecom "streamlined its global business operations, establishing most operations outside China as divisions of [China Telecom Global]." TT-DOJ-495-99, at TT-DOJ-496.
* ↑ See DHS00473 PSI-76, at DHS00473PSI; TT-DOJ-495-99, at TT-DOJ-497.
* ↑ See DHS00473 PSI-76, at DHS00473PSI; TT-DOJ-495-99, at TT-DOJ-497.
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020).
* ↑ Id.
* ↑ Team Telecom defined "customer data" to include customer billing and service data, as well as sales information "such as name, address, billing information, and contract terms. For technical reasons, CTA also retains information about the location of customer data closets, paths to endpoints, and initial data connection points." TT-DOJ-495-99, at TT-DOJ-499.
* ↑ TT-DOJ-500-06, at TT-DOJ-502.
* ↑ TT-DOJ-495-99, at TT-DOJ-499.
* ↑ Id.; DHS00473PSI-76, at DHS00475PSI.
* ↑ TT-DOJ-500-06, at TT-DOJ-502.
* ↑ Id.
* ↑ Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ TT-DOJ-500-06, at TT-DOJ-502-03.
* ↑ See TT-DOJ-495-99, at TT-DOJ-496.
* ↑ See Email from the Dep't of Homeland Sec. to the Subcommittee (Feb. 14, 2020) (on file with the Subcommittee).
* ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020); Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
* ↑ See generally DHS00477PSI-99; TT-DOJ-507-20.
* ↑ DHS00477PSI-99, at DHS00478PSI; TT-DOJ-507-20, at TT-DOJ-508.
* ↑ TT-DOJ-507-20, at TT-DOJ-514-15. The points of presence were located in Palo Alto, CA; San Jose, CA; Los Angeles, CA; Hillsboro, OR; Denver, CO; New York, NY; Seattle, WA; Ashburn, VA; Miami, FL; Chicago, IL; and Dallas, TX. CTA also reported a point of presence in Toronto, Ontario, Canada. See TT-DOJ-514. CTA's data centers included four locations in Santa Clara, CA; one location each in Los Angeles, CA and Dallas, TX; and two locations in Ashburn, VA. See TT-DOJ-515.
* ↑ TT-DOJ-180-81.
* ↑ TT-DOJ-189-91.
* ↑ Shavitt & Demchak, supra note 109, at 3.
* ↑ See, e.g., Shavitt & Demchak, supra note 109, at 3.
* ↑ U.S.-China Econ. & Sec. Review Comm'n, Report to Congress 1, 243-44 (2010); Toonk, supra note 121.
* ↑ Toonk, supra note 121.
* ↑ Diaz, supra note 121. See also U.S.-China Economic & Security Review Commission, Report to Congress 244 (2010). Cf. Toonk, supra note 121.
* ↑ U.S.-China Econ. & Sec. Review Comm'n, Report to Congress 1, 244 (2010).
* ↑ Id.
* ↑ Compare Toonk, supra note 121 (concluding that, given the short time frame and large number of announced routes, the hijack was likely the result of a configuration issue) with Diaz, supra note 121 ("Security expert Dmitri Alperovitch—VP of threat research at McAfee—says that this happens 'accidentally' a few times a year, but this time it was different: The China Telecom network absorbed all the data and returned it without any significant delay. Before, this kind of accident would have resulted in communication problems, which lead experts to believe this wasn't an accident but a deliberated attempt to capture as much data as possible.").
* ↑ Andree Toonk, Facebook's detour through China and Korea, BGPMon (Mar. 26, 2011), https://bgpmon.net/facebooks-detour-through-china-and-korea/.
* ↑ Id.
* ↑ Madory, supra note 121.
* ↑ Madory, supra note 121.
* ↑ Madory, supra note 121.
* ↑ Briefing with Verizon (Sept. 4, 2019).
* ↑ Id. The peering partner was not a Chinese carrier. Id.
* ↑ Shavitt & Demchak, supra note 109.
* ↑ Shavitt & Demchak, supra note 109, at 5-7.
* ↑ Madory, supra note 121. In describing the allegations, Madory referred to the incidents as "misdirections." See Madory, supra note 121.
* ↑ See Shavitt & Demchak, supra note 109, at 5-7.
* ↑ See generally Shavitt & Demchak, supra note 109. As noted above, as of 2020, CTA purports to have points of presence in 13 cities across America. See Global Data Center Map, China Telecom Americas, https://www.ctamericas.com/global-data-center-map/.
* ↑ Briefing with BGProject (July 1, 2019).
* ↑ Ameet Naik, Internet Vulnerability Takes Down Google, Thousand Eyes Blog (Nov. 12, 2018), https://blog.thousandeyes.com/internet-vulnerability-takes-down-google/.
* ↑ Id. China Telecom denied hijacking the data. In a release, it noted that the company "promptly commenced a serious and thorough investigation . . . [which] found that the re-routing of Google data traffic stemmed from erroneous routing configuration by a Nigerian operator MainOne Cable . . . causing the Google data traffic, which was originally directed by MainOne Cable, to be mistakenly sent to China Telecom." The company also acknowledged that "it is normal for Americas or Europe data traffic to route through China Telecom's international network." Press Release, China Telecom Corp. Ltd., Statement Regarding the Unfounded Report on China Telecom Being Alleged "Hijacking Internet Traffic" (Nov. 22, 2018), https://www.chinatelecom-h.com/en/media/news/p181122.php.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 49-50.
* ↑ Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Id.
* ↑ Id.
* ↑ TT-DOJ-264-69.
* ↑ Id.
* ↑ Id. See also Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ TT-DOJ-264-69.
* ↑ Executive Branch Recommendation re CTA, supra note 56. CTA told the Subcommittee that Team Telecom did not inquire whether CTA would be prepared to consider another security agreement prior to submitting its recommendation to the FCC. Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee). Team Telecom's recommendation, however, stated that Team Telecom felt further mitigation would be insufficient "because the underlying foundation of trust that is needed for a [security] agreement to adequately address national security and law enforcement concerns is not present." Executive Branch Recommendation re CTA, supra note 56, at 53.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 1-2.
* ↑ The information described below is based on Team Telecom's recommendation. CTA informed the Subcommittee that it disputes Team Telecom's allegations and "explicitly denies the assertions that it has engaged in intentional hijacking or that its licenses provide opportunities for China to engage in espionage against the United States." Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 8 (citing General FAQs, China Telecom Americas, https://www.ctamericas.com/faqs). Team Telecom referenced CTA's provision of international private lines, mobile virtual network operator, MPLS VPN, SD-WAN, Ethernet, data center, and cloud services. See Executive Branch Recommendation re CTA, supra note 56, at 8-10.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 11-12.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 12.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 11-12.
* ↑ Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with AT&T (Sept. 17, 2019).
* ↑ Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with AT&T (Sept. 17, 2019).
* ↑ Briefing with Verizon (Sept. 4, 2019).
* ↑ Briefing with CenturyLink (Sept. 10, 2019).
* ↑ Id.
* ↑ Id. CenturyLink purchases the same network services from Chinese carriers in China, to allow CenturyLink to deliver traffic to a CenturyLink customer based in China. Id.
* ↑ Briefing with AT&T (Sept. 17, 2019). AT&T representatives told the Subcommittee that the revenue generated by these agreements is relatively small, particularly when compared to similar agreements with other large international carriers. For example, similar arrangements with other large international carriers generate up to 36 to 62 times as much revenue as arrangements with the Chinese state-owned carriers discussed in this report. Id.; Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Briefing with AT&T (Sept. 17, 2019). AT&T described the peering arrangement as "among the smallest . . . in terms of network capacity that AT&T maintains" with foreign carriers. Id.
* ↑ Id.
* ↑ Id.
* ↑ Teleconference with Gibson, Dunn & Crutcher LLP, counsel to AT&T (Oct. 15, 2019).
* ↑ Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with AT&T (Sept. 17, 2019).
* ↑ See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with AT&T (Sept. 17, 2019). Verizon representatives told the Subcommittee that Verizon's interconnection agreements with Chinese state-owned carriers are substantially identical to the agreements in place with other external carriers. Teleconference with Verizon (June 2, 2020).
* ↑ Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with AT&T (Sept. 17, 2019); Teleconference with Verizon (June 2, 2020); Email from CenturyLink to the Subcommittee (June 2, 2020) (on file with the Subcommittee); Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 17.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 18-26. Team Telecom also believes CTA made inaccurate statements to U.S. customers about its cybersecurity practices. Executive Branch Recommendation re CTA, supra note 56, at 26-32.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 53-56.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 53-55. See also TT-DOJ-277–80. Signal point codes are unique addresses that identify individual network elements for a Signaling Point used in Message Transfer Part to identify the destination of a message signal unit. They operate similar to IP addresses. See SS7 Point Code Administration, ICONECTIV, https://iconectiv.com/ss7. In documents made available to the Subcommittee, CTA refuted the allegations, arguing that (1) the lack of a comprehensive information security policy was not indicative of a breach of obligations, and (2) the security agreement's obligations require CTA to alert Team Telecom only of actions that would result in a material change to the company's ownership structure, service offerings, or its ability to ensure the availability of its U.S. records in the United States. CTA argued that signal point codes do not fall into any of those categories. TT-DOJ-283-90.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 33.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 34.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 37-40. In discussions with the Subcommittee, CTA refuted Team Telecom's characterization that it has complied with Chinese government requests, describing it as "misleading and based on fear of some future hypothetical event, not substantiated by any proof of existing conduct." Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
* ↑ Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (May 22, 2020) (on file with the Subcommittee).
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 41-42.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 41.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 42-43.
* ↑ Executive Branch Recommendation re CTA, supra note 56, at 44-50.
* ↑ See In the Matter of China Telecom (Americas) Corporation, DA 20-448 (Apr. 24, 2020), https://docs.fcc.gov/public/attachments/DA-20-448A1.pdf.
* ↑ See Letter from Denise Coca, Chief, Telecommc'ns & Analysis Div., Int'l Bureau, Fed. Commc'ns Comm'n to Andrew Lipman, Counsel to CTA, Morgan, Lewis & Bockius LLP (May 14, 2020).