United States Senate 

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS 

Committee on Homeland Security and Governmental Affairs

Rob Portman, Chairman

Tom Carper, Ranking Member 

THREATS TO U.S. NETWORKS: 

OVERSIGHT OF CHINESE

GOVERNMENT-OWNED CARRIERS

STAFF REPORT

PERMANENT SUBCOMMITTEE ON

INVESTIGATIONS

UNITED STATES SENATE
THREATS TO U.S. NETWORKS: OVERSIGHT OF 

CHINESE GOVERNMENT-OWNED CARRIERS

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY.................................................................................. 1

II. FINDINGS OF FACT AND RECOMMENDATIONS ................................... 8

III. BACKGROUND................................................................................................16

A. China Views the Telecommunications Industry as Critical to National 

Priorities ......................................................................................................... 16

B. China Heavily Regulates its Telecommunications Industry and Carriers .. 17

1. China Heavily Restricts Foreign Telecommunications Investments ........ 17

2. China Exerts Control over Domestic Carriers ........................................... 20

3. China Encourages State-Owned Telecommunications Carriers to Expand 

Internationally............................................................................................. 21

C. The United States Government Has Highlighted National Security 

Concerns Associated with Chinese State-Owned Carriers Operating within 

the United States ........................................................................................... 22

1. The Chinese Government Engages in Extensive Cyber and Economic 

Espionage Efforts against the United States ............................................. 23

2. Chinese State-Owned Companies are Subject to Control by the Chinese 

Government ................................................................................................. 27

3. Chinese State-Owned Carriers Can Facilitate the Chinese Government’s 

Espionage Efforts by Hijacking Data through Their Relationships with 

U.S. Carriers ................................................................................................ 29

IV. EFFORTS TO MITIGATE NATIONAL SECURITY RISKS OF FOREIGN 

CARRIERS OPERATING IN THE UNITED STATES........................................32

A. The FCC Regulates the Operations of Foreign Telecommunications Carriers 

in the United States ....................................................................................... 32

1. The FCC Authorizes Carriers to Provide Telecommunications Services in 

the United States Pursuant to Section 214 of the Communications Act of 

1934 .............................................................................................................. 33

2. The FCC Must Determine that International Section 214 Authorization 

Serves the Public Interest, but It Relies on the Executive Branch to 
3

Evaluate National Security, Law Enforcement, Foreign Policy, and Trade 

Concerns....................................................................................................... 34

3. The FCC Does Not Periodically Review Section 214 Authorizations Once 

Granted ........................................................................................................ 36

B. Team Telecom Assessed National Security and Law Enforcement Risks, but 

It Historically Operated in an Ad Hoc Manner ............................................ 38

1. Team Telecom’s Section 214 Review Process ............................................. 39

2. Team Telecom’s Lack of Statutory Authority, Established Procedures, and 

Limited Resources Hampered its Review Process ..................................... 42

3. Team Telecom’s Post-Authorization Monitoring and Oversight Was Also 

Limited and Sporadic .................................................................................. 44

C. Nearly a Year after the Subcommittee’s Investigation Began, the 

Administration Took Steps to Formalize Team Telecom ............................. 46

V. CHINESE STATE-OWNED TELECOM COMPANIES OPERATED IN 

THE UNITED STATES WITH MINIMAL OVERSIGHT FROM THE FCC AND 

TEAM TELECOM......................................................................................................48

A. China Mobile Limited and China Mobile USA.............................................. 49

1. Team Telecom’s Review of China Mobile USA’s Application Lasted Seven 

Years ............................................................................................................ 51

2. Ten Months after Team Telecom’s Recommendation, the FCC Denied 

China Mobile USA’s Application on National Security Grounds .............. 54

B. China Telecom Corporation and China Telecom Americas .......................... 55

1. The FCC Streamlined and Approved China Telecom’s and CTA’s Initial 

Section 214 Authorizations within Two Weeks.......................................... 56

2. After a Change in Ownership in 2007, Team Telecom Sought a Security 

Agreement with CTA................................................................................... 57

3. Team Telecom’s Oversight of CTA Since 2007 Has Consisted of Two Site 

Visits and Intermittent Email Communication ......................................... 62

4. Team Telecom Did Not Engage CTA regarding Public Allegations that 

China Telecom and Its Affiliates Hijacked and Rerouted Data through 

China............................................................................................................ 65

5. Nearly Two Decades after Obtaining Section 214 Authorization, Team 

Telecom Recommended CTA’s Authorizations Be Revoked and Terminated

...................................................................................................................... 69

C. China Unicom and China Unicom (Americas) Operations Limited............. 73

1. The FCC Approved CUA’s Section 214 Application in Two Weeks after 

Team Telecom Raised No Concerns............................................................ 74
4

2. Team Telecom Has Never Engaged in Post-Authorization Oversight of 

CUA.............................................................................................................. 75

3. CUA Shares Characteristics Highlighted by Team Telecom about China 

Mobile USA and CTA .................................................................................. 77

D. ComNet (USA) LLC and Pacific Networks Corp........................................... 84

1. ComNet’s Initial Section 214 Authorization Did Not Require Team 

Telecom’s Review......................................................................................... 85

2. Pacific Networks’ Initial Section 214 Authorization Prompted Team 

Telecom Review and Resulted in a Security Agreement ........................... 86

3. ComNet’s Integration with Pacific Networks Prompted Further Team 

Telecom Scrutiny and Resulted in a Security Agreement......................... 87

4. Despite a Security Agreement, Team Telecom Conducted Limited PostAuthorization Monitoring............................................................................ 90

5. ComNet Shares Characteristics Team Telecom Highlighted regarding 

China Mobile USA and CTA ....................................................................... 94

VI. CONCLUSION................................................................................................100
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THREATS TO U.S. NETWORKS: 

OVERSIGHT OF CHINESE GOVERNMENT-OWNED CARRIERS

I. EXECUTIVE SUMMARY

Information and telecommunications technologies bring the world closer 

together, allowing individuals and businesses nearly everywhere in the world to 

communicate with each other. The expansion of global telecommunications 

networks, in particular, acts as a driving force of economic development by affording 

individuals unprecedented access to information and opportunities. Understanding 

the increasing interconnectedness of society, the Federal Communications 

Commission (“FCC”)—the federal agency tasked with regulating the U.S. 

telecommunications industry—strives to open U.S. markets to foreign 

telecommunications carriers, where doing so is in the country’s public interest. As a 

result, foreign-owned carriers have established operations within the United States. 

Not all international expansion of telecommunications carriers, however, is in 

the United States’ national security interests. Some foreign governments seek to 

exploit the openness of America’s telecommunications market to advance their own 

national interests. One such country is China. The Chinese government views 

telecommunications as a “strategic” industry. It has expended significant resources 

to create and promote new business opportunities for its state-owned carriers and 

has established barriers to market entry for foreign carriers seeking to operate in 

China. Today, three state-owned carriers dominate the Chinese 

telecommunications market: China Mobile, China Telecom, and China Unicom, 

commonly referred to as the “Big Three.” In addition to shoring up a stable 

domestic market for these carriers, the Chinese government has encouraged its

carriers to expand into global markets, including the United States. This 

expansion, however, raises national security concerns. U.S. government officials 

have warned that Chinese state-owned carriers are “subject to exploitation, 

influence, and control by the Chinese government” and can be used in the Chinese 

government’s cyber and economic espionage efforts targeted at the United States.

The operation of Chinese state-owned telecommunications carriers in the 

United States garnered public attention in May 2019 after the FCC denied China 

Mobile International (USA) Inc. (“China Mobile USA”) the authority to provide 

international telecommunications services between the United States and foreign 

locations. The FCC premised its denial on national security concerns. This marked 

the first instance in which the FCC denied an application on national security 

grounds. Following that denial, the Subcommittee launched an investigation into 

how the U.S. federal government guards against risks posed by Chinese stateowned carriers already authorized to provide international telecommunications 

services between the United States and other points. 
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This report details how the U.S. federal government—particularly the FCC, 

Department of Justice (“DOJ”), and Department of Homeland Security (“DHS”)—

historically exercised minimal oversight to safeguard U.S. telecommunications 

networks against risks posed by Chinese state-owned carriers. Three Chinese 

state-owned carriers have been operating in the United States since the early 

2000s, but only in recent years have the FCC, DOJ, and DHS focused on potential 

risks associated with these carriers. DOJ and DHS did enter into security 

agreements with two of the Chinese state-owned carriers prior to 2010, but they 

conducted only two site visits to each carrier since that time (or four total). Three of 

those visits occurred between 2017 and 2018. This lack of oversight undermined 

the safety of American communications and endangered our national security. 

Since the Subcommittee launched its investigation, the agencies have 

increased their oversight of the Chinese state-owned carriers. The administration 

also recently issued an executive order establishing a formal committee to review 

the national security and law enforcement risks posed by foreign carriers operating 

in the United States. Still, the new committee’s authorities remain limited, and as 

a result, our country, our privacy, and our information remain at risk.

* * * * *

The Chinese government exerts control over China’s domestic 

telecommunications industry and state-owned carriers. China aims to be a world 

leader in technology by 2050, including in the telecommunications sector. To 

achieve this goal, China controls who can provide domestic services by maintaining 

one of the most restrictive foreign investment regimes in the world. Although the 

Chinese government may publicly state that it is opening the telecommunications 

market, foreign companies are subject to burdensome regulatory requirements; 

required to enter into joint ventures majority owned by Chinese parties; and often 

forced to transfer both technology and know-how to Chinese counterparts. Stateowned carriers are equally controlled, as the Chinese government selects their 

management, sets target returns and growth rates, and compels companies to put 

state interests ahead of the carriers’ market interests. 

The Chinese government has encouraged state-owned telecommunications 

carriers to expand internationally. In 1999, the Chinese government issued a “Go 

Out” policy, through which it pledged financial support to entities to expand into 

global markets. Telecommunications carriers took advantage of this, with major 

state-owned carriers establishing operations across the world, including in the 

United States.

The Chinese government targets the United States through cyber and 

economic espionage activities and enlists state-owned entities in these efforts. Many 

U.S. government officials have highlighted the “persistent” threat posed by China. 
3

As Assistant Attorney General of DOJ’s National Security Division John Demers 

stated, China’s “overall economic policy [is to] develop[ ] China at American 

expense.” U.S. government officials have also warned that China will use its stateowned carriers to further its national interests. At least one Chinese carrier is 

publicly alleged to have hijacked and rerouted communications data through China. 

This allows Chinese actors to access sensitive communications, regardless of 

whether the data is encrypted.

* * * * *

The Subcommittee reviewed the federal agencies responsible for regulating 

and monitoring foreign telecommunications carriers operating in the United States. 

Although foreign carriers have operated in the United States for decades, the U.S. 

government had no statutory authorities to monitor the risks associated with these 

carriers. This is especially evident when reviewing the agencies’ oversight of 

Chinese state-owned carriers. 

The FCC regulates the U.S. telecommunications market. Carriers seeking to 

provide international telecommunications services between the United States and 

foreign points must apply for and obtain authorization from the FCC. The FCC’s 

process is aimed at protecting the U.S. market from anti-competitive behavior in 

foreign markets. Thus, in evaluating applications, the FCC considers whether the 

foreign carrier’s proposed services are in the public interest. Once authorization is 

granted, the Subcommittee found that it effectively exists in perpetuity; the FCC 

does not periodically review existing authorizations. 

The FCC historically relied on “Team Telecom” to assess national security and 

law enforcement risks associated with a foreign carrier’s provision of international 

telecommunications services. The FCC’s public interest calculation involves 

weighing the national security, law enforcement, trade, and foreign policy 

implications associated with a foreign carrier’s proposed services. The FCC has 

recognized, however, that it lacks the subject-matter expertise to evaluate these 

topics, and thus, it relies on certain Executive Branch agencies for guidance. For 

years, three agencies—DOJ, DHS, and the Department of Defense (“DOD”), which 

until recently were collectively referred to as “Team Telecom”—were tasked with 

evaluating national security and law enforcement concerns. Where Team Telecom 

believed that risks may exist, it attempted to mitigate those risks through a 

security agreement with the foreign carrier. These agreements provided Team 

Telecom with oversight capabilities, including the right to visit the carrier’s U.S.-

based facilities. If Team Telecom opted not to enter into a security agreement with 

a foreign carrier, it had no insight into the carrier’s operations.

These measures were ineffective as Team Telecom lacked formal statutory 

authority, leaving its operations unstructured and ad hoc. Because of the lack of 
4

statutory authority, Team Telecom had no formal, written processes for reviewing 

applications or monitoring compliance with security agreements. The informality 

also resulted in protracted review periods and a process FCC commissioners 

described as “broken” and an “inextricable black hole” that provided “no clarity for 

[the] future.” For example, Team Telecom’s review of China Mobile USA’s 

application lasted seven years. Further, the agencies did not dedicate sufficient 

resources to ensure Team Telecom conducted oversight in an efficient and effective 

manner. The components of DHS and DOJ responsible for Team Telecom together 

historically tasked three employees with reviewing applications and monitoring 

compliance with security agreements. 

 

In April 2020, as the Subcommittee was nearing the end of its investigation, 

the President issued Executive Order 13913, replacing the informal Team Telecom 

with the Committee for the Assessment of Foreign Participation in the United 

States Telecommunications Services (“EO Telecom Committee”). The Executive 

Order seeks to address many of the shortcomings identified by the Subcommittee’s 

investigation. The Executive Order requires members of the EO Telecom 

Committee to enter into a memorandum of understanding by July 3, 2020. 

Therefore, this report continues to refer to Team Telecom, even in relation to 

actions taken after April 4, 2020. 

Beginning in 2018, Team Telecom and the FCC publicly highlighted the

national security concerns associated with Chinese state-owned carriers operating in 

the United States. China Mobile USA’s application marked the first instance in 

which Team Telecom recommended that the FCC deny a foreign carrier 

authorization to provide international telecommunications services on national 

security grounds. In its denial, the FCC relied on Team Telecom’s conclusion that 

China Mobile USA is “subject to exploitation, influence, and control by the Chinese 

government.” Such government control, Team Telecom warned, could advance the 

Chinese government’s cyber and economic espionage activities targeted at the 

United States. Team Telecom specifically cautioned that China Mobile USA would 

build relationships with major U.S. carriers, through which it could gain access to 

U.S. networks and the sensitive public and private data transferred across those 

networks.

At least three other Chinese state-owned carriers have been operating in the 

United States for decades. The U.S. subsidiaries of the two other Big Three 

carriers—China Telecom and China Unicom—along with a smaller state-affiliated 

provider ComNet (USA) LLC (“ComNet”) each received authorization to provide 

international telecommunications services in or prior to 2002 and have been 

operating ever since. During this time, these Chinese carriers have built 

relationships with major U.S. carriers and established points of presence across the 

United States. Further, China Telecom’s U.S. subsidiary, China Telecom Americas, 

provides services to Chinese government facilities in the United States. 
5

Until recently, Team Telecom conducted limited oversight of these Chinese 

state-owned carriers. Team Telecom entered into security agreements with China 

Telecom Americas (2007) and ComNet (2009), but it exercised minimal oversight 

over those entities until recently. During the more-than-ten year period in which 

these security agreements have been in effect, Team Telecom conducted just two 

site visits to each company—or four in total, three of which occurred within the past 

three years. At no point did Team Telecom enter into a security agreement with 

China Unicom Americas, meaning Team Telecom has no oversight authority to 

assess the company’s operations in the United States. 

The national security concerns Team Telecom and the FCC outlined in 

relation to China Mobile USA are applicable to the Chinese state-owned carriers

currently operating in the United States. In advocating that the FCC deny China 

Mobile USA’s application, Team Telecom raised a number of national security 

concerns related to China Mobile USA’s Chinese government ownership. As Team 

Telecom officials acknowledged to the Subcommittee, those concerns also apply to 

China Telecom Americas, China Unicom Americas, and ComNet. The carriers are 

ultimately owned by the Chinese government; are required to comply with Chinese 

national security laws to support the Chinese government’s intelligence work; and 

have established relationships with U.S. carriers, giving them access to critical 

infrastructure that the Chinese government could exploit in its economic and cyber 

espionage efforts. Team Telecom recognized these issues in its recent 

recommendation that the FCC to revoke China Telecom Americas’ authorizations. 

The FCC also indicated its awareness of these concerns, when it recently called for 

all the carriers to demonstrate why their authorizations should not be revoked. 

* * * * *

It must be noted that state-ownership does not presume a national security 

risk. Indeed, many foreign telecommunications companies around the world are 

state-owned. There are also compelling commercial interests dependent on 

facilitating the flow of data between the United States and China, which are among 

each other’s top trading partners. The vast global telecommunications and 

technology infrastructure that facilitates commerce and economic development 

include undersea, terrestrial, wireless, and space-based networks jointly owned or 

operated by Chinese and Western companies. 

Commercial interests, however, must be balanced against national security 

interests. Striking an appropriate balance between these interests requires the 

Executive Branch to exercise greater oversight and regularly evaluate the risks 

posed by foreign-owned companies, especially considering that national security 

concerns evolve over time. Currently, Chinese state-owned carriers are providing 

international telecommunications services based on FCC authorizations granted 
6

more than a decade ago, in some cases nearly two decades. The carriers have 

provided services during this time, with minimal oversight from Team Telecom.

The Subcommittee’s Investigations 

This investigation continues the Subcommittee’s examination of national 

security issues involving China. During the 115th Congress, the Subcommittee 

highlighted China’s leading role in the opioid crisis by investigating how illicit 

opioids like fentanyl are shipped from China to the United States through 

international mail. The Subcommittee held an initial oversight hearing on May 25, 

2017, titled “Stopping the Shipment of Synthetic Opioids: Oversight of U.S. 

Strategy to Combat Illicit Drugs.” On January 25, 2018, the Subcommittee held a 

second hearing and issued a bipartisan report titled “Combatting the Opioid Crisis: 

Exploiting Vulnerabilities in International Mail.” On October 24, 2018, the 

President signed into law the Synthetic Trafficking & Overdose Prevention Act 

(“STOP Act”), legislation designed to assist law enforcement in identifying and 

stopping fentanyl being shipped into the United States.

In the current 116th Congress, on February 28, 2019, the Subcommittee held 

a hearing and issued a bipartisan report titled “China’s Impact on the U.S. 

Education System.” The Subcommittee examined China’s propaganda efforts at 

U.S. colleges and universities through Confucius Institutes. The Chinese 

government funds Confucius Institutes and hires Chinese teachers to teach 

language and culture classes to students and non-student community members. 

Confucius Institute funding comes with strings that can compromise academic 

freedom. The Chinese government approves all teachers, events, and speakers. 

Some U.S. schools contractually agree that both Chinese and U.S. laws will apply. 

The Chinese teachers sign contracts with the Chinese government pledging they 

will not damage Chinese national interests. The Subcommittee found that these 

limitations export China’s censorship of political debate to the United States and 

prevent the academic community from discussing topics that the Chinese 

government believes are politically sensitive. In addition, a number of U.S. schools 

have been prevented from opening American cultural and educational centers in 

China. The Subcommittee recommended that, absent full transparency regarding 

how Confucius Institutes operate and full reciprocity for U.S. cultural outreach 

efforts on college campuses in China, Confucius Institutes should not continue in 

the United States. Twenty-one Confucius Institutes have closed since the 

Subcommittee published its report.

The Subcommittee continued its review of China’s influence in the United 

States this congress by examining China’s talent recruitment plans. On November 

18, 2019, the Subcommittee released a bipartisan report titled “Threats to the U.S. 

Research Enterprise: China’s Talent Recruitment Plans.” The Subcommittee also 

held a hearing related to China’s talent recruitment programs on November 19, 
7

2019. The Subcommittee examined how American taxpayers have been unwittingly 

funding the rise of China’s economy and military over the last two decades while 

federal agencies have done little to stop it. The Subcommittee found that China has 

been recruiting U.S.-based scientists and researchers and incentivizing them to 

transfer U.S. taxpayer-funded intellectual property to China for China’s own 

military and economic gain. The Subcommittee focused specifically on China’s most 

prominent talent recruitment program, the Thousand Talents Plan. The 

Subcommittee also surveyed seven federal agencies’ efforts to combat the theft of 

American taxpayer-funded research and technology through Chinese talent 

recruitment programs, finding that the U.S. government does not have a 

comprehensive strategy to combat this threat.

At the November 19, 2019 hearing, the FBI’s Assistant Director for 

Counterintelligence stated that “[w]ith our present-day knowledge of the threat 

from Chinese talent plans, we wish we had taken more rapid and comprehensive 

action in the past, and the time to make up for that is now.” Following the 

Subcommittee’s report and hearing, the Department of Justice has charged several 

individuals with crimes related to their participation in the Thousand Talents Plan, 

including the Chair of Harvard’s Chemistry and Chemical Biology Department.

Finally, the Subcommittee has examined cyberattacks against U.S. 

companies that have been attributed to Chinese actors. On March 7, 2019, the 

Subcommittee released a bipartisan report titled “How Equifax Neglected 

Cybersecurity and Suffered a Devastating Data Breach.” The Subcommittee held a 

hearing on the report on March 7, 2019, which also examined the 2018 data breach 

suffered by Marriott. Chinese military personnel were indicted for their 

involvement in the Equifax breach on February 20, 2020, and Attorney General 

Barr indicated in announcing those indictments that Chinese government officials 

are also responsible for the attack against Marriott.

For this investigation, the Subcommittee reviewed more than 6,400 pages of 

documents and conducted more than 10 interviews, including interviews with 

individuals from the FCC, DOJ, DHS, China Telecom Americas, China Unicom 

Americas, ComNet, AT&T, Verizon, and CenturyLink. The Subcommittee also met 

with researchers who analyzed the Chinese government’s use of 

telecommunications carriers to hijack communications. All entities and individuals 

complied with the Subcommittee’s requests for information, documents, and 

interviews.
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II. FINDINGS OF FACT AND RECOMMENDATIONS

Findings of Fact

(1) The Chinese government exercises control over China’s 

telecommunications industry and carriers. The Chinese 

telecommunications market is the largest in the world, in terms of 

number of subscribers. The Chinese government views the 

telecommunications industry as critical and has set goals for the 

industry to “enter the ranks of powerful countries.” To achieve this 

goal, the Chinese government exerts control over the domestic 

telecommunications market, including restraining foreign investment. 

Further, the largest domestic carriers are government owned; the 

Chinese government handpicks these firms’ leaders, frequently 

shuffling the senior leadership between the companies. The carriers 

are also subject to “national service,” requiring that they put State 

interests ahead of their commercial interests.

(2) China does not provide U.S. telecommunications companies 

reciprocal access to the Chinese market and requires foreign 

carriers seeking to operate in China to enter into joint 

ventures with Chinese companies. These joint ventures often 

require U.S. companies to give their technology, proprietary know-how, 

and intellectual property to their Chinese partners. In the two decades 

since China acceded to the World Trade Organization, “not a single 

foreign firm has succeeded in establishing a new joint venture” to 

access China’s basic telecommunications services market and “only a 

few dozen foreign-invested suppliers have secured licenses to provide 

value-added telecommunications services, while there are thousands of 

licensed domestic suppliers.”

(3) The Chinese government encourages Chinese companies to 

take advantage of more open international markets. Through 

its “Go Out” policy announced in 1999, the Chinese government 

provided financial support to state-owned companies to encourage 

expansion into global markets. Telecommunications carriers are 

among the companies that benefited, and they have since established 

operations across the world, including in the United States.

(4) The Chinese government engages in cyber and economic 

espionage efforts against the United States and may use 

telecommunications carriers operating in the United States to 

further these efforts. The U.S. government has highlighted the 

Chinese government’s cyber and economic espionage efforts against the 
9

United States. To carry out these efforts, the Chinese government 

frequently enlists the assistance of state-owned entities. Chinese 

state-owned companies are subject to an added layer of state influence 

in that they must comply with strict national security, intelligence, 

and cyber security laws regardless of where they operate. The U.S. 

National Counterintelligence and Security Center and the Director of 

National Intelligence have warned that the Chinese government is 

likely to use its state-owned carriers to assist in its espionage efforts 

because the carriers “provide valuable services that often require 

access to the physical and logical control points of the computers and 

networks they support.” In fact, public reports allege that at least one 

Chinese carrier—China Telecom—and its affiliates have hijacked and 

rerouted data through China on a number of occasions since 2010. 

China Telecom and its affiliates, including its U.S. affiliate, China 

Telecom Americas, deny the public reports. 

(5) The FCC regulates foreign carriers seeking to provide 

international telecommunications services between the United 

States and foreign points, but historically relied on Team 

Telecom to assess the national security and law enforcement 

risks associated with a foreign carrier’s proposed services. The 

FCC also seeks input from other Executive Branch agencies concerning 

other risks, such as foreign policy and trade implications.

(6) The FCC is not required to review a foreign carrier’s 

authorization after it has been granted. Authorizations 

effectively exist in perpetuity despite evolving national security 

implications. The FCC does not require a foreign carrier’s 

authorization to be periodically reassessed to confirm the services 

continue to serve the public interest. 

(7) Team Telecom was an informal group, with no statutory 

authority. As a result, its review of foreign carriers’ 

applications was ad hoc, leading to delays and uncertainty. 

Throughout its existence, Team Telecom operated under no formal 

legislative or regulatory authority. Instead, it reviewed foreign 

carriers’ applications at the request of and under the powers of the 

FCC. The lack of statutory authority resulted in a disorganized, 

haphazard, and lengthy review process that has been heavily criticized 

and referred to as an “inextricable black hole.” Team Telecom had no 

deadlines by which it needed to make recommendations to the FCC, 

meaning the review of an application could—and often did—last years.
10

(8) The lack of statutory authority also prohibited Team Telecom 

from conducting meaningful oversight of foreign carriers 

authorized by the FCC. Team Telecom’s monitoring and oversight 

capabilities existed only when it signed a security agreement with a 

foreign carrier. But, it was limited to monitoring compliance with the 

particular terms of the agreement. The stringency of these agreements 

increased over time, but historical agreements—particularly those 

entered before 2010—were written broadly, such that Team Telecom 

had little to verify. Further, Team Telecom did not start to develop an 

interagency process for monitoring compliance with security 

agreements until 2010 or 2011. 

(9) Team Telecom had insufficient resources. DOJ and DHS 

historically dedicated fewer than five employees to reviewing 

applications and monitoring compliance with security agreements.

(10) Nearly a year after the Subcommittee began its investigation, 

the Administration issued an executive order that formalized 

Team Telecom. Executive Order 13913 established the EO Telecom 

Committee, set deadlines by which the EO Telecom Committee must 

complete reviews, and provided for input from other Executive Branch 

agencies, including the Intelligence Community. While the Order is a 

positive development, it does not address all of the concerns the 

Subcommittee identified relating to Team Telecom, including resource 

levels and formal review procedures. 

(11) The FCC has authorized three Chinese state-owned carriers to 

provide international telecommunications services between 

the United States and foreign points. These three Chinese stateowned carriers have operated in the United States for decades: China 

Unicom Americas and China Telecom Americas obtained authorization 

in 2002; ComNet first obtained authorization in 1999.

(12) Team Telecom has had no interaction with China Unicom 

Americas since the FCC’s authorization. Team Telecom has never 

sought a security agreement with China Unicom Americas, despite 

having opportunities to do so as recently as 2017. As a result, Team 

Telecom had no oversight of the company’s operations in the United 

States. 

(13) Team Telecom entered into security agreements with China 

Telecom Americas and ComNet, but conducted just two site 

visits in more than 10 years. Team Telecom entered into a security 

agreement with China Telecom Americas in 2007 and ComNet in 2009. 
11

Since entering into the agreements more than ten years ago, Team 

Telecom conducted only two site visits to each company—or four in 

total. Only one of those visits occurred before 2017. 

(14) The FCC and Team Telecom have recognized the national 

security risks posed by Chinese state-owned carriers operating 

in the United States. In particular, in connection with China Mobile 

USA’s application, the FCC, Team Telecom, and other Executive 

Branch agencies cited three areas of concerns: (1) China Mobile USA 

could be exploited, influenced, and controlled by the Chinese 

government; (2) China Mobile USA could gain access to U.S. networks 

through interconnection arrangements with U.S. carriers; and (3) due 

to its Chinese government control and access to U.S. critical 

infrastructure, China Mobile USA could help the Chinese government 

in its cyber and economic espionage or other malicious activities. 

Team Telecom argued that, if authorized to provide international 

telecommunication services, China Mobile USA would have been able 

to monitor, degrade, and disrupt U.S. government communications. 

And, as a Chinese state-owned company, it must legally comply with 

requests made by the Chinese government and could not be expected to

act against the interests of the Chinese government.

(15) The national security concerns outlined with respect to China 

Mobile USA apply to the other Chinese state-owned carriers 

operating within the United States. The carriers are ultimately 

owned by the Chinese government, and therefore subject to 

exploitation, influence, and control by the Chinese government. They 

may be forced to assist in cyber and economic espionage activities 

targeted at the United States, as they are similarly bound by Chinese 

national security laws. Further, the carriers have established 

relationships with major U.S. carriers, including AT&T, Verizon, and 

CenturyLink—all of which serve government entities, as well as 

private customers. China Telecom Americas also provides services to 

Chinese government facilities in the United States.

(16) Since the Subcommittee began its investigation, Team Telecom 

and the FCC took actions to address national security concerns 

posed by Chinese state-owned carriers. On April 9, 2020, Team 

Telecom recommended that the FCC revoke and terminate China 

Telecom Americas’ authorizations. On April 24, 2020, the FCC issued 

a notice to each of the Chinese state-owned carriers requiring them to 

demonstrate why their authorizations should not be revoked.
12

Recommendations

(1) The FCC should complete its review of China Telecom 

Americas, China Unicom Americas, and ComNet in a timely 

manner. Team Telecom has recommended that China Telecom 

Americas’ authorizations be revoked because of “substantial and 

unacceptable” national security concerns. The FCC should 

expeditiously review the authorizations of China Telecom Americas 

and the other Chinese state-owned carriers to ensure our national 

security and communications networks are not unnecessarily put at 

risk. As part of its review of China Unicom Americas’ and ComNet’s 

authorizations, the FCC should seek the recommendation of the newly 

established EO Telecom Committee as to national security and law 

enforcement concerns associated with the carriers’ authorizations. The 

analysis should also include a decision as to whether risks can be 

mitigated—through the existing security agreements or new 

agreements.

(2) The FCC should establish a clear standard and process for 

revoking a foreign carrier’s existing authorizations. Currently, 

there is no clear standard or process for revoking a foreign carrier’s 

existing authorizations. Telecommunications companies must 

understand the circumstances under which authorizations could be 

revoked and be afforded due process to challenge potential revocation. 

Team Telecom officials indicated that they do not know what the FCC 

considers a “sufficient” basis for a revocation. Thus, while government 

officials may believe revocation is warranted, they may not recommend 

revocation without additional guidance. A formal standard and 

revocation process would provide clear guidance to both the 

government and industry as to when revocation of an existing 

authorization is warranted.

(3) Congress should require the periodic review and renewal of 

foreign carriers’ authorizations to provide international 

telecommunications services. Currently, these authorizations can 

exist in perpetuity. Although the recent Executive Order allows the 

EO Telecom Committee to review existing authorizations, it does not

mandate periodic review or renewal. Considering the limited resources 

DOJ and DHS dedicated to Team Telecom’s review of foreign carriers’ 

applications, it is unlikely that they will review many existing 

authorizations. National security and law enforcement concerns, as 

well as trade, and foreign policy concerns, however, are ever evolving, 

meaning that an authorization granted in one year may not continue 

to serve the public interest years later. Requiring a periodic review 
13

and renewal of authorizations would ensure that the FCC and the 

Executive Branch continually account for evolving national security, 

law enforcement, policy, and trade risks. 

(4) Congress should statutorily authorize the EO Telecom 

Committee. The Administration established the EO Telecom 

Committee, which formalizes Team Telecom, but the EO Telecom 

Committee still has no governing statutory authority. Team Telecom’s 

historical lack of statutory authority led to a review process criticized 

by many as “opaque” and “broken.” The recent Executive Order is a 

positive step, but formal legislative authority will provide for greater 

oversight over foreign carriers.

(5) Congress should preserve the role of other relevant Executive 

Branch agencies. Team Telecom was comprised of DOJ, DHS, and 

DOD officials. These agencies are also the primary components of the 

newly established EO Telecom Committee. Historically, the FCC has 

sought input on a foreign carrier’s application from other Executive 

Branch agencies, including the Department of State, Department of 

Commerce, and the U.S. Trade Representative. The recent Executive 

Order makes these agencies, and others, advisors to the EO Telecom 

Committee. These agencies provide invaluable input and their role in 

the review process must be accounted for in any formal legislation. 

(6) Congress should set deadlines by which decisions on FCCrelated application reviews must be made. Team Telecom had no 

set deadlines by which it needed to complete its review of a foreign 

carrier’s application pursuant to the FCC’s request. Further, Team 

Telecom’s already limited resources were often focused on actions 

related to the Committee on Foreign Investment in the United States 

(“CFIUS”). This resulted in protracted reviews and business 

uncertainty. Setting deadlines will imbue trust back into the review 

process. The recent Executive Order imposed certain timelines, but it 

allows for the EO Telecom Committee to seek extensions, which could 

draw out the review process, especially if resources remain limited. 

(7) Congress should provide sustained resources necessary for the

EO Telecom Committee to effectively assess foreign carriers’ 

applications and to monitor foreign carriers operating in the 

United States. The Foreign Investment Risk Review Modernization 

Act of 2018 provided CFIUS agencies specialized authority to hire staff 

to ensure agencies can manage CFIUS filings. EO Telecom Committee 

agencies should be provided a similar authority to ensure it is able to 
14

effectively and efficiently review foreign carriers’ applications and 

monitor foreign carriers’ operations.

(8) Congress should require the EO Telecom Committee to 

formally coordinate reviews of foreign carrier applications 

with CFIUS. The EO Telecom Committee’s component agencies are 

members of CFIUS. CFIUS’s and the EO Telecom Committee’s 

processes overlap when a foreign investor seeks to acquire control of a 

U.S. telecommunications operator or infrastructure owner. These 

applications already undergo extensive review by CFIUS. Requiring 

formal coordination between CFIUS and the EO Telecom Committee 

will streamline the regulatory clearance process while meeting 

national security, law enforcement, trade policy, and foreign policy 

objectives.

(9) Congress should provide the EO Telecom Committee with 

authority to recommend revocation of a carrier’s 

authorization, even where no security agreement exists 

between it and the carrier. Where no security agreement existed, 

Team Telecom did not interact with the foreign carrier. Although 

certain government officials believed that Team Telecom could review 

an existing authorization, even where no agreement existed, there is 

no formal, legal basis for such review. Combined with a requirement 

to periodically renew authorizations, affording the EO Telecom 

Committee the authority to review and recommend revocation of 

existing authorizations, even without a security agreement in place, 

allows the EO Telecom Committee to better respond to the evolving 

nature of national security risks.

(10) Congress should require the periodic review and renewal of 

security agreements between the EO Telecom Committee and 

foreign carriers. Team Telecom officials told the Subcommittee that, 

even if it believed that a security agreement was not comprehensive to 

address all risks associated with a foreign carrier’s operations, it had 

little leverage to update the agreement. This means that certain risks, 

which could otherwise be mitigated, may go unaddressed. Requiring a 

periodic review and renewal of security agreements provides the EO 

Telecom Committee yet another tool to ensure that national security 

and other risks are regularly assessed and addressed. 

(11) The EO Telecom Committee should establish formal, written 

policies and procedures governing its monitoring of 

compliance with security agreements. Team Telecom had no 

formal, written processes governing its monitoring of a foreign carrier’s 
15

compliance with a security agreement. It relied on written 

correspondence and site visits, but there was no clear method as to 

when these mechanisms were used or why. The EO Telecom 

Committee should document and formalize Team Telecom’s processes, 

which will provide for more streamlined and consistent review of 

foreign carriers’ operations in the United States.

(12) Congress and the Administration should take steps to ensure 

reciprocal access to the Chinese telecommunications market 

for U.S. companies. In those aspects of telecommunications in which 

China officially permits foreign participation, China requires forced 

technology transfers and imposes discriminatory regulatory processes 

and burdensome licensing and operating requirements. This results in 

a highly asymmetric playing field in which U.S. companies face 

immensely restrictive policies in China, while Chinese companies are 

not equally restricted in the United States.
16

III. BACKGROUND

This section discusses China’s development of and control over its domestic 

telecommunications industry and carriers. In addition to exercising control over the 

domestic telecommunications industry, China has encouraged its carriers to expand 

internationally. During the past two decades, Chinese state-owned 

telecommunications carriers have established operations across the world, including 

in the United States. Finally, this section highlights the Chinese government’s 

cyber and economic espionage efforts targeted at the United States and U.S. 

government officials’ warnings about how the Chinese government may use its 

state-owned telecommunications carriers to further China’s national interests.

A. China Views the Telecommunications Industry as Critical to 

National Priorities

The Chinese telecommunications market is the largest in the world, in terms 

of number of subscribers.1 Telecommunications services in China are divided into 

two categories: basic telecommunications services (“BTS”) and value-added 

telecommunications services (“VATS”).2 BTS provide “basic facilities of public 

networks, public data transmission as well as basic speech communication” and 

include services like fixed line and mobile calls, internet, international 

communication facilities, and satellite communications.3 VATS include the 

“telecommunication and information services using the basic facilities of public 

networks” and includes e-mail and online data processing and database storage.4

In 2006, the Chinese government’s State Council released the National 

Medium and Long-Term Program for Science and Technology Development, 

designating development of science and technology as a key Chinese strategic goal.5 

China aimed to become an “innovation-oriented country” by 2020 and a leader in 

science and technology by 2050.6 To further this goal, China issued its Made in 

 1 China Telecommunications Market, INT’L DATA CORP., 

https://www.idc.com/getdoc.jsp?containerId=IDC_P39849 (“In addition, in 2018, Chinese mobile 

subscribers reached 1.57 billion, which is the largest single mobile communication market in the 

world.”); Dr. Daouda Cissé, “Going Global” in Growth Markets—Chinese Investments in 

Telecommunications in Africa, STELLENBOSCH UNIV. CENTRE FOR CHINESE STUDIES (2012). 2 See Regulation Concerning Telecommunications of the People’s Republic of China, Order of the 

State Council No. 291. Art. 8 (promulgated Sept. 25, 2000) (English translation), 

http://www.fdi.gov.cn/1800000121_39_2537_0_7.html. 3 Id. at Art. 8, Appendix – Catalogue of Telecommunications Business. 4 Id. 

5 Micah Springut, Stephen Schlaikjer & David Chen, China’s Program for Sci. & Tech. 

Modernization: Implications for American Competitiveness, CENTRA TECH. INC. 6, 43 (Jan. 2011), 

https://www.uscc.gov/sites/

default/files/Research/USCC_REPORT_China%27s_Program_forScience_and_Technology_Moderniz

ation.pdf (prepared for U.S.-CHINA ECON. & SEC. REVIEW COMM’N). 6 JAMES MCGREGOR, U.S. CHAMBER OF COMMERCE, CHINA’S DRIVE FOR ‘INDIGENOUS INNOVATION’: A

WEB OF INDUS. POLICIES 4, 17 (2010).
17

China 2025 (“MIC 2025”) plan, which targets ten strategic industries deemed 

critical to China’s economic competitiveness and high-tech growth.7 According to 

the U.S. Chamber of Commerce, MIC 2025 “appears to provide preferential access 

to capital to domestic companies in order to promote their indigenous research and 

development capabilities, support their ability to acquire technology from abroad, 

and enhance their overall competitiveness.”8 The U.S. Chamber also found that, in 

concert with China’s state-led development plans, MIC 2025 constitutes a “broader 

strategy to use state resources to alter and create comparative advantage[s] in these 

sectors on a global scale.”9

The telecommunications industry is among those China deemed critical. In 

MIC 2025, the Chinese government outlines its goal for the information and 

telecommunications industry to “enter the ranks of powerful countries” by 2020.10 

China also seeks to be the leader in 5G international standards, technology, and 

industry and to reach 50 percent share of the international market for next 

generation internet.11

B. China Heavily Regulates its Telecommunications Industry and

Carriers

To reach its goal to be a leader in the telecommunications industry, the 

Chinese government exerts control over foreign investment and domestic carriers. 

Further, it has incentivized state-owned carriers to expand operations 

internationally. This section analyzes each topic in turn.

1. China Heavily Restricts Foreign Telecommunications 

Investments

China maintains one of the most restrictive foreign investment regimes in

the world.12 The Chinese government first allowed foreign businesses in China 

during the 1970s.13 Foreign investment accelerated in 2001, when—as a condition 

to join the World Trade Organization—China committed to allowing foreign carriers 

to form joint ventures with domestic carriers.14 Despite the appearance of opening 

up, however, China has continued to restrict access to the telecommunications 

 7 See U.S. CHAMBER OF COMMERCE, MADE IN CHINA 2025: GLOBAL AMBITIONS BUILT ON LOCAL 

PROTECTIONS 6 (2017). 8 Id. 

9 Id. 10 Id. at 65, 69. 11 Id. at 66. 12 See id. at 26 (citing OECD FDI Regulatory Index, http://www.oecd.org/investment/fdiindex.htm). 

13 Laney Zhang, China: Foreign Investment Law Passed, LIBRARY OF CONGRESS: GLOBAL LEGAL 

MONITOR (May 30, 2019), https://www.loc.gov/law/foreign-news/article/china-foreign-investment-lawpassed/. 14 WAYNE M. MORRISON, CONG. RESEARCH SERV., RL33536, CHINA-U.S. TRADE ISSUES 49–50 (2018).
18

sector.15 Many telecommunications services remain “off-limits to foreign 

operators.”16 Instead, with limited exceptions,17 foreign telecommunications 

companies must enter into joint ventures that are at least 50 percent owned by a 

Chinese party.18 

The joint venture agreements often require U.S. companies to turn over their 

technology, proprietary know-how, and intellectual property to their Chinese 

partners, an exchange referred to as “forced technology transfer.”19 Former U.S. 

Treasury Secretary Timothy Geithner described the practice:

We’re seeing China continue to be very, very aggressive in a strategy they 

started several decades ago, which goes like this . . . you want to sell to 

our country, we want you to come produce here. If you want to come 

produce here, you need to transfer your technology to us.20

The European Union Chamber of Commerce in China reported in May 2019 

that “results from its annual survey showed 20% of members reported being 

compelled to transfer technology for market access, up from 10% two years ago.”21

In addition, “nearly a quarter of those who reported such transfers said the practice 

was currently ongoing, while another 39% said the transfers had occurred less than 

 15 OFFICE OF THE U.S. TRADE REPRESENTATIVE, EXEC. OFFICE OF THE PRESIDENT, FINDINGS OF THE 

INVESTIGATION INTO CHINA’S ACTS, POLICIES, AND PRACTICES RELATED TO TECH. TRANSFER,

INTELLECTUAL PROP., & INNOVATION UNDER SECTION 301 OF THE TRADE ACT OF 1974 26, 28 (Mar. 22, 

2018) [hereinafter 2018 U.S. TRADE REPRESENTATIVE REPORT].

16 Yang Zhou, Regulation of Telecommunications Sector in China: Overview, ZHONG LUN (Aug. 16, 

2017), http://www.zhonglun.com/Content/2017/08-16/1841302098.html#co_anchor_a836533_1. 17 In 2019, the Chinese government removed restrictions on three categories of value-added 

telecommunications services: multi-party communication, store-and-forward, and call center 

businesses. Foreign ownership of businesses providing these services is now permitted. See Zoey Ye 

Zhang, China’s 2019 Negative Lists and Encouraged Catalogue for Foreign Investment, CHINA 

BRIEFING (July 10, 2019), https://www.china-briefing.com/news/chinas-2019-negative-listsencouraged-catalogue-foreign-investment/. 18 See Regulations on the Administration of Foreign-Invested Telecommunications Enterprises, Art. 

6 (promulgated Feb. 6, 2016), https://china.lexiscn.com/law/law-english-1-3161594-

T.html?crid=1ffa565c-d660-b54d-6325-79b30208a4f5&prid= (“The proportion of capital contributed 

by the foreign investor(s) in foreign-funded telecommunications enterprise that is engaged in basic 

telecommunications services (other than radio paging services) shall not ultimately exceed 49%. The 

proportion of capital contributed by the foreign investor(s) in a foreign-invested telecommunications 

enterprise that is engaged in value-added telecommunications services (including radio paging 

business as part of its basic telecommunications services) shall not ultimately exceed 50%.”). 

19 See, e.g., KAREN SUTTER, CONG. RESEARCH SERV., IN11208, U.S. SIGNS PHASE ONE TRADE DEAL 

WITH CHINA 1 (2020); 2018 U.S. TRADE REPRESENTATIVE REPORT, supra note 15, at 19.

20 WAYNE M. MORRISON, CONG. RESEARCH SERV., RL33536, CHINA-U.S. TRADE ISSUES 44 (2018). 

China publicly committed to rectifying this problem in 2016, but evidence indicates that the problem 

still exists. Id. 21 Michael Martina, China’s Tech Transfer Problem is Growing, EU Business Group Says, REUTERS

(May 20, 2019).
19

two years ago.”22 Some researchers, however, suggest these percentages are underinclusive given that Chinese officials often exert pressure to transfer technology 

orally to avoid creating a written record, and many companies avoid raising the 

issue to evade negative publicity or retaliation from the Chinese government.23 

China’s foreign investment approval process is also complex and variable. 

China imposes strict administrative licensing requirements for telecommunications

carriers—they must secure approval from up to six government agencies before 

operating in the country.24 This can include an anti-monopoly and national security 

review by the Ministry of Commerce; a review of the company’s name by the State 

Administration of Industry and Commerce; and approval from the Ministry of 

Information Industry and Technology, China’s telecommunications regulator.25 

Although the telecoms licensing approval timelines are officially either 60 or 180 

days, depending on the type of license sought,26 the overall approval process can last 

more than a year.27 Complicating the bureaucratic licensing process is the 

discretion held by local officials, who may add unofficial requirements28 and “impose 

deal-specific conditions in exchange for the licenses.”29

These restrictions have blocked foreign carriers from accessing China’s BTS 

market.30 Since China’s accession to the World Trade Organization almost two 

decades ago, “not a single foreign firm has succeeded in establishing a new joint 

venture to enter this sector.”31 China’s VATS regulations have also “created serious 

barriers to market entry for foreign [carriers] seeking to enter this sector.”32 As a 

result, “only a few dozen foreign-invested [carriers] have secured licenses to valueadded telecommunications services, while there are thousands of licensed domestic 

suppliers.”33 Although China has publicly agreed to lessen barriers for foreign 

 22 Id. 

23 WAYNE M. MORRISON, CONG. RESEARCH SERV., RL33536, CHINA-U.S. TRADE ISSUES 44 (2018). 24 See U.S. CHAMBER OF COMMERCE, CHINA’S APPROVAL PROCESS FOR INBOUND FOREIGN DIRECT INV.

10, chart 1 (2012). 

25 Specifics for the telecommunications industry are laid out in the Regulations on the 

Administration of Foreign-invested Telecommunications Enterprises (revised in 2016). See also U.S.

CHAMBER OF COMMERCE, CHINA’S APPROVAL PROCESS FOR INBOUND FOREIGN DIRECT INV. 8–20 (2012) 

(listing other requirements).

26 U.S. CHAMBER OF COMMERCE, CHINA’S APPROVAL PROCESS FOR INBOUND FOREIGN DIRECT INV. 8–20

(2012). 27 2018 U.S. TRADE REPRESENTATIVE REPORT, supra note 15, at 37.

28 See id. at 20 (quoting an investigation submission that states, “Chinese officials are careful not to 

put such requirements in writing, often resorting to oral communications and informal 

‘administrative guidance’ to pressure foreign firms to transfer technology”).

29 Id. at 39. 30 OFFICE OF THE U.S. TRADE REPRESENTATIVE, EXEC. OFFICE OF THE PRESIDENT, NAT’L TRADE 

ESTIMATE REP. ON FOREIGN TRADE BARRIERS 119 (2020).

31 Id.

32 Id. (citing restrictions, including “opaque and arbitrary licensing procedures, foreign equity caps,

and periodic, unjustified moratoria on the issuance of new licenses”).

33 Id.
20

investment in China,34 numerous challenges remain.35 China continues to “use 

discriminatory regulatory processes, informal bans on entry and expansion, case-bycase approvals, overly burdensome licensing and operating requirements, and other 

means to frustrate the efforts of U.S. suppliers of services to achieve their full 

market potential in China.”36

2. China Exerts Control over Domestic Carriers

Not only does China limit foreign investment in the telecommunications 

industry, but it also controls its state-owned carriers. Prior to 1999, the Chinese 

government relied on a single carrier, which effectively had a monopoly on all 

telecom services in China.37 However, the government chose to break up that 

monopoly and create a number of smaller, state-owned carriers to spur 

competition.38 In 2008, the Chinese government reversed course and launched a 

series of reforms, which resulted in consolidating the number of carriers in China.39 

Today, the Chinese telecommunications market is dominated by the “Big 

Three” carriers: China Mobile, China Telecom, and China Unicom.40 The Chinese 

government controls the companies’ management and operations.41 “[M]ost senior 

executives of the Chinese telecom companies have links to the [Ministry of 

Information Industry and Technology], the Government, or the [Communist] 

Party.”42 The Chinese government handpicks the companies’ leaders, frequently 

shuffling senior leadership between the companies, and implements policies 

discouraging intense competition between the Big Three.43 In fact, in 2017, the 

 34 See KAREN SUTTER, CONG. RESEARCH SERV., IN11208, U.S. SIGNS PHASE ONE TRADE DEAL WITH 

CHINA (2020). 35 OFFICE OF THE U.S. TRADE REPRESENTATIVE, EXEC. OFFICE OF THE PRESIDENT, NAT’L TRADE 

ESTIMATE REP. ON FOREIGN TRADE BARRIERS 116 (2020).

36 Id.

37 James Huddleston, The Battle between China’s 3 Telecom Companies and Its Impact on Profits, 

SEEKING ALPHA (July 23, 2013), https://seekingalpha.com/article/1565812-the-battle-between-chinas3-telecom-companies-and-its-impact-on-profits. 

38 Id.

39 Yukyung Yeo, Between Owner and Regulator: Governing the Business of China’s 

Telecommunications Service Industry, 200 CHINA QUARTERLY 1013, 1023–24 (2009), 

https://www.jstor.org/stable/pdf/27756541.pdf. 40 See Alan Weissberger, China’s Big 3 Mobile Operators Have 9 Million 5G Subscribers in Advance 

of the Service; IEEE COMM. SOC. TECH. BLOG (Oct. 7, 2019), 

https://techblog.comsoc.org/2019/10/07/chinas-big-3-mobile-operators-have-9-million-5g-subscribersin-advance-of-the-service-barrons-china-to-lead-in-5g-deployments/. 41 See, e.g., Bien Perez, Bosses of China Mobile, Unicom and Telecom Reshuffled as Beijing Revamps 

State-Owned Telecommunications Firms, SOUTH CHINA MORNING POST (Aug. 24, 2015). 42 CHINA: TELECOM INDUSTRY BUSINESS OPPORTUNITIES HANDBOOK 1, 61 (2014). 

43 China Telecom Chairman Moves to China Mobile, THE ECONOMIST INTELLIGENCE UNIT (Mar. 6, 

2019), http://www.eiu.com/industry/article/147729798/china-telecom-chairman-moves-to-chinamobile/2019-03-06; Huddleston, supra note 37.
21

government stated that it intended to factor in “social obligations” when selecting 

senior management for the Big Three carriers.44 

The Chinese government also retains ultimate control over the carriers by 

setting target returns and growth rates.45 State-owned carriers are subject to 

“national service,” which compels them to put the government’s development goals 

ahead of the companies’ own market interests.46 In 2017, for example, Li Keqiang, 

Premier of the Chinese Government, “directed China Mobile, China Unicom and 

China Telecom to remove all domestic long-distance and mobile roaming fees by the 

end of [the] year, significantly cut internet connection and leased line charges for 

small and medium-sized enterprises . . . and reduce international long-distance 

tariffs.”47 All three companies pledged to do so within 24 hours of the Premier’s 

directive, despite noting that doing so would negatively impact their financial 

performance.48

3. China Encourages State-Owned Telecommunications Carriers to 

Expand Internationally

Although strictly regulating the domestic telecommunications industry, the 

Chinese government has also sought to take advantage of more open international 

markets. China formally announced a “Go Out” policy or “Going Global” strategy in 

1999 to encourage state-owned enterprises to invest and expand overseas.49 The 

Chinese government pledged financial support to companies in strategic industries

to encourage expansion into global markets.50 “The essence of the ‘going global’ 

strategy [was] to promote ‘the international operations of capable Chinese firms 

with a view to improving resource allocation and enhancing their international 

competitiveness.’”51 Other commentators noted that the underlying motive of the 

policy was to bolster “[Communist] Party claims to legitimacy by becoming an 

effective global actor.”52 Chinese telecom companies have benefited from this policy, 

 44 Bien Perez, Why Government Policy has a Bigger Impact on China’s Telecoms Industry than 

Market Competition, SOUTH CHINA MORNING POST (Mar. 11, 2017). 45 Id.

46 Id.

47 Id.

48 Id.

49 See generally NARGIZA SALIDJANOVA, U.S.-CHINA ECON. & SEC. REVIEW COMM’N, GOING OUT: AN 

OVERVIEW OF CHINA’S OUTWARD FOREIGN DIRECT INV. (Mar. 30, 2011).

50 See Hongying Wang, A Deeper Look at China’s “Going Out” Policy, CENTRE FOR INT’L GOVERNANCE 

INNOVATION (Mar. 8, 2016); NARGIZA SALIDJANOVA, U.S.-CHINA ECON. & SEC. REVIEW COMM’N, 

GOING OUT: AN OVERVIEW OF CHINA’S OUTWARD FOREIGN DIRECT INV. 5 (Mar. 30, 2011) (citing 

UNITED NATIONS CONFERENCE ON TRADE & DEV., WORLD INV. REPORT (2006)).

51 NARGIZA SALIDJANOVA, U.S.-CHINA ECON. & SEC. REVIEW COMM’N, GOING OUT: AN OVERVIEW OF 

CHINA’S OUTWARD FOREIGN DIRECT INV. 5 (Mar. 30, 2011) (citing UNITED NATIONS CONFERENCE ON 

TRADE & DEV., WORLD INV. REPORT (2006)).

52 CHINA POLICY, CHINA GOING GLOBAL: BETWEEN AMBITION AND CAPACITY 3 (Apr. 2017), 

https://policycn.com/wp-content/uploads/2017/05/2017-Chinas-going-global-strategy.pdf.
22

establishing operations abroad in an effort to acquire technology and new 

markets.53

C. The United States Government Has Highlighted National Security 

Concerns Associated with Chinese State-Owned Carriers Operating 

within the United States

In recent years, the U.S. government has highlighted national security 

concerns raised by China’s state-owned telecom carriers operating in the United 

States. The U.S. National Counterintelligence and Security Center (“NCSC”) notes 

that foreign telecom companies are often subject to foreign state influence because 

they “provide valuable services that often require access to the physical and logical 

control points of the computers and networks they support.”54 Chinese state-owned 

companies are subject to an added layer of state influence in that they must comply 

with strict laws regardless of where they operate.55 These laws underscore the 

concern that the Chinese government may use state-owned carriers to assist in its 

cyber and economic espionage activities, particularly those targeted at the United 

States.56 

This section discusses the Chinese government’s history of cyber and 

economic espionage efforts against the United States. It then discusses some of the 

recent laws the Chinese government has enacted by which it could force companies 

to comply with Chinese government requests to assist in cyber and economic 

espionage efforts. Finally, this section discusses how a Chinese carrier might assist 

the Chinese government—through disrupting and rerouting internet and 

communications data. These “hijacking” efforts are possible because Chinese 

carriers have established operations in the United States and built interconnections 

with U.S. carriers. 

 53 Cf. Dr. Daouda Cissé, “Going Global” in Growth Markets—Chinese Investments in 

Telecommunications in Africa, STELLENBOSCH UNIV. CENTRE FOR CHINESE STUDIES (2012).

54 NAT’L COUNTERINTELLIGENCE & SEC. CTR., FOREIGN ECONOMIC ESPIONAGE IN CYBERSPACE 14 

(2018). 55 See, e.g., National Intelligence Law of the People’s Republic, Art. 7 (adopted June 27, 2017), 

http://cs.brown.edu/courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf (discussed 

infra).

56 See generally Redacted Executive Branch Recommendation to Deny China Mobile International 

(USA) Inc.’s Application for an International Section 214 Authorization, FCC No. ITC-214-20110901-

00289, at 7 (filed July 2, 2018), 

https://licensing.fcc.gov/myibfs/download.do?attachment_key=1444739 [hereinafter Executive Branch 

Recommendation re China Mobile USA]; Redacted Executive Branch Recommendation to Revoke 

and Terminate China Telecom’s International Section 214 Common Carrier Authorizations, FCC 

Nos. ITC-214-20010613-00346, ITC-214-20020716-00371, ITC-T/C-20070725-00285 (Apr. 9, 2020)

[hereinafter Executive Branch Recommendation re CTA].
23

1. The Chinese Government Engages in Extensive Cyber and 

Economic Espionage Efforts against the United States

According to the NCSC, “foreign intelligence services—and threat actors 

working on their behalf—continue to” be the most persistent and pervasive cyber 

threat.57 The NCSC concluded that China is among the most capable and active 

actors in this area, aggressively targeting and collecting sensitive economic and 

technological information to support its strategic development goals, including in 

the area of telecommunications.58 Similarly, in the 2019 Worldwide Threat 

Assessment, the Director of National Intelligence warned that “China presents a 

persistent cyber espionage threat and a growing attack threat to our core military 

and critical infrastructure systems.”59 As Team Telecom recently highlighted, 

“China is the first country identified by name” in the 2019 Worldwide Threat 

Assessment given the threat it poses.60

The U.S. government is one of the leading targets of China’s cyber espionage 

efforts.61 A 2013 report by the Department of Defense concluded that China “is 

using its computer network exploitation . . . capability to support intelligence 

collection against the U.S. diplomatic, economic, and defense industrial base sectors 

that support U.S. national defense programs.”62 Following the arrest of a Chinese 

officer on economic espionage charges, DOJ’s National Security Division warned of 

China’s “‘overall economic policy of developing China at American expense,’ often 

through illegal means.”63 

 57 NAT’L COUNTERINTELLIGENCE & SEC. CTR., FOREIGN ECONOMIC ESPIONAGE IN CYBERSPACE 5

(2018). 58 Id. (“China has expansive efforts in place to acquire U.S. technology to include sensitive trade 

secrets and proprietary information.”). 59 Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to the 

S. Select Comm. on Intelligence, 116th Cong. 5 (Jan. 29, 2019) (statement of Daniel R. Coats, Dir. of 

Nat’l Intelligence). 60 Executive Branch Recommendation re CTA, supra note 56, at 2 (citing Worldwide Threat 

Assessment of the U.S. Intelligence Community Statement for the Record to the S. Select Comm. on 

Intelligence, 116th Cong. 5 (Jan. 29, 2019) (statement of Daniel R. Coats, Dir. of Nat’l Intelligence)). 61 Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to the 

S. Select Comm. on Intelligence 6 (Feb. 13, 2018) (statement of Daniel R. Coats, Dir. of Nat’l

Intelligence) (“Most detected Chinese cyber operations against US private industry are focused on 

cleared defense contractors or IT and communications firms whose products and services support 

government and private sector networks worldwide.”).

62 U.S. DEP’T OF DEF., ANNUAL REPORT TO CONGRESS: MILITARY AND SECURITY DEVELOPMENTS 

INVOLVING THE PEOPLE’S REPUBLIC OF CHINA 36 (2013). 63 Sam Karson, Caught Between Superpowers: Alaska's Economic Relationship with China Amidst 

the New Cold War, 36 ALASKA L. REV. 47, 56 (2019) (quoting John Demers, Assistant Attorney Gen., 

Nat’l Sec. Div., Dep’t of Justice). See also Press Release, Dep’t of Justice, Chinese Intelligence 

Officer Charged with Economic Espionage Involving Theft of Trade Secrets from Leading U.S. 

Aviation Companies (Oct. 10, 2018), https://www.justice.gov/opa/pr/chinese-intelligence-officercharged-economic-espionage-involving-theft-trade-secrets-leading.
24

Several instances demonstrate China’s use of cyber espionage to attack U.S. 

government agencies and contractors to bolster its national security and economic 

priorities.64 As part of China’s “strategic plan” to increase its intelligence collection 

efforts, state-sponsored hackers have reportedly targeted U.S. networks containing 

large amounts of data on American intelligence personnel and government 

employees.65 For example, in 2014, U.S. intelligence officials revealed that hackers 

associated with the Chinese government infiltrated Office of Personnel 

Management databases, which held personnel records and security-clearance files 

for former and current federal employees, their families, and friends; defense 

contractors’ records were also obtained.66 Over 22 million individuals were affected 

by the breach.67 Former FBI Director Comey described the data as a “treasure 

trove of information about everybody who has worked for, tried to work for, or 

[currently] works for the United States government,” making the breach a major 

national security concern.68 Later that year, the Intelligence Community suspected 

that Chinese state-sponsored hackers were behind a breach of the U.S. Postal 

Service’s computer networks—exposing data containing sensitive information on 

more than 800,000 employees.69 Cyber policy experts concluded that the attack was 

part of the Chinese government’s effort to build its inventory of information on U.S. 

persons for counter-intelligence and recruitment purposes.70

Chinese hackers have also targeted U.S. government contractors and the 

private sector. For example, in 2014, Chinese state-sponsored hackers allegedly 

breached the computer network of U.S. Investigation Services (“USIS”), which was 

then one of the government’s largest contractors for providing federal background 

and security clearance investigations.71 The breach resulted in the loss of more 

than 25,000 records belonging to DHS employees.72 In 2018, Marriott’s Starwood 

chain hotel reservation system was allegedly infiltrated by hackers working on 

 64 Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to the 

S. Select Comm. on Intelligence 6 (Feb. 13, 2018) (statement of Daniel R. Coats, Dir. of Nat’l

Intelligence).

65 Ellen Nakashima, Hacks of OPM Databases Compromised 22.1 Million People, Federal Authorities 

Say, WASH. POST (July 9, 2015). 66 Id.

67 The OPM Data Breach: How the Government Jeopardized Our National Security for More than a 

Generation, H.R. COMM. ON OVERSIGHT & GOV’T REFORM, MAJORITY STAFF REP., 114 Cong. 1, v n.1 

(Sept. 7, 2016).

68 Ellen Nakashima, Hacks of OPM Databases Compromised 22.1 Million People, Federal Authorities 

Say, WASH. POST (July 9, 2015). 69 Ellen Nakashima, China Suspected of Breaching U.S. Postal Service Computer Networks, WASH.

POST (Nov. 10, 2014).

70 Id.

71 Ellen Nakashima, DHS Contractor Suffers Major Computer Breach, Officials Say, WASH. POST

(Aug. 6, 2014); Cory Bennett, Report: China Hacked Security Contractor, THE HILL (Nov. 3, 2014). 72 Stephanie Stamm & Kaveh Waddell, A Timeline of Government Data Breaches, THE ATLANTIC

(July 6, 2015). 
25

behalf of China’s Ministry of State Security.73 The breach exposed personal 

information and travel details of up to 500 million people.74 Earlier this year, DOJ 

charged four individuals associated with the Chinese People’s Liberation Army for 

hacking Equifax in 2017.75 As detailed in the Subcommittee’s March 2019 report, 

the Equifax breach resulted in the release of personal identifying information of 

over 145 million Americans;76 FBI Deputy Director Bowdich described it as “the 

largest theft of sensitive [personally identifying information] by state-sponsored 

hackers ever recorded.”77 

Pursuant to China’s efforts to modernize its military and diminish the U.S. 

military’s technological advantage, state-sponsored hackers have also engaged in a 

comprehensive campaign to steal information about U.S. advanced weapons 

technology.78 For example, in 2012, a cyberattack on NASA’s Jet Propulsion 

Laboratory was traced back to a Chinese IP address; during the incident the 

hackers “had full functional control over [the Laboratory’s] networks.”79 Two years 

later, Chinese government-affiliated hackers stole military secrets, including the 

designs for Boeing’s C-17 Globemaster and Lockheed Martin’s F-35 and F22 stealth 

fighters.80 More recently, Chinese state-sponsored hackers breached the computer 

network of a U.S. Navy defense contractor, stealing massive amounts of highly 

sensitive data, including secret plans for the development of a supersonic anti-ship 

submarine missile.81

 73 Ellen Nakashima, U.S. Investigators Point to China in Marriot Hack Affecting 500 Million Guests,

WASH. POST (Dec. 11, 2018). 74 Id.

75 Criminal Indictment, United States v. Zhiyong et al., No. 2:20-CR046 (N.D. Ga. Jan. 28, 2020). 

See also Devlin Barrett & Matt Zapotosky, U.S. Charges Four Chinese Military Members in 

Connection With 2017 Equifax Hack, WASH. POST (Feb. 11, 2020). 76 S. PERMANENT SUBCOMM. ON INVESTIGATIONS, HOW EQUIFAX NEGLECTED CYBERSECURITY AND 

SUFFERED A DEVASTATING DATA BREACH, 116 Cong. 1 (Mar. 6, 2019). 77 Eric Geller, U.S. Charges Chinese Military Hackers with Massive Equifax Breach, POLITICO (Feb. 

10, 2020). 78 See Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to 

the S. Select Comm. on Intelligence 6 (Feb. 13, 2018) (statement of Daniel R. Coats, Dir. of Nat’l 

Intelligence). See also China’s Non-Traditional Espionage against the United States: The Threat and 

Potential Policy Responses: Hearing Before the S. Comm. on the Judiciary, 115 Cong. 3 (2018) 

(statement of Peter Harrell, Adjunct Senior Fellow, Center for a New Am. Sec.). 79 Investigating the Chinese Threat, Part I: Military and Econ. Aggression: Hearing before the H. 

Comm. on Foreign Affairs, 112 Cong. 36 (2012) (statement of John J. Tkacik, Jr., Senior Fellow, Int’l 

Assessment & Strategy Center).

80 Wendell Minnick, Chinese Businessman Pleads Guilty of Spying on F-35 and F-22, DEFENSE NEWS

(Mar. 24, 2016), https://www.defensenews.com/breaking-news/2016/03/24/chinese-businessmanpleads-guilty-of-spying-on-f-35-and-f-22/. 81 Ellen Nakashima & Paul Sonne, China Hacks Navy Contractor and Secured a Trove of Highly 

Sensitive Data on Submarine Warfare, WASH. POST (June 8, 2018).
26

China is also focused on commercial sectors critical to U.S. infrastructure,

but vulnerable to cyberattack.82 The U.S. Trade Representative recently warned 

that “cyber theft [was] one of China’s preferred methods of collecting commercial 

information because of its . . . plausible deniability.”83 Many of the targeted 

companies operate in sectors that China believes are important for future 

innovation, such as information technology.84 In 2014, then-Director of the 

National Security Agency, Admiral Michael Rogers, warned that China was capable 

of shutting down the U.S. electric grid and other critical infrastructure systems via 

cyberattack.85 Just last year, cyber security experts attributed a cyberattack on the 

National Council of Examiners for Engineering and Surveying to Chinese state 

hacker-group APT10.86 These experts warned that the attack was indicative of a 

specific threat to U.S. utility providers—the attacks were highly targeted and 

designed to steal intellectual property or to plant vulnerabilities in sectors essential 

to everyday national operations, such as energy, utilities, and 

telecommunications.87

China’s cyber and economic espionage efforts are not expected to subside in 

the coming years. The Director of National Intelligence has advised that the 

Chinese government “will authorize cyber espionage against key U.S. technology 

sectors when doing so addresses a significant national security or economic goal not 

achievable through other means.”88 In a recent hearing before the Senate 

Committee on Homeland Security and Governmental Affairs, David J. Glawe, 

Undersecretary of the Office of Intelligence and Analysis at DHS, testified that 

China “will remain aggressive” in its cyber efforts against the United States and 

will continue to use its cyber capabilities to “undermine critical infrastructure, 

target our livelihoods and innovation, steal our national security secrets, and 

threaten our democratic institutions.”89 

 82 Zack Doffman, Chinese State Hackers Suspected of Malicious Cyber Attack on U.S. Utilities, 

FORBES (Aug. 3, 2019); U.S.-CHINA ECON. & SEC. REVIEW COMM’N, 2016 REPORT TO CONGRESS 1, 298–

300 (Nov. 2016) (defining critical infrastructure to include the information technology sector).

83 2018 U.S. TRADE REPRESENTATIVE REPORT, supra note 15, at 153. 84 COUNCIL ON FOREIGN RELATIONS, A NEW OLD THREAT: COUNTERING THE RETURN OF CHINESE 

INDUSTRIAL CYBER ESPIONAGE (Dec. 6, 2018).

85 Ken Dilanian, NSA Director: China Can Damage U.S. Power Grid, ASSOCIATED PRESS (Nov. 20, 

2014). 86 Zack Doffman, Chinese State Hackers Suspected of Malicious Cyber Attack on U.S. Utilities, 

FORBES (Aug. 3, 2019). 87 Id.

88 Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to the 

S. Select Comm. on Intelligence 5 (Jan. 29, 2019) (statement of Daniel R. Coats, Dir. of Nat’l 

Intelligence).

89 Threats to the Homeland: Hearing before the S. Comm. on Homeland Sec. & Governmental Affairs, 

116 Cong. (2019) (statement of David J. Glawe, Undersec’y, Office of Intelligence & Analysis, U.S. 

Dep’t of Homeland Sec.).
27

2. Chinese State-Owned Companies are Subject to Control by the 

Chinese Government

China “enlist[s] the support of a broad range of actors spread throughout its 

government and industrial base” to carry out its strategic goals.90 The Director of 

National Intelligence recently expressed concern about China’s potential use of 

“Chinese information technology firms as routine and systemic espionage 

platforms . . . .”91 In recent filings with the FCC, Team Telecom officials warned 

that Chinese telecommunications carriers, among other state-owned entities, are 

subject to control by the Chinese government because the entities must comply with 

strict national security laws.92

The Chinese government has enacted multiple laws obligating Chinese 

citizens and companies to support, assist, and cooperate in the government’s 

intelligence and national security efforts.93 The National Intelligence Law of 2017, 

for example, requires that all “organization[s] or citizen[s] shall support, assist and 

cooperate with the state intelligence work in accordance with the law, and keep the 

secrets of the national intelligence work known [sic] to the public.”94 The law also 

reserves the right for the state intelligence services to commandeer the 

communications equipment and other facilities of organizations and government 

organs.95 The Chinese Cybersecurity Law of 2016, which became effective in June 

2017, similarly provides that “network operators shall provide technical support 

and assistance to public security organs . . . .”96 Under the 2015 National Security 

 90 NAT’L COUNTERINTELLIGENCE & SEC. CTR., FOREIGN ECONOMIC ESPIONAGE IN CYBERSPACE 14 

(2018). 91 Worldwide Threat Assessment of the U.S. Intelligence Community Statement for the Record to the 

S. Select Comm. on Intelligence 4 (Jan. 29, 2019) (statement of Daniel R. Coats, Dir. of Nat’l 

Intelligence).

92 See generally Executive Branch Recommendation re China Mobile USA, supra note 56; Executive 

Branch Recommendation re CTA, supra note 56, at 38–40 (Apr. 9, 2020). 93 See National Intelligence Law of the People’s Republic, Art. 7 (adopted June 27, 2017), 

http://cs.brown.edu/courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf. See also 

Murray Scot Tanner, Beijing’s New National Intelligence Law: From Defense to Offense, LAWFARE 

BLOG (July 20, 2017), https://www.lawfareblog.com/beijings-new-national-intelligence-law-defenseoffense. Other relevant Chinese laws obligating citizens and organizations to assist in “national 

security” efforts include the laws on Counterespionage (2014), National Security (2015), 

Counterterrorism (2015), and Cybersecurity (2016).

94 National Intelligence Law of the People’s Republic, Art. 7 (adopted June 27, 2017), 

http://cs.brown.edu/courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf. 

95 See id. at Art. 17 (“According to the needs of the work, according to the relevant national 

regulations, the staff of the national intelligence work agency may preferentially use or legally 

requisition the means of transport, communication tools, sites and buildings of relevant organs, 

organizations and individuals . . . .”). 

96 Cybersecurity Law of the People’s Republic of China, Art. 28 (effective June 1, 2017), 

https://www.newamerica.org/cybersecurity-initiative/digichina/blog/translation-cybersecurity-lawpeoples-republic-china/. The law also requires “critical information infrastructure operators 

purchasing network products and services that might impact national security” to comply with a 

Government-led national security review. See id. at Arts. 35, 49. China Telecom Corporation 
28

Law, all citizens and organizations are required to “obey[ ] . . . provisions of the 

Constitution, laws, and regulations regarding national security,” “provid[e] 

conditions to facilitate national security efforts and other assistance,” “provid[e]

public security organs, state security organs or relevant military organs with 

necessary support and assistance,” and “keep[ ] state secrets they learn of 

confidential.”97 The 2014 Counter-Espionage Law similarly provides that, during 

the course of a counter-espionage investigation, “relevant organizations and 

individuals shall truthfully provide information and must not refuse.”98 

Chinese companies operating in the United States have denied that they are 

bound by Chinese law.99 Government officials and other commentators, however, 

point to the broad language of the laws to argue otherwise: the laws contain no 

geographic limitation and require that all organizations and citizens comply with 

requests from the Chinese government.100 Further, while the laws are limited to 

“national security,” “intelligence,” and “counter-espionage” activities, these concepts 

are not defined.101 Thus, commentators argue that the Chinese government could 

 

Limited (“CTCL”) has acknowledged that the 2017 Cybersecurity Law could require it to be subject 

to a “security review,” which would be organized and conducted by China’s Ministry of Industry and 

Information Technology and would “focus on the security and controllability of network products and 

services.” CHINA TELECOM CORP. LTD. ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE 

SEC. EXCH. ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 (20-F), COMM. FILE NO. 1-

31517, at 30 (filed Apr. 28, 2020), 

https://www.sec.gov/Archives/edgar/data/1191255/000119312520123302/d851335d20f.htm

[hereinafter CHINA TELECOM FY2019 FORM 20-F].

97 National Security Law of the People’s Republic of China, Art. 77(1), (4)–(6) (adopted July 1, 2015), 

https://www.chinalawtranslate.com/2015nsl/?lang=en. 98 See Counter-Espionage Law of the People’s Republic of China, Art. 22 (adopted Nov. 1, 2014), 

https://www.chinalawtranslate.com/en/anti-espionage/. 99 See, e.g., Samantha Hoffman & Elsa Kania, Huawei and the Ambiguity of China’s Intelligence and 

Counter-Espionage Laws, AUSTRALIAN STRATEGIC POLICY INST. (Sept. 13, 2018), 

https://www.aspistrategist.org.au/huawei-and-the-ambiguity-of-chinas-intelligence-and-counterespionage-laws/. 

100 See National Intelligence Law of the People’s Republic, Art. 7 (adopted June 27, 2017), 

http://cs.brown.edu/courses/csci1800/sources/2017_PRC_NationalIntelligenceLaw.pdf; 5G: The 

Impact on National Security, Intellectual Property, and Competition: Hearing Before the S. Comm. on 

the Judiciary, 116th Cong. 2 (May 14, 2019) (testimony of Christopher Krebs, Dir., Cybersecurity &

Infrastructure Sec. Agency, U.S. Dep’t of Homeland Sec.) (“Chinese laws on national security and 

cybersecurity provide the Chinese government with a legal basis to compel technology companies . . . 

to cooperate with Chinese security services.”). See also Yuan Yang, Is Huawei Compelled by Chinese 

Law to Help with Espionage, FIN. TIMES (Mar. 4, 2019); AMNESTY INT’L, CHINA: SUBMISSION TO THE 

NPC STANDING COMM.’S LEGISLATIVE AFFAIRS COMM. ON THE DRAFT “NATIONAL INTELLIGENCE LAW”

4–5 (2017).

101 See GOV’T OF CANADA, CHINA’S INTELLIGENCE LAW & THE COUNTRY’S FUTURE INTELLIGENCE 

COMPETITIONS, https://www.canada.ca/en/security-intelligence-service/corporate/publications/chinaand-the-age-of-strategic-rivalry/chinas-intelligence-law-and-the-countrys-future-intelligencecompetitions.html; Yuan Yang, Is Huawei Compelled by Chinese Law to Help with Espionage, FIN.

TIMES (Mar. 4, 2019); Samantha Hoffman & Elsa Kania, Huawei and the Ambiguity of China’s 

Intelligence and Counter-Espionage Laws, AUSTRALIAN STRATEGIC POLICY INST. (Sept. 13, 2018), 

https://www.aspistrategist.org.au/huawei-and-the-ambiguity-of-chinas-intelligence-and-counter-
29

use these provisions to justify instructions to state-owned carriers to engage in 

cyber and economic espionage on behalf of the Chinese government.102 Further, 

given the state ownership, it is unlikely that the carriers would protest any such 

requests by the Chinese government.103

3. Chinese State-Owned Carriers Can Facilitate the Chinese 

Government’s Espionage Efforts by Hijacking Data through Their 

Relationships with U.S. Carriers

Data transported across global networks are vulnerable to interception or

interference by hostile actors.104 The networks were created with minimal security, 

which allows malicious actors to “target, alter, block, and re-route” 

communications.105 As the U.S. government has warned, “the deepening 

integration of the global telecommunications market has created risks and 

vulnerabilities in a sector replete with a broad range of malicious activities.”106 The 

telecommunications industry has been particularly susceptible to cyber 

espionage.107 One report estimated that nearly half of telecommunications 

 

espionage-laws/; AMNESTY INT’L, CHINA: SUBMISSION TO THE NPC STANDING COMM.’S LEGISLATIVE 

AFFAIRS COMM. ON THE DRAFT “NATIONAL INTELLIGENCE LAW” 4–5 (2017).

102 Cf. 5G: The Impact on National Security, Intellectual Property, and Competition: Hearing Before 

the S. Comm. on the Judiciary, 116th Cong. 2–3 (May 14, 2019) (testimony of Christopher Krebs, 

Dir., Cybersecurity & Infrastructure Sec. Agency, U.S. Dep’t of Homeland Sec.).

103 Cf. Samantha Hoffman & Elsa Kania, Huawei and the Ambiguity of China’s Intelligence and 

Counter-Espionage Laws, AUSTRALIAN STRATEGIC POLICY INST. (Sept. 13, 2018), 

https://www.aspistrategist.org.au/huawei-and-the-ambiguity-of-chinas-intelligence-and-counterespionage-laws/. 104 See, e.g., CYBERSECURITY & INFRASTRUCTURE SEC. AGENCY, U.S. DEP’T OF HOMELAND SEC., ALERT 

(TA16-250A): THE INCREASING THREAT TO NETWORK INFRASTRUCTURE DEVICES AND RECOMMENDED 

MITIGATIONS (last modified Sept. 28, 2016), https://www.us-cert.gov/ncas/alerts/TA16-250A (“The 

advancing capabilities of organized hacker groups and cyber adversaries create an increasing global

threat to information systems. . . . For several years now, vulnerable network devices have been the 

attack-vector of choice and one of the most effective techniques for sophisticated hackers and 

advanced threat actors.”). Cf. 5G: The Impact on National Security, Intellectual Property, and 

Competition: Hearing Before the S. Comm. on the Judiciary, 116th Cong. 1 (May 14, 2019) (testimony 

of Christopher Krebs, Dir., Cybersecurity & Infrastructure Sec. Agency, U.S. Dep’t of Homeland Sec.) 

(“Risks to mobile communications generally include such activities as call interception and 

monitoring, user location tracking, attackers seeking financial gain through banking fraud, social 

engineering, ransomware, identity theft, or theft of the device, services, or any sensitive data. . . . 

Risks to the mobile Data on 5G networks will flow through interconnected cellular towers, small 

cells, and mobile devices that may provide malicious actors additional vectors to intercept, 

manipulate, or destroy critical data. Malicious actors could also introduce device vulnerabilities into 

the 5G supply chain to compromise unsecured wireless systems and exfiltrate critical infrastructure 

data.”).

105 Executive Branch Recommendation re China Mobile USA, supra note 56, at 10. 106 Executive Branch Recommendation re China Mobile USA, supra note 56, at 2–3.

107 See, e.g., Critical Infrastructure and Communications Security, FED. COMMC’NS COMM’N, 

https://www.fcc.gov/general/critical-infrastructure-and-communications-security (“The number of 

incidents of documented attacks on computer-based systems and communications systems increases 

on a daily basis. These range from unsophisticated access attempts by curious hackers to the 
30

organizations were the target of malware attacks between 2017 and 2018,108 and 

these organizations are increasingly subject to hijacking attacks, wherein third 

parties capture and reroute information.109

Hijacking attacks occur when information is routed from one point to 

another, usually when it is routed through different carriers’ networks.110 In 

routing, “information is sent across intervening [networks] as small data ‘packets’ 

with their destination IP addresses attached. Each router in the transited networks 

looks at the destination IP address in the packet and forwards it to the next and 

closest [network],” seeking the shortest and most efficient route from the start point 

to the end point.111 The Border Gateway Protocol (“BGP”) is the central routing 

protocol.112 The BGP, however, is notoriously complex, and “errors can occur given 

the complexity.”113 It is these errors that open up opportunities for malicious actors 

to hijack traffic.114 

 

malicious attempts to extract financial gain by criminal enterprises. The growth of malicious 

activities grew in the wake of the Telecommunications Act of 1996 as perpetrators capitalized on the 

‘openness’ of networks, particularly the public Internet. The end result of these activities though can 

be catastrophic to the normal operations of communications and control systems and may threaten 

our national security.”); Worldwide Threat Assessment of the U.S. Intelligence Community Statement 

for the Record to the S. Select Comm. on Intelligence 6 (Feb. 13, 2018) (statement of Daniel R. Coats, 

Dir. of Nat’l Intelligence) (“Most detected Chinese cyber operations against US private industry are 

focused on cleared defense contractors or IT and communications firms whose products and services 

support government and private sector networks worldwide.”); DNS Security—The Telecom Sector’s 

Achilles’ Heel, EFFICIENTIP (Nov. 27, 2017), https://www.efficientip.com/dns-security-telecom-sector/

(finding that, per a 2017 survey, telecom organizations suffered more attacks than any other 

industry surveyed).

108 Mike Robuck, Report: Telecommunications Industry Woefully Unprepared for Cyberattacks, 

FIERCETELECOM (Nov. 21, 2018). 109 Jim Cowie, The New Threat: Targeted Internet Traffic Misdirection, DYN (Nov. 19, 2013), 

https://dyn.com/blog/mitm-internet-hijacking/; Juha Saarinen, Internet Traffic Hijacking on the Rise, 

ITNEWS (Nov. 21, 2013), https://www.itnews.com.au/news/internet-traffic-hijacking-on-the-rise365006. “Hijack attacks expose a network to potentially critical damage because it is not a hack of 

the end-point but of the critical exchanges carrying information between end points.” Yuval Shavitt 

& Chris C. Demchak, China’s Maxim—Leave No Access Point Unexploited: The Hidden Story of 

China Telecom’s BGP Hijacking, 3 MILITARY CYBER AFFAIRS 1, 4 (2018).

110 See U.S.-CHINA ECON. & SEC. REVIEW COMM’N, THE NAT’L SEC. IMPLICATIONS OF INVS. & PRODS.

FROM THE PEOPLE’S REPUBLIC OF CHINA IN THE TELECOMM. SECTOR 42–43 (Jan. 2011); Shavitt &

Demchak, supra note 109, at 4. Because different networks serve as the start and end points, a 

mechanism is needed to transport the traffic from one carrier to the other carrier for final delivery to 

the destination. Shavitt & Demchak, supra note 109, at 4. 111 Shavitt & Demchak, supra note 109, at 2. 112 See, e.g., What is BGP Hijacking, CLOUDFLARE, 

https://www.cloudflare.com/learning/security/glossary/bgp-hijacking/; Yashin Huang, Internet 

Outrage Caused by Verizon Shows How Fragile the Internet Routing Is, MEDIUM (July 2, 2019), 

https://medium.com/hackernoon/internet-outrage-caused-by-verizon-shows-how-fragile-the-internetrouting-is-a367241130e8. Administrators of each network are responsible for announcing the IP 

addresses associated with their networks on the BGP. See, e.g., What is BGP Hijacking, 

CLOUDFLARE, https://www.cloudflare.com/learning/security/glossary/bgp-hijacking/. 113 Shavitt & Demchak, supra note 109, at 3. 114 See Shavitt & Demchak, supra note 109, at 3.
31

In practice, if a malicious actor announces through the BGP that it owns an 

IP address block that actually is owned by Network 1, traffic destined for Network 1 

will be routed to—or through—the malicious actor’s network.115 After receiving and 

inspecting the misdirected traffic, the malicious actor redirects it to the original 

destination point, and the traffic is delivered to its intended destination.116 

Because of the hijack, the malicious actor can access an organization’s network, 

steal valuable data, add malicious implants to seemingly normal traffic, or simply 

modify or corrupt valuable data.117 If diverted and copied even for a small amount 

of time, encryption can be broken.118 Further, detecting the attack can be extremely 

difficult.119 Given that traffic is continuously flowing, it is possible that the endrecipient might not notice any increase in “latency that results from the 

interception.”120 

Researchers allege that the Chinese government is increasingly using its 

state-owned telecommunications carriers to carry out hijacking attacks.121 Chinese 

carriers have not established independent transmission facilities and networks 

outside of China.122 Rather, as China Mobile stated in a recent SEC filing, the 

carriers are dependent on “interconnection arrangements and access to other 

networks.”123 Through these interconnection arrangements, the Chinese carriers 

can promote—and allegedly have promoted—false routes on the BGP.124 Particular 

allegations of hijacking by Chinese state-owned carriers are discussed more below.

 115 See What is BGP Hijacking, CLOUDFLARE, 

https://www.cloudflare.com/learning/security/glossary/bgp-hijacking/.

116 See Cowie, supra note 109.

117 Shavitt & Demchak, supra note 109, at 4. 118 Shavitt & Demchak, supra note 109, at 4. 119 See Cowie, supra note 109; BGP Hijacking Overview: Routing Incidents Prevention and Defense 

Mechanisms, NOCTION (Apr. 24, 2018), https://www.noction.com/blog/bgp-hijacking. 

120 Cowie, supra note 109. 121 See, e.g., Doug Madory, China Telecom’s Internet Traffic Misdirection, ORACLE: INTERNET 

INTELLIGENCE (Nov. 5, 2018), https://internetintel.oracle.com/blogsingle.html?id=China+Telecom%27s+Internet+Traffic+Misdirection; Shavitt & Demchak, supra note 

109, at 3; Jesus Diaz, China’s Internet Hijacking Uncovered, GIZMODO (Nov. 17, 2010), 

https://gizmodo.com/chinas-internet-hijacking-uncovered-5692217; Andree Toonk, Chinese ISP 

Hijacks the Internet, BGPMON (Apr. 8, 2010), 

https://web.archive.org/web/20190415002259/https://bgpmon.net/chinese-isp-hijacked-10-of-theinternet/. 122 See, e.g., TT-DOJ-045–60; TT-DOJ-001–15.

123 CHINA MOBILE LTD. ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SEC. EXCH. ACT OF 

1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 (FORM 20-F), COMM. FILE NO. 1-14696, at 16

(filed Apr. 28, 2020), 

https://www.sec.gov/Archives/edgar/data/1117795/000119312520122124/d825927d20f.htm#toc825927

_5 [hereinafter CHINA MOBILE FY2019 FORM 20-F]. 124 See, e.g., Shavitt & Demchak, supra note 109.
32

IV. EFFORTS TO MITIGATE NATIONAL SECURITY RISKS OF 

FOREIGN CARRIERS OPERATING IN THE UNITED STATES

This section analyzes the U.S. government’s regulation of foreign carriers 

seeking or authorized to provide international telecommunications services between 

the United States and foreign destinations.125 The FCC regulates the U.S. 

telecommunications market by authorizing foreign and domestic carriers to provide 

telecommunications services. As part of its analysis of whether to permit 

international telecommunications services, the FCC must determine that 

authorizing the carrier serves the public interest. This includes assessing a number 

of factors, including national security, law enforcement, foreign policy, and trade 

concerns raised by the proposed services. The FCC, however, does not analyze 

these factors itself. Instead, until recently, it relied on relevant Executive Branch 

agencies to provide subject-matter expertise on these topics. Team Telecom—an 

informal group comprised of DOJ, DHS, and DOD—was charged with assessing 

national security and law enforcement risks. But Team Telecom’s review was 

historically described as “broken” and a “black hole,” due in part to a lack of 

statutory authority and limited resources. Where Team Telecom did reserve for 

itself the right to monitor a foreign carrier’s operations in the United States, it 

exercised that authority in an ad hoc manner. 

A. The FCC Regulates the Operations of Foreign Telecommunications 

Carriers in the United States

The FCC is an independent126 U.S. government agency responsible for 

regulating “interstate and international communications by radio, television, wire, 

satellite, and cable in all 50 states, the District of Columbia, and U.S. territories.”127 

Congress created the FCC to evaluate and regulate competition within the 

communications industry and avoid economic waste, by assessing and preventing 

large monopolies and protecting existing carriers through regulation of market 

entry.128 With a focus on ensuring economic opportunities, the FCC seeks to 

 125 As described more below, this report focuses on carriers authorized to provide international 

telecommunications services under Section 214 of the Communications Act of 1934. International 

Section 214 authorization permits the authorization holder to provide international 

telecommunications services between the United States and foreign destinations. The FCC 

separately issues domestic Section 214 authorization for services within the United States. 

References to Section 214 authorization contained in this report are meant to refer to international 

Section 214 authorization, unless otherwise noted.

126 The FCC is “an independent U.S. government agency overseen by Congress.” It is “directed by 

five commissioners who are appointed by the President of the United States and confirmed by the 

U.S. Senate.” See What We Do, FED. COMMC’NS COMM’N, https://www.fcc.gov/about-fcc/what-we-do. 127 47 U.S.C. § 151 et seq. (as amended) (2018); Mission, FED. COMMC’NS COMM’N, 

https://www.fcc.gov/about/overview.

128 See generally H. COMM. ON INTERSTATE & FOREIGN COMMERCE, COMMS. ACT OF 1934, SECTION 214

LEGISLATIVE BACKGROUND, H. DOC. NO. 44-667, 1–2 (1979) [hereinafter SECTION 214 LEGISLATIVE 

BACKGROUND]. 
33

promote “competition, innovation, and investment” in communications services and 

facilities.129 The FCC’s International Bureau administers “international 

telecommunications and satellite programs and policies, including licensing and 

regulatory functions,”130 as well as monitors compliance “with the terms and 

conditions of authorizations and licenses granted by the Bureau . . .[,]” including 

authorizations to foreign carriers to operate telecommunications lines to, from, or 

within the United States.131

1. The FCC Authorizes Carriers to Provide Telecommunications 

Services in the United States Pursuant to Section 214 of the 

Communications Act of 1934

The FCC authorizes carriers to operate in the United States under Section 

214 of the Communications Act of 1934.132 Specifically, Section 214(a) provides that 

no telecommunications carrier may construct, extend, acquire, or operate a wire or 

cable line or engage in transmission over a line unless and until the FCC certifies 

that such action serves the public interest, convenience, and necessity.133 Section 

214 similarly regulates the transfer of control and assignment of telecommunication 

lines.134

The development of telecommunications technology in the early- and mid1900s spurred the desire for greater government regulation of the industry.135 

Previously, oversight was effected through the Interstate Commerce Commission 

(“ICC”), although many viewed the ICC as only supervising routine matters and 

lacking an effective “legislative mandate to implement its mission.”136 A 

Department of Commerce interdepartmental committee ultimately recommended 

that the FCC be established to “centralize the jurisdiction of [the ICC] over wire and 

radio common carriers . . . and . . . over telegraph companies and telegraph lines.”137 

 129 What We Do, FED. COMMC’NS COMM’N, https://www.fcc.gov/about-fcc/what-we-do. 130 International, FED. COMMC’NS COMM’N, https://www.fcc.gov/international. See 47 C.F.R. §§ 0.51, 

0.261.

131 Functions of the International Bureau, FED. COMMC’NS COMM’N, 

https://www.fcc.gov/general/international-bureau-functions. See 47 C.F.R. § 0.51.

132 See 47 U.S.C. § 214(a). 

133 See id. FCC authorization is not required for “(1) a line within a single State unless such line 

constitutes part of an interstate line, (2) local, branch, or terminal lines not exceeding ten miles in 

length, or (3) any line acquired under section 221 [concerning consolidations and mergers of 

telephone companies].” Id. See also John Sallet, FCC General Counsel, FCC Transaction Review: 

Competition and the Public Interest, FCC BLOG (Aug. 12, 2014), https://www.fcc.gov/newsevents/blog/2014/08/12/fcc-transaction-review-competition-and-public-interest.

134 See 47 U.S.C. § 214(a). 

135 See generally SECTION 214 LEGISLATIVE BACKGROUND, supra note 128. 136 SECTION 214 LEGISLATIVE BACKGROUND, supra note 128, at 25.

137 SECTION 214 LEGISLATIVE BACKGROUND, supra note 128, at 25. Thus, the FCC regulates “common 

carriers,” defined as “any person [partnership, association, joint-stock company, trust, or corporation] 

engaged as a common carrier for hire, in interstate or foreign communication by wire or radio or 

interstate or foreign radio transmission of energy . . . .” 47 U.S.C. § 153(11). Telecommunications 
34

Section 214 served to codify this consolidation.138 In presenting the proposed 

legislation, Representative Sam Rayburn, chairman of the sponsoring committee, 

summarized the purpose of Section 214 as follows:

Section 214, relating to extensions of lines, is based upon section 1(18) –

(22) of the Interstate Commerce Act, which relates only to 

transportation. It requires a certificate of public convenience and 

necessity from the Commission for the construction of a new interstate 

line . . . . The section is designed to prevent useless duplication of 

facilities, with consequent higher charges upon the users of the 

service.139

Today, Section 214 authorization covers a carrier’s provision of 

“telecommunications services,” defined as the “offering of telecommunications for a 

fee directly to the public, or to such classes of users as to be effectively available 

directly to the public, regardless of the facilities used.”140 The FCC’s rules divide 

telecommunications services into (1) facilities-based services—where a carrier 

provides services across its own infrastructure and facilities,141 and (2) resale 

services—where a carrier sells services provided through another carrier’s 

network.142

2. The FCC Must Determine that International Section 214 

Authorization Serves the Public Interest, but It Relies on the 

Executive Branch to Evaluate National Security, Law 

Enforcement, Foreign Policy, and Trade Concerns

The FCC’s assessment of international Section 214 applications includes

consideration of the applicant’s foreign ownership, given that the FCC seeks to 

balance its desire for an open market against potential discrimination by foreign 

carriers against domestic carriers.143 Prior to the mid-1990s, however, the FCC 

 

carriers are separately defined as “any provider of telecommunications,” with the exception of 

aggregators of telecommunications services, and are deemed to be common carriers to the extent that 

the carriers are providing telecommunications services. See 47 U.S.C. § 153(51). 

138 See generally SECTION 214 LEGISLATIVE BACKGROUND, supra note 128. 139 SECTION 214 LEGISLATIVE BACKGROUND, supra note 128, at 26 (quoting 78 Cong. Rec. 10814 

(1934)).

140 See 47 U.S.C. § 153(53). 141 See 47 C.F.R. § 63.22; Briefing with the Dep’t of Justice (Apr. 3, 2020). Specifically, “facilitiesbased carrier” is defined as “a carrier that holds an ownership, indefeasible-right-of-user, or 

leasehold interest in bare capacity in the U.S. end of an international facility, regardless of whether 

the underlying facility is a common carrier or non-common carrier submarine cable or a satellite 

system.” See 47 C.F.R. § 63.09(a). 142 See 47 C.F.R. § 63.23; Briefing with the Dep’t of Justice (Apr. 3, 2020).

143 Paul W. Kenefick, A Step in the Right Direction: The FCC Provides Regulatory Relief in 

International Settlements and International Services Licensing, 8 COMM. LAW CONSPECTUS 45 (2000).
35

evaluated foreign ownership on an ad hoc basis.144 Over time, the FCC formalized 

its international Section 214 application review process, including documenting the 

criteria it considers in evaluating applications.145 The FCC has also taken a 

number of steps to streamline the process for reviewing and approving 

applications.146 

When evaluating Section 214 applications, the FCC must determine that a 

carrier’s proposed operations serve the public interest.147 In 1995, the FCC 

explained that it considers a variety of factors when evaluating the public interest. 

Included among the factors are “national security, law enforcement issues, foreign 

policy, and trade concerns brought to [the FCC’s] attention by the Executive 

Branch.”148 The FCC recognized that federal agencies have “specific expertise” in 

these matters, such that the FCC’s analysis would benefit from those agencies’ 

input.149 It “accord[s] deference to the expertise of the Executive Branch in 

identifying and interpreting issues of concern related to national security, law 

enforcement, and foreign policy”150 and “considers any such legitimate concerns as 

[it] undertake[s] [its] own independent analyses of whether grant of a particular 

authorization is in the public interest.”151 The carrier applicant has the burden to 

show that its proposed services would serve the public interest despite any national 

security, law enforcement, or other risks identified by the Executive Branch.152

Upon “accepting” an international Section 214 application, the FCC releases 

a public notice summarizing the applicant’s proposed services.153 Where a carrier 

 144 Id.

145 See In the Matter of Mkt. Entry & Regulation of Foreign Affiliated Entities, Rep. & Order, 11 FCC 

Rcd 3873 (1995) [hereinafter 1995 FCC Foreign Entry Order]; In the Matter of Streamlining the Int’l 

Section 214 Authorization Process & Tariff Requirements, Report & Order, 11 FCC Rcd 12884 (1996)

[hereinafter 1996 FCC Streamlining Order]; 47 C.F.R. § 63.18. In 1999, the FCC granted all 

telecommunications carriers blanket authority under Section 214 to provide domestic interstate 

services and to construct or operate any domestic transmission lines. Implementation of Section 

402(b)(2)(A) of the Telecommunications Act of 1996 et al., Report and Order in CC Docket No. 97-11, 

Second Memorandum Opinion & Order in AAD File No. 98–43, 14 FCC Rcd 11364, 11365–66, ¶ 2 

(1999); 47 C.F.R. § 63.01.

146 See generally 1995 FCC Foreign Entry Order, supra note 145; 1996 FCC Streamlining Order, 

supra note 145. 147 47 C.F.R. § 63.18; 47 U.S.C. § 214; 1995 FCC Foreign Entry Order, supra note 145, at ¶ 223; In the 

Matter of Rules & Policies on Foreign Participation in the U.S. Telecomm. Mkt., Report & Order, 12 

FCC Rcd 23891, ¶¶ 65–66 (1997) [hereinafter 1997 FCC Foreign Participation Order].

148 1995 FCC Foreign Entry Order, supra note 145, at ¶ 3. See also 1997 FCC Foreign Participation 

Order, supra note 147, at ¶¶ 59–61.

149 1997 FCC Foreign Participation Order, supra note 147, at ¶¶ 61–62. See also 1995 FCC Foreign 

Entry Order, supra note 145, at ¶¶ 38, 62, 216–19.

150 1997 FCC Foreign Participation Order, supra note 147, at ¶ 63.

151 1997 FCC Foreign Participation Order, supra note 147, at ¶ 62. 152 See In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3367, ¶ 11

(May 10, 2019). 153 See 47 C.F.R. § 63.12(a). See, e.g., Fed. Commc’ns Comm’n, Public Notice – International 

Applications Accepted for Filing, Rep. No. TEL-01338S (Jan. 16, 2009); Fed. Commc’ns Comm’n, 
36

has a ten percent or greater foreign owner,154 the FCC refers the application to the 

Executive Branch agencies via an “Executive Branch letter.”155 The letter explains 

that the FCC received an application from a carrier with foreign ownership interest

and briefly describes the applicant and its proposed services.156 The FCC requests 

that the agencies opine on whether the application raises national security, law 

enforcement, foreign policy, or trade policy concerns.157 If the Executive Branch 

agencies do not raise national security, law enforcement, foreign policy, or trade 

policy concerns, the FCC conducts no further review of the issues.158 In fact, in its 

Executive Branch letter, the FCC typically requests that agencies provide 

comments by a certain date, because the FCC is otherwise “prepared to take action 

on [the] application[ ].”159 The FCC “streamlines” the application and deems it 

approved 14 days after the FCC issues a public notice of the application.160 

Thereafter, the carrier is allowed to begin providing the authorized services. 

3. The FCC Does Not Periodically Review Section 214 

Authorizations Once Granted

Once the FCC authorizes a carrier to provide services, nothing in the FCC’s 

regulations require it to periodically renew that authorization or to reevaluate 

whether the carrier’s services continue to serve the public interest.161 As long as the 

authorized carrier pays annual regulatory fees, files regular reports, and otherwise 

complies with the FCC’s rules, the authorization to operate and provide services 

 

Public Notice – International Applications Accepted for Filing, Rep. No. TEL-00575S (Sept. 13, 2002); 

Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. No. 

TEL-00417S (July 6, 2001); Fed. Commc’ns Comm’n, Public Notice – International Applications 

Accepted for Filing, Rep. No. TEL-00144S (Oct. 13, 1999).

154 NOTICE OF PROPOSED RULEMAKING: PROCESS REFORM FOR EXEC. BRANCH REVIEW OF CERTAIN FCC

APPLICATIONS & PETITIONS INVOLVING FOREIGN OWNERSHIP, 31 FCC Rcd 7456, 7458 ¶ 6 (2016)

[hereinafter FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM]. See also Executive Branch 

Recommendation re China Mobile USA, supra note 56, at 2; Kathleen Collins, Assistant Bureau 

Chief, International Bureau, Fed. Commc’ns Comm’n, Remarks for Panel Discussion at the 2d

National Forum on CFIUS (July 21, 2015).

155 See Briefing with the Dep’t of Justice (Aug. 1, 2019). See, e.g., FCC-PSI-000227–28; FCC-PSI000478–79. 156 See Briefing with the Dep’t of Justice (Aug. 1, 2019). See, e.g., FCC-PSI-000227–28; FCC-PSI000478–79.

157 See, e.g., FCC-PSI-000227–28; FCC-PSI-000478–79.

158 See Email from the Fed. Commc’ns Comm’n to the Subcommittee (June 2, 2020) (on file with the 

Subcommittee). 

159 See, e.g., FCC-PSI-000227–28; FCC-PSI-000478–79.

160 See 47 C.F.R. § 63.12(a)–(b). In addition to requests by Team Telecom and other Executive 

Branch agencies, the FCC can remove an application from streamlining if certain specified 

regulatory requirements are met. See id.

161 See generally 47 U.S.C. § 214(a). The FCC told the Subcommittee, however, that if at any time it 

finds an international Section 214 holder is not compliant with FCC rules, the FCC can and has 

referred the authorization holder to the FCC’s Enforcement Bureau. Email from the Fed. Commc’ns 

Comm’n to the Subcommittee (June 2, 2020) (on file with the Subcommittee). 
37

effectively extends indefinitely.162 A carrier can install, replace, or make other 

changes to its operations and equipment, so long as it does not impair the adequacy 

or quality of service provided.163 A carrier can also use its international Section 214 

authorization to demonstrate legitimacy of its operations in seeking 

interconnections with U.S. or other foreign carriers.164 This means that a foreign 

carrier can operate for years, if not decades, at a time, without regard to the 

evolving global environment.

The FCC can revoke authorizations,165 but the FCC has never done so under 

a national security standard.166 The Subcommittee reviewed some FCC revocation 

decisions, which were based on the carrier discontinuing operations, ceasing to pay 

annual fees, or failing to file required reports, either with the FCC or Team 

Telecom.167 One Team Telecom official suggested to the Subcommittee that, 

especially where a foreign carrier is servicing a large number of customers, the FCC 

may be hesitant to revoke an authorization because of the potential customer 

harm.168 

 162 See 47 U.S.C. § 159(a); 47 C.F.R. § 63.20; Fees, FED. COMMC’NS COMM’N, 

https://www.fcc.gov/licensing-databases/fees. 163 See 47 U.S.C. § 214(a). 164 See In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3377, ¶ 33 

n.98 (May 10, 2019) (finding that Section 214 authorization would allow China Mobile USA to 

request interconnection with the networks of other Section 214-authorized U.S. common carriers).

165 While there is no provision of the U.S. Code or the FCC’s regulations that specifically provides for 

the revocation of international Section 214 authorizations, the FCC’s prior revocation decisions 

generally cite to authority under 47 U.S.C. § 154(i) (“The Commission may perform any and all acts, 

make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may 

be necessary in the execution of its functions.”). See, e.g., In the Matter of IP To Go, LLC, 81 Fed. 

Reg. 91933 (Dec. 2016); In the Matter of Redes Modernas de la Frontera SA de CV, 81 Fed. Reg. 

91932 (Dec. 2016); In the Matter of JuBe Communications LLC, 81 Fed. Reg. 55199 (Aug. 2016).

166 See Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). Although no decision has been 

reached, as described further below, the FCC recently ordered Chinese government-controlled 

carriers with international Section 214 authorizations to show cause why their authorizations should 

not be revoked. In the orders, the FCC highlighted national security concerns as a reason revocation 

may be warranted. See Press Release, Fed. Commc’ns Comm’n, FCC Scrutinizes Four Chinese 

Government-Controlled Entities Providing Telecommunications Services in the U.S. (Apr. 24, 2020), 

https://www.fcc.gov/document/fcc-scrutinizes-four-chinese-government-controlled-telecom-entities. 167 Typically, Team Telecom alerts the FCC that the authorized carrier is failing to comply with the 

commitments outlined in the security agreement. Most instances reviewed by the Subcommittee 

involved a carrier that was no longer doing business in the United States and therefore was not 

filing the requisite information. Team Telecom recommended that the FCC terminate the 

authorization. The FCC first conducted its own lengthy review process, which included providing 

notice, allowing the applicant to respond to the allegations, and comply with the mitigation 

agreement. See, e.g., In the Matter of IP To Go, LLC, 81 Fed. Reg. 91933 (Dec. 2016); In the Matter of 

Redes Modernas de la Frontera SA de CV, 81 Fed. Reg. 91932 (Dec. 2016); In the Matter of JuBe 

Communications LLC, 81 Fed. Reg. 55199 (Aug. 2016). 

168 Briefing with the Dep’t of Justice (Aug. 1, 2019).
38

B. Team Telecom Assessed National Security and Law Enforcement 

Risks, but It Historically Operated in an Ad Hoc Manner

As described above, the FCC seeks input from a variety of Executive Branch 

agencies on the national security, law enforcement, foreign policy, and trade policy 

concerns implicated by a foreign carrier’s Section 214 application.169 DOJ, DHS, 

and DOD—until recently referred to as Team Telecom—focused on assessing 

national security and law enforcement risks.170 DOJ’s National Security Division’s 

Foreign Investment Review Section served as the unofficial group lead for Team 

Telecom on Section 214 applications and coordinated among internal DOJ 

component parts and other Team Telecom members.171 

Despite the long history of Team Telecom, it historically operated in an ad 

hoc manner. Team Telecom was not established in statute; it operated only at the 

request of the FCC.172 Further, Team Telecom had no formal procedures, policies, 

or guidelines governing its review of Section 214 applications. This informality 

resulted in protracted review periods and a process FCC commissioners described 

as “broken,”173 and an “inextricable black hole” that provided “no clarity for [the]

future.”174 It also limited the actions Team Telecom could take to address identified

national security or law enforcement risks. Team Telecom could recommend that 

the FCC approve or deny applications by foreign-owned entities.175 Team Telecom 

 169 1997 FCC Foreign Participation Order, supra note 147, at ¶ 63; FCC PROPOSED EXECUTIVE 

BRANCH REVIEW REFORM, supra note 154, at ¶ 6. See also Executive Branch Recommendation re 

China Mobile USA, supra note 56, at 2. 

170 Briefing with the Dep’t of Justice (Aug. 1, 2019); Executive Branch Recommendation re CTA, 

supra note 56, at 12. Other agencies, including the Department of State, the Department of 

Commerce, the United States Trade Representative, and the White House Office of Science and 

Technology Policy are responsible for assessing other concerns raised by the Section 214 application. 

See FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154, at n.16. Team Telecom 

works closely with the agencies to prepare a single recommendation on behalf of the Executive 

Branch, which is filed by the National Telecommunications and Information Administration, a part 

of the Department of Commerce. Briefing with the Dep’t of Justice (Aug. 1, 2019). The 

Subcommittee’s investigation focused on Team Telecom’s processes. The Subcommittee, however, 

recognizes the important role played by the other agencies in evaluating risks associated with 

foreign carriers.

171 Briefing with the Dep’t of Justice (Aug. 1, 2019). Team Telecom also reviewed other applications 

at the request of the FCC, such as applications to operate submarine cable landing sites. For those 

applications, DHS’s Office of Policy usually served as the lead coordinating agency. See id; Briefing 

with the Dep’t of Homeland Sec. (Feb. 7, 2020). 172 Briefing with the Dep’t of Justice (Aug. 1, 2019); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 

2020). 173 See FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154 (statement, Ajit Pai, 

Commissioner, Fed. Commc’ns Comm’n).

174 See Michael O’Reilly, Team Telecom Reviews Need More Structure, FED. COMMC’NS COMM’N (Sept. 

18, 2015).

175 Briefing with the Dep’t of Justice (Aug. 1, 2019). Cf. FCC-PSI-003792–93 (“Executive Branch 

agencies have the opportunity to offer advice to the FCC regarding any foreign applicant seeking a 
39

could also recommend a foreign-owned entity be approved for Section 214 

authorization if it entered into a security agreement to mitigate national security or 

law enforcement concerns.176 Even where a security agreement was entered,

however, Team Telecom’s process for monitoring compliance with that agreement 

was haphazard.

1. Team Telecom’s Section 214 Review Process

Before the recent Executive Order, Team Telecom’s process for reviewing

foreign carriers’ Section 214 applications was ambiguous, due in part to its lack of 

authority and established procedures. Team Telecom only publicly disclosed a list 

of factors it considered in evaluating national security and law enforcement 

concerns in 2018.177 Upon receipt of the FCC’s request to review a Section 214 

application, Team Telecom conducted an initial review to determine whether the 

FCC’s streamlining and granting of an application within two weeks was 

appropriate.178 The factors weighed by Team Telecom included:

• The Applicant: Whether the applicant has a criminal history; has 

engaged in conduct that calls the applicant’s trustworthiness into 

question; and is vulnerable to exploitation, influence, or control by other 

actors;

• State Control, Influence, and Ability to Compel Applicant to Provide 

Information: Whether an applicant’s foreign ownership could result in the 

control of U.S. telecommunication infrastructure or persons operating 

such infrastructure by a foreign government; is from a country suspected 

of engaging in actions, or possessing the intention to take actions, that 

could impair U.S. national security; whether the applicant will be 

required, by virtue of its foreign ownership, to comply with foreign 

requests or is otherwise susceptible to such requests or demands made by 

a foreign nation or other actors; and whether such requests are governed 

by publicly available legal procedures subject to independent judicial 

oversight;

• Planned Operations: Whether the applicant’s planned operations within 

the United States provide opportunities for an applicant or other actors to 

(1) undermine the reliability and stability of the domestic communications 

infrastructure, (2) identify and expose national security vulnerabilities, (3) 

 

license to operate in the United States.”); 1997 FCC Foreign Participation Order, supra note 147, at 

¶¶ 65–66. 

176 Briefing with the Dep’t of Justice (Aug. 1, 2019).

177 Executive Branch Recommendation re CTA, supra note 56, at 14–15; Executive Branch 

Recommendation re China Mobile USA, supra note 56, at 6–7 (citing a May 2015 Letter from U.S. 

Dep’t of Justice to China Mobile). 

178 Briefing with the Dep’t of Justice (Aug. 1, 2019).
40

render the domestic communications infrastructure otherwise vulnerable 

to exploitation, manipulation, attack, sabotage, or covert monitoring, (4) 

engage in economic espionage activities against corporations that depend 

on the security and reliability of the U.S. communications infrastructure 

to engage in lawful business activities, or (5) otherwise engage in 

activities with potential national security implications; and 

• U.S. Legal Process: Whether the Executive Branch will be able to 

continue to conduct its statutorily authorized law enforcement and 

national security missions, which may include issuance of legal process for 

the production of information or provision of technical assistance.179

If no immediate concerns were identified, Team Telecom informed the FCC 

that it had no comment on or objections to the application.180 As noted above, the 

FCC did not conduct further review of the issues—the foreign carrier’s application 

was streamlined and deemed approved within 14 days.181 

If Team Telecom determined that the applicant’s foreign ownership or 

proposed services raised potential concerns, it recommended that the application be 

removed from the FCC’s streamlining process.182 Team Telecom also requested that 

the FCC defer any action on the application until Team Telecom’s review was 

complete.183 Team Telecom then engaged the foreign carrier applicant to learn 

more about its business and proposed services. Information solicited from the 

applicant typically included:

• Descriptions of the regulated and unregulated services provided by the 

applicant, including the technical specifications for providing such 

services;

 179 Executive Branch Recommendation re CTA, supra note 56, at 14–15; Executive Branch 

Recommendation re China Mobile USA, supra note 56, at 6–7. According to Team Telecom, these 

factors were developed “based on input from agencies with expertise in national security and law 

enforcement matters, as well as past experiences evaluating applications referred by the 

Commission and monitoring the effectiveness of mitigation measures.” Executive Branch 

Recommendation re CTA, supra note 56, at 15.

180 Briefing with the Dep’t of Justice (Aug. 1, 2019); FCC PROPOSED EXECUTIVE BRANCH REVIEW 

REFORM, supra note 154, at ¶ 8; Kathleen Collins, Assistant Bureau Chief, International Bureau, 

Fed. Commc’ns Comm’n, Remarks for Panel Discussion at the 2d National Forum on CFIUS (July 

21, 2015). 

181 See 47 C.F.R. § 63.12(a)–(b); FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154, 

at ¶ 8; Kathleen Collins, Assistant Bureau Chief, International Bureau, Fed. Commc’ns Comm’n, 

Remarks for Panel Discussion at the 2d National Forum on CFIUS (July 21, 2015).

182 Briefing with the Dep’t of Justice (Aug. 1, 2019); Kathleen Collins, Assistant Bureau Chief, 

International Bureau, Fed. Commc’ns Comm’n, Remarks for Panel Discussion at the 2d National 

Forum on CFIUS (July 21, 2015). 

183 Briefing with the Dep’t of Justice (Aug. 1, 2019); Kathleen Collins, Assistant Bureau Chief, 

International Bureau, Fed. Commc’ns Comm’n, Remarks for Panel Discussion at the 2d National 

Forum on CFIUS (July 21, 2015). 
41

• Revenue information;

• Actual and expected categories of customers (e.g., enterprise, residential, 

carrier), including any federal, state, and local governmental customers;

• Individuals and entities with ownership interests and the level of each’s 

involvement in the company;

• Members of management;

• Other foreign persons with access to infrastructure or customer records;

• Location of current and anticipated customer and business records; and

• Anticipated access to public switched telephone networks or the 

internet.184

Depending on the nature of the responses, Team Telecom occasionally

required the applicant to clarify or expand on the information provided.185 This 

engagement of the applicant was done solely by Team Telecom; no FCC personnel

were involved.186 Throughout this process, Team Telecom was constantly assessing 

whether its concerns could be mitigated through a written security agreement—

commonly referred to as a network security agreement or a letter of assurance.187 

Team Telecom ultimately made one of three recommendations to the FCC: 

1. It had no concerns and therefore no objection to the application;

2. Concerns existed but could be mitigated through a security agreement, so 

Team Telecom did not object to the FCC approving the application subject 

to the carrier agreeing to comply with the conditions and obligations 

contained in the security agreement; or 

 184 See, e.g., TT-DOJ-001–15; TT-DOJ-045–60; FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM,

supra note 154, at ¶ 7 (citing to a letter explaining that “the reviewing agencies’ current practice is to 

send an applicant a set of initial questions”).

185 Briefing with the Dep’t of Justice (Aug. 1, 2019); FCC PROPOSED EXECUTIVE BRANCH REVIEW 

REFORM, supra note 154, at ¶ 7. See also TT-DOJ-106–08; TT-DOJ-061–63; TT-DOJ-067–101 (China 

Telecom Americas responding to Team Telecom’s clarification questions about its Section 214 

application).

186 FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154, at ¶ 7.

187 FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154, at ¶ 7; Briefing with the 

Dep’t of Justice (Aug. 1, 2019). According to DOJ, there is no substantive difference between a 

network security agreement and a letter of assurance. See Briefing with the Dep’t of Justice (Aug. 1, 

2019). Thus, for ease of reference, the Subcommittee uses security agreement throughout.
42

3. The concerns were so great that they could not be mitigated by a security 

agreement and therefore, Team Telecom recommended that the 

application be denied outright.188

Where Team Telecom recommended the application be subject to the carrier 

complying with the conditions and obligations contained in a security agreement, 

the FCC’s authorization provides that failure to comply with the conditions and 

obligations constitutes a failure to meet a condition of the Section 214 authorization 

and serves as grounds for terminating the authorization.189 

2. Team Telecom’s Lack of Statutory Authority, Established 

Procedures, and Limited Resources Hampered its Review Process

FCC Commissioners have long criticized Team Telecom’s review process. 

Before becoming Chairman, Ajit Pai described the process as “broken,” given that it 

“[took] too long and lack[ed] predictability.”190 Commissioner Michael O’Rielly 

similarly outlined a number of “high-level” complaints with Team Telecom’s 

process, including:

• Inextricable Black Hole – Once applications are submitted, there 

is little to no information available to the [FCC], much less 

applicants, on status or potential areas of concern, no timeline for 

conclusion, and no way to discern which agency, if any, has concerns.

• No Clarity for the Future – The haphazard process does not 

provide any precedential value for future applicants to know what 

may be acceptable or unacceptable practices, structure or 

partnerships. This leaves applicants subject to the whim of the 

individual members of Team Telecom at that exact moment in 

time.191

One major criticism was the time Team Telecom took to review applications. 

Because its review process was not conducted pursuant to formal statutory 

 188 See Briefing with the Dep’t of Justice (Aug. 1, 2019). See also FCC PROPOSED EXECUTIVE BRANCH 

REVIEW REFORM, supra note 154, at ¶ 8; Kathleen Collins, Assistant Bureau Chief, International 

Bureau, Fed. Commc’ns Comm’n, Remarks for Panel Discussion at the 2d National Forum on CFIUS 

(July 21, 2015). 

189 See, e.g., IB Public Notice, 30 FCC Rcd at 11018; Wypoint Telecom, Inc., Termination of 

International Section 214 Authorization, Order, 30 FCC Rcd 13431, 13431–32, ¶ 2 (2015). In 

addition to termination, the FCC can impose monetary sanctions or other enforcement actions for 

failing to meet a condition of the authorization. 47 U.S.C. §§ 312, 503.

190 See FCC PROPOSED EXECUTIVE BRANCH REVIEW REFORM, supra note 154 (statement, Ajit Pai, 

Commissioner, Fed. Commc’ns Comm’n). 191 See Michael O’Reilly, Team Telecom Reviews Need More Structure, FED. COMMC’NS COMM’N (Sept. 

18, 2015), https://www.fcc.gov/news-events/blog/2015/09/18/team-telecom-reviews-need-morestructure. 
43

authority, once an application was removed from streamlining, Team Telecom had 

no deadline by which it had to make a final recommendation to the FCC.192 

Therefore, the process could—and did—last years. In response to an FCC notice of 

proposed rulemaking, telecommunications companies claimed that applications 

referred to Team Telecom took up to four times longer to process than other 

applications.193 As discussed more below, China Mobile USA applied for Section 

214 authorization in September 2011, but Team Telecom did not recommend that 

the FCC deny that application until July 2018.194

Current officials recognize that Team Telecom has suffered from a lack of 

statutory authority.195 Although the Department of Justice served as the unofficial 

lead, Team Telecom had no formal chair or spokesperson.196 Further, both 

internally and externally, Team Telecom had to work with agencies that had 

conflicting responsibilities and mission areas.197 This often led to interagency delay 

in decision making.198 As one Team Telecom component agency characterized, 

“responsibility without authority is problematic.”199

Team Telecom’s review process also suffered from a lack of staff dedicated to 

reviewing applications. DHS officials estimated that the Office of Policy, which 

represents DHS on Team Telecom, has had, at most, only two employees designated 

to Team Telecom; these employees are responsible for all aspects of the Team 

Telecom portfolio, including reviewing applications and monitoring compliance with 

security agreements.200 DOJ historically dedicated only one attorney to Team 

 192 See Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). 193 Comments of Telecommunications Companies, IB Docket No. 16-155, at 4 (May 23, 2016) (“FCC 

applications requiring referral to Team Telecom . . . take three to four times longer to receive 

approval than applications not subject to this review.”).

194 See Int’l Bureau Selected Applications Listing, File No. ITC-214-20110901-00289, FED. 

COMMC’NS COMM’N, http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+

Number/%3D/ITC2142011090100289&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/

File+Number. 195 Briefing with the Dep’t of Justice (Aug. 1, 2019); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 

2020); Briefing with the Dep’t of Justice (Apr. 3, 2020); Email from the Dep’t of Justice to the 

Subcommittee (June 3, 2020) (on file with the Subcommittee).

196 Briefing with the Dep’t of Justice (Aug. 1, 2019); Briefing with the Dep’t of Justice (Apr. 3, 2020); 

Email from the Dep’t of Justice to the Subcommittee (June 3, 2020) (on file with the Subcommittee).

197 Briefing with the Dep’t of Justice (Aug. 1, 2019); Briefing with the Dep’t of Justice (Apr. 3, 2020); 

Email from the Dep’t of Justice to the Subcommittee (June 3, 2020) (on file with the Subcommittee).

198 Cf. Briefing with the Dep’t of Justice (Aug. 1, 2019); Briefing with the Dep’t of Justice (Apr. 3, 

2020). 199 Email from the Dep’t of Justice to the Subcommittee (June 3, 2020) (on file with the 

Subcommittee).

200 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). This does not account for employees from 

other DHS offices, such as the Office of General Counsel, who assist on Team Telecom matters. See 

Email from Dep’t of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the 

Subcommittee).
44

Telecom matters.201 Like DHS, DOJ’s employee was responsible for both the initial 

review of applications and post-authorization compliance monitoring.202 With 

limited exception, these individuals were responsible not only for Team Telecom’s 

portfolio but also that of the Committee on Foreign Investment in the United States 

(“CFIUS”).203 Because the CFIUS process is governed by statutory requirements, 

including deadlines by which applications must be reviewed, DOJ and DHS 

resources typically focused on those projects, at the expense of Team Telecom 

projects.204 DOJ claims to have vastly increased its Team Telecom resources in 

recent years. Today, it has five attorneys dedicated to reviewing FCC 

applications.205 According to the team’s managing attorney, however, the longest 

tenured individual has been with the agency for little more than a year.206

3. Team Telecom’s Post-Authorization Monitoring and Oversight

Was Also Limited and Sporadic

Not only was Team Telecom’s review of Section 214 applications limited, but 

so too was its oversight and monitoring of the carriers with which it entered into a 

security agreement.207 Without a security agreement, Team Telecom had no insight 

into the activities of a foreign-owned carrier after Section 214 authorization was 

granted.208 Team Telecom officials informed the Subcommittee that they believed

they had the authority to review any Section 214 authorized carrier at any time, 

even where no security agreement existed.209 The officials further noted their belief 

that Team Telecom could recommend that the FCC revoke an existing authorization

at any time.210 However, the officials acknowledged there was no formal legal basis 

for these reviews and recommendations, and Team Telecom never conducted a sua 

sponte review or recommended revoking the authorization of a carrier with which 

Team Telecom did not have a security agreement.211 

Where Team Telecom did enter into a security agreement with a Section 214 

authorized carrier, Team Telecom had a slightly larger degree of oversight power.212 

Team Telecom’s authority, however, was limited to ensuring the carrier complied

 201 Briefing with the Dep’t of Justice (Apr. 3, 2020). 202 Id.

203 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice (Aug. 1, 

2019). 204 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice (Aug. 1, 

2019). 205 Briefing with the Dep’t of Justice (Apr. 3, 2020). 206 Id.

207 Briefing with the Dep’t of Justice (Aug. 1, 2019). 208 Id.

209 Id. 210 Id. 211 Id. 212 Id.
45

with the specific terms of the security agreement.213 Team Telecom officials, 

however, recognized the limited enforcement mechanism this provides.214 Although 

security agreements have become more robust over time, older agreements 

contained few provisions, were broad in scope, and provided little for Team Telecom 

to verify.215 Another reason that monitoring agreements proved difficult is that 

Team Telecom had to rely heavily on the carrier’s forthrightness: 

Although [Team Telecom] . . . monitors [a company’s] compliance with 

[its security] agreements on an ongoing basis, [Team Telecom] can never 

have full visibility into all of a company’s activities. Therefore, [Team 

Telecom] necessarily relies on the other party to adhere rigorously and 

scrupulously to [security] agreement provisions and to self-report any 

problems or issues of non-compliance.216

Team Telecom retained oversight authority through the security agreements;

however, its exercise of that authority was sporadic.217 Team Telecom did not 

establish a process by which to ensure compliance with security agreements until 

2010 or 2011, even though it entered into agreements years prior.218 Team Telecom 

developed no formal protocol, policy, or guidance document detailing how it 

monitored compliance with security agreements.219 Team Telecom officials stated it 

relied heavily on written correspondence and requests for information from the

foreign carriers.220 Team Telecom provided no evidence or explanation 

demonstrating how it evaluated written representations for accuracy. 

Team Telecom also conducted site visits to the carriers’ U.S.-based facilities. 

It used these visits to physically visit domestic sites, look for violations of a security 

agreement, and speak to employees.221 As with written correspondence, the 

frequency of site visits varied.222 Further, even if Team Telecom identified

violations of the security agreement or issues to suggest the security agreement was 

inadequate, Team Telecom did not have strong enforcement mechanisms.223 It 

 213 Id. 214 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). 215 Id.

216 Executive Branch Recommendation re China Mobile USA, supra note 56, at 16. 

217 Although never formally documenting its compliance monitoring procedures, the Department of 

Justice noted that it has always dedicated personnel to compliance monitoring. Historical knowledge 

about these compliance efforts, however, has been “weakened” due to employee attrition. See Email 

from the Dep’t of Justice to the Subcommittee (June 3, 2020) (on file with the Subcommittee).

218 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). Around 2010, the Department of 

Homeland Security created an internal interagency system of record to track Team Telecom 

compliance deliverables, which is still used today. Id.

219 Briefing with the Dep’t of Justice (Aug. 1, 2019). 220 Id. 221 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). 222 Briefing with the Dep’t of Justice (Aug. 1, 2019). 223 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020).
46

could attempt to induce companies to come back into compliance with agreement

terms or recommend that the FCC revoke a carrier’s authorization.224 Team 

Telecom officials, however, claimed they do not know what the FCC would deem a 

sufficient reason for revocation, and none were familiar with the FCC ever revoking 

an authorization on the basis of national security concerns.225 Team Telecom 

officials, however, stressed that site visits were still a helpful tool in that they, at a 

minimum, signaled to the foreign carriers that Team Telecom was watching from an 

oversight perspective.226

As with the review process, in addition to limited statutory authority,227

resources have been a major contributing factor to Team Telecom’s haphazard 

oversight.228 As described above, DHS has only two employees dedicated to Team 

Telecom—both reviewing applications and monitoring security agreement 

compliance.229 DOJ historically had one attorney doing the same.230 Although it 

has attempted to increase resources, DOJ currently employs only two attorneys 

dedicated to compliance monitoring efforts.231 Those attorneys, along with their 

supervisor, are responsible for monitoring compliance with more than 100 security 

agreements.232

C. Nearly a Year after the Subcommittee’s Investigation Began, the 

Administration Took Steps to Formalize Team Telecom

Nearly a year after the Subcommittee launched its investigation and 

extensively engaged with members of Team Telecom, the administration took steps 

to address systemic issues regarding Team Telecom. On April 4, 2020, the 

President issued Executive Order 13913, formalizing Team Telecom as the 

Committee for the Assessment of Foreign Participation in the United States 

 224 Id.; Email from the Dep’t of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the 

Subcommittee). 

225 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice (Aug. 1, 

2019). 226 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice (Aug. 1, 

2019). 227 Team Telecom officials noted that the lack of statutory authority left it with limited enforcement 

mechanisms. For example, unlike CFIUS, Team Telecom had no subpoena authority or means to 

protect classified information. See Email from the Dep’t of Justice to the Subcommittee (June 3, 

2020) (on file with the Subcommittee). 

228 See id. 229 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). Again, this represents only employees in 

DHS’s Office of Policy, which is the DHS representative to Team Telecom. It does not include 

employees from other DHS offices, such as the Office of General Counsel, who assist on Team 

Telecom matters. See Email from Dep’t of Homeland Sec. to the Subcommittee (June 4, 2020) (on file 

with the Subcommittee).

230 Briefing with the Dep’t of Justice (Apr. 3, 2020). 231 Id.

232 Id.
47

Telecommunications Services Sector (“EO Telecom Committee”).233 DOJ officially 

leads the EO Telecom Committee, which also includes DHS and DOD; other 

Executive Branch agencies, including the Intelligence Community, serve as 

advisors.234 The EO Telecom Committee is tasked with “assist[ing] the FCC in its 

public interest review of national security and law enforcement concerns that may 

be raised by foreign participation in the United States telecommunications services 

sector.”235 To that end, the EO Telecom Committee is authorized to review Section 

214 and other applications, respond to any risks presented by the applications, and 

recommend dismissal, denial, modification, or revocation of an authorization.236 It 

is also permitted—but not required—to review existing authorization.237 

Unlike Team Telecom’s historical operations discussed above, where the 

timeline for application review was not standardized, the Executive Order provides

that any initial application review must be completed “before the end of the 120-day 

period beginning on the date the [Attorney General] determines that the applicant’s 

responses to any questions and information requests from the Committee are 

complete.”238 Thus, before the clock begins to run, DOJ must determine that all of 

its questions have been satisfactorily answered.239 This can take—and in some 

instances, such as those described below, has taken—months. Where the EO 

Telecom Committee determines that a “secondary assessment” is warranted, the 

Executive Order requires such an assessment be completed in 90 days.240 

The Executive Order establishes timelines and assigns roles. It does not, 

however, address the entirety of past concerns regarding Team Telecom. Notably, 

the Executive Order does not afford the EO Telecom Committee any additional 

resources; it provides only that DOJ shall “provide such funding and administrative 

support for the Committee” as may be required.241 As described above, DOJ’s 

current staffing ignores the realities necessary to effectively and efficiently assess 

Section 214 applications and to monitor compliance with security agreements. 

Further, the Executive Order permits, but does not require, the review of Section 

214 authorizations where no security agreement exists. Finally, the Executive 

Order provides no clarity regarding what may trigger a security agreement or a 

recommendation to deny an application.

 233 Exec. Order No. 13913, 85 C.F.R. § 19643 (Apr. 4, 2020). 

234 Id. at §§ 3(b)−(d).

235 Id. at § 3(a).

236 Id.

237 Id. at § 6.

238 Id. at § 5(b)(iii).

239 Id.

240 Id. at § 5(c). 241 Id. at § 11(b).
48

V. CHINESE STATE-OWNED TELECOM COMPANIES OPERATED IN 

THE UNITED STATES WITH MINIMAL OVERSIGHT FROM THE 

FCC AND TEAM TELECOM 

The FCC’s and Team Telecom’s limitations described above resulted in a lack 

of oversight of Chinese state-owned carriers operating in or seeking to operate in 

the United States. In 2018, Team Telecom acknowledged that Chinese state-owned 

telecommunications carriers providing international telecom services between the 

United States and foreign points raise national security concerns.242 This occurred 

in connection with Team Telecom’s first ever recommendation to deny Section 214 

authorization because of national security concerns: the application of Chinese 

state-owned carrier China Mobile USA.243 The recommendation, however, came 

seven years after the application was submitted.244 The FCC waited another year 

before denying the application in 2019.245

Three Chinese state-owned carriers currently possess international Section 

214 authorizations: (1) China Telecom (Americas) Corporation (“CTA”); (2) China 

Unicom (Americas) Operations Limited (“CUA”); and (3) ComNet (USA) LLC 

(“ComNet”) (and its immediate parent company Pacific Networks Corp.). All three 

companies received Section 214 authorizations nearly two decades ago and have 

operated in the United States since.246 Team Telecom officials acknowledged to the 

 242 See Executive Branch Recommendation re China Mobile USA, supra note 56, at 3; In the Matter of 

China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361 (May 10, 2019).

243 See Executive Branch Recommendation re China Mobile USA, supra note 56, at 3; In the Matter of 

China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3365 (May 10, 2019); Press Release, 

Fed. Commc’ns Comm’n, FCC Denies China Mobile USA Application to Provide Telecommunications 

Services (May 9, 2019), https://docs.fcc.gov/public/attachments/DOC-357372A1.pdf (“This is the first 

instance in which Executive Branch agencies have recommended that the FCC deny a section 214 

application due to national security and law enforcement concerns.”). 244 See Int’l Bureau Selected Applications Listing, File No. ITC-214-20110901-00289, FED. 

COMMC’NS COMM’N, http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+

Number/%3D/ITC2142011090100289&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/

File+Number. 245 See id. During the year period, China Mobile USA and Executive Branch agencies were provided 

opportunities to file arguments in favor of and against denial. The FCC told the Subcommittee that 

staff “actively worked on the recommendation to deny from July 2018, when it was received” until 

the May 2019 order. It also suggested that it took longer to reach a decision because the “denial of 

an international Section 214 application on national security grounds was a case of first impression.” 

See Email from the Fed. Commc’ns Comm’n to the Subcommittee (June 2, 2020) (on file with the 

Subcommittee).

246 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00581, DA No. 02-2500, 17 FCC Rcd 19181, 19182 (Oct. 3, 2002) (CUA authorization); Fed. 

Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL-00567, DA 

02-2060, 17 FCC Rcd 16199, 16201 (Aug. 22, 2002) (CTA authorization); Fed. Commc’ns Comm’n, 

Public Notice – International Authorizations Granted, Rep. No. TEL-00423, DA No. 01-1794, 16 FCC 

Rcd 14695, 14696 (July 26, 2001) (China Telecom authorization); Fed. Commc’ns Comm’n, Public 
49

Subcommittee that there is no meaningful difference between the services for which 

China Mobile USA sought authorization to provide and the services currently being 

provided by the three other Chinese state-owned carriers.247 Further, the officials 

stated that CTA, CUA, and ComNet were also susceptible to the same national 

security and law enforcements concerns Team Telecom raised when recommending 

the FCC deny China Mobile USA’s application.248 Nevertheless, until recently, 

Team Telecom conducted minimal oversight of these entities, despite having 

entered into security agreements with CTA and ComNet more than a decade ago.249 

During that time, Team Telecom conducted only two site visits to each company.250 

Team Telecom, by contrast, never entered into a security agreement with CUA, 

meaning it has had no interaction with the company.251 Only since April 2020, 

when the Subcommittee was nearing the end of its investigation, did Team Telecom 

and the FCC take steps to fully assess whether the companies’ existing 

authorizations continue to serve the public interest.252

A. China Mobile Limited and China Mobile USA

China Mobile Limited (“China Mobile”) is “the leading provider of 

telecommunications and related services in Mainland China.”253 The company 

provides a full suite of communications services, including “mobile voice and data 

business [and] wireline broadband.”254 Together with its subsidiaries, it is also the 

 

Notice – International Authorizations Granted, Rep. No. TEL-00151, DA No. 99-2328, 14 FCC Rcd 

17862, 17864 (Oct. 28, 1999) (ComNet authorization).

247 Briefing with the Dep’t of Justice (Apr. 3, 2020); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 

2020).

248 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice (Aug. 1, 

2019).

249 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); 

Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) LLC 

to Stephen Heifetz, Deputy Assistant Sec’y for Policy Dev., Dep’t of Homeland Sec. & Matthew 

Olsen, Acting Assistant Att’y Gen., Nat’l Sec. Div., Dep’t of Justice (Mar. 3, 2009). 

250 See DHS00472PSI–76; DHS00477PSI–89; DHS00460PSI–65; DHS00466PSI–71; TT-DOJ-521–73; 

TT-DOJ-495–99; TT-DOJ-500–06; TT-DOJ-507–20.

251 Briefing with China Unicom Americas (Apr. 16, 2020); Briefing with the Dep’t of Justice (Apr. 3, 

2020); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice 

(Aug. 1, 2019).

252 See Executive Branch Recommendation re CTA, supra note 56; Press Release, Fed. Commc’ns 

Comm’n, FCC Scrutinizes Four Chinese Government-Controlled Entities Providing 

Telecommunications Services in the U.S. (Apr. 24, 2020), https://www.fcc.gov/document/fccscrutinizes-four-chinese-government-controlled-telecom-entities. Team Telecom officials stressed to 

the Subcommittee that, although it did not file its recommendation to revoke CTA’s authorizations 

until April 2020, it was reviewing CTA’s authorizations long before that. Email from the Dep’t of 

Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).

253 CHINA MOBILE FY2019 FORM 20-F, supra note 123, at 21.

254 About China Mobile – Overview, CHINA MOBILE LIMITED, 

https://www.chinamobileltd.com/en/about/overview.php.
50

largest provider of telecommunications services in the world, as measured by the

total number of subscribers,255 with approximately 946 million mobile customers 

worldwide as of March 2020.256 China Mobile reported a 2019 operating revenue of 

$107 billion, of which approximately 90 percent came from telecommunications 

services.257

Outside of China, China Mobile operates through its subsidiary, China 

Mobile International.258 China Mobile USA, a subsidiary of China Mobile 

International, was registered in Delaware in May 2011; it maintains offices in New 

York and California.259 

On September 1, 2011, China Mobile USA applied for Section 214 

authorization to provide international facilities-based and resale services between 

the United States and all international points, including China.260 China Mobile 

USA planned to provide a variety of international services, including international 

interexchange services, international private line circuits, and mobile virtual 

network operator services, as well as data center and cloud services, for which no 

 255 Id.; In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, n.12 (May 

10, 2019); China Mobile Closing Down 3G System, Complete Switch-Off Expected by 2020, 

TELEGEOGRAPHY (Mar. 11, 2019), 

https://www.telegeography.com/products/commsupdate/articles/2019/03/11/china-mobileclosingdown-3g-system-complete-switch-off-expected-by-2020/; The World’s Top 10 Telecommunications 

Companies, INVESTOPEDIA (May 16, 2019), 

https://www.investopedia.com/articles/markets/030216/worlds-top-10-telecommunicationscompanies.asp. 256 See CHINA MOBILE FY2019 FORM 20-F, supra note 123, at 21; Investor Relations – Monthly 

Customer Data, CHINA MOBILE LIMITED, https://www.chinamobileltd.com/en/ir/operation_m.php. 257 Investor Relations – Key Operation Data, CHINA MOBILE LIMITED, 

https://www.chinamobileltd.com/en/ir/operation_y.php?scroll2title=1. See CHINA MOBILE FY2019

FORM 20-F, supra note 123, at 3.

258 Application of China Mobile International (USA) Inc. for International Section 214 Authority, File 

No. ITC-214-20110901-00289, Attach. 2 (filed Sept. 1, 2011), https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=95289&acct=235487&id_form_num=2&

filing_key=-233159; Amendment to Application of China Mobile International (USA) Inc. for 

International Section 214 Authority, File No. ITC-214-20110901-00289 (Jan. 30, 2015), 

http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-

233159&f_number=ITC2142011090100289. 259 See History – About Us, CHINA MOBILE INTERNATIONAL, 

https://www.cmi.chinamobile.com/en/about/cmi; Global Resources – Global Footprint, CHINA MOBILE 

INTERNATIONAL, https://www.cmi.chinamobile.com/en/global-resources. 260 See Int’l Bureau Selected Applications Listing, File No. ITC-214-20110901-00289, FED. 

COMMC’NS COMM’N, http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+

Number/%3D/ITC2142011090100289&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/

File+Number (listing “date filed” as September 1, 2011); Fed. Commc’ns Comm’n, Public Notice –

International Applications Accepted for Filing, Report No. TEL-01519S (Sept. 16, 2011); In the 

Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3367, ¶ 4 (May 10, 2019).
51

Section 214 authorization is needed.261 Team Telecom undertook a seven year 

review before ultimately recommending that the FCC deny the application on 

national security grounds. The FCC denied the application, but it did so nearly a 

year after receiving Team Telecom’s recommendation.

1. Team Telecom’s Review of China Mobile USA’s Application Lasted 

Seven Years

As noted above, China Mobile USA applied for Section 214 authorization on 

September 1, 2011.262 The FCC referred the application to Team Telecom for its 

input on the national security and law enforcement risks posed by the proposed 

operations.263 Team Telecom requested the application be removed from 

streamlining to give it additional time to evaluate concerns.264 Team Telecom spent 

the next seven years evaluating the application, during which Team Telecom 

engaged China Mobile USA to “learn more about its management, business, and 

proposed activities.”265 China Mobile USA responded to Team Telecom’s questions 

between 2011 and 2012 and again to another set of inquiries in 2014.266 Not until 

July 2018, however, did Team Telecom—through the National Telecommunications 

and Information Administration (“NTIA”)267—recommend that the FCC deny China 

Mobile USA’s application. Team Telecom concluded that China Mobile USA’s 

proposed services raised serious national security concerns that could not be

sufficiently mitigated through a security agreement.268 Team Telecom’s concerns 

generally fell into the following categories.

China Mobile USA is ultimately owned by the Chinese government. Team 

Telecom noted that China Mobile USA, through intermediary companies, is 

majority owned and controlled by the Chinese government.269 China Mobile USA is 

 261 See Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, 

Report No. TEL-01519S (Sept. 16, 2011); In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-

38, 34 FCC Rcd 3361, 3367, ¶ 4 (May 10, 2019). See also Letter from J. Kostyu, Counsel to China 

Mobile International (USA) Inc., to Marlene Dortch, Sec’y, Fed. Commc’ns Comm’n (Mar. 12, 2013).

262 See In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3367, ¶ 4 

(May 10, 2019). 263 Id. at ¶ 5. Other Executive Branch agencies were also asked to opine on foreign policy and trade 

risks. Id. 

264 Cf. id. 265 Executive Branch Recommendation re China Mobile USA, supra note 56, at 4. 266 Id. at 4–5. 

267 Team Telecom works closely with other Executive Branch agencies to prepare a single 

recommendation on behalf of the Executive Branch. NTIA is responsible for filing that 

recommendation with the FCC. Briefing with the Dep’t of Justice (Aug. 1, 2019). NTIA is a part of 

the Department of Commerce. See About NTIA, NAT’L TELECOMMC’NS & INFO. ADMIN., 

https://www.ntia.doc.gov/about. 268 Id.; Li Tao, Why the US Government Sees China Mobile as a National Security Threat, SOUTH 

CHINA MORNING POST (July 4, 2018).

269 See In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3367 ¶ 19 

(May 10, 2019).
52

a wholly-owned subsidiary of China Mobile. Although listed on both the New York 

and Hong Kong stock exchanges, China Mobile is majority owned by China Mobile 

Communications Corporation, “a Chinese state-owned enterprise subject to 

supervision of . . . [the State-owned Assets Supervision and Administration 

Commission (‘SASAC’)].”270 “The Chinese government holds a direct 100 percent 

ownership interest in China Mobile Communications Corporation.”271 At the time 

China Mobile USA applied for Section 214 authorization, China Mobile 

Communications Corporation owned more than 70 percent of China Mobile.272

273

 270 Executive Branch Recommendation re China Mobile USA, supra note 56, at 3. See also

Application of China Mobile International (USA) Inc. for Authority to Provide International 

Facilities-Based and Resold Services to All International Points, at Attach. 2 – Answer to Question 

14. In January 2015, China Mobile (USA) alerted the FCC that its immediate parent company had 

been transferred to China Mobile International (UK) Limited, which was also majority controlled by 

China Mobile Communications Corporation. Thus, the change was in name only and had no effect 

on China Mobile USA’s ultimate ownership or its status as a Chinese state-owned entity. See Letter 

from K. Bressie et al., Counsel to China Mobile USA, to Marlene Dortch, Sec’y, Fed. Commc’ns 

Comm’n (Jan. 30, 2015). 271 See Application of China Mobile International (USA) Inc. for Authority to Provide International 

Facilities-Based and Resold Services to All International Points, at Attach. 2 – Answer to Question 

14. 

272 Executive Branch Recommendation re China Mobile USA, supra note 56, at 3. 

273 The diagram is derived from information contained in Executive Branch Recommendation re 

China Mobile USA, supra note 56; In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 

FCC Rcd 3361 (May 10, 2019); CHINA MOBILE FY2019 FORM 20-F, supra note 123. 
53

China Mobile USA is vulnerable to exploitation, influence, and control by the 

Chinese government. Team Telecom concluded that China Mobile USA is 

vulnerable to exploitation, influence, and control by the Chinese government, in 

part because of its government ownership.274 Team Telecom also noted that China 

Mobile USA would be required to comply with intercept requests from the Chinese 

government.275 

China Mobile USA’s authorization would allow it to interconnect with U.S. 

telecommunications networks and carriers. Team Telecom warned that, with 

Section 214 authorization, China Mobile USA would have been able “to interconnect 

[its international voice traffic] with the U.S. telecommunications network.”276 “A 

carrier connected to [the U.S. telecommunications networks] has greater access to 

telephone lines, fiber-optic cables, cellular networks, and communication 

satellites . . . .”277 Further, China Mobile USA would have been able to build “direct 

and indirect interconnection relationships with other telecommunications carriers, 

from basic connections between networks in order to exchange traffic . . . to much 

more integrated relationships.”278 Access to these networks and relationships with 

U.S. carriers would provide China Mobile USA—and by extension the Chinese 

government—with access to critical infrastructure, which the Chinese government 

could use to further its espionage and intelligence activities.279

China Mobile USA’s authorization would allow it to increase its operations in 

the United States without further FCC approval. The concern about China Mobile 

USA’s access to the U.S. telecommunications networks was “amplified” given that, 

after obtaining an international Section 214 authorization, China 

Mobile [USA] could further expand its U.S. operations by increasing the 

number of its points of presence in the United States, developing its own 

domestic network without relying on underlying carriers for 

connectivity, increasing its number of peering partners, providing 

mobile service, or operating as a mobile virtual network operator.280 

 274 See Executive Branch Recommendation re China Mobile USA, supra note 56, at 7–17. See also In 

the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, ¶¶ 8, 19 (May 10, 

2019).

275 See Executive Branch Recommendation re China Mobile USA, supra note 56, at 8. The Executive 

Branch also expressed concern that “there is a substantial risk that the Chinese government would 

exert even greater control over China Mobile and China Mobile USA than other state-owned 

enterprises given the Chinese government’s 100% ownership of China Mobile, the size and reach of 

China Mobile and its subsidiaries, and the importance of any opportunities afforded by the 

telecommunications services offered both within China and globally.” See Executive Branch 

Recommendation re China Mobile USA, supra note 56, at 8. See also In the Matter of China Mobile 

Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361 ¶¶ 8, 19 (May 10, 2019).

276 Executive Branch Recommendation re China Mobile USA, supra note 56, at 3. 277 Executive Branch Recommendation re China Mobile USA, supra note 56, at 10.

278 Executive Branch Recommendation re China Mobile USA, supra note 56, at 3. 279 Executive Branch Recommendation re China Mobile USA, supra note 56, at 3, 10.

280 Executive Branch Recommendation re China Mobile USA, supra note 56, at 10–11.
54

Team Telecom warned that this contributed to a “substantial and unacceptable risk 

of increased economic espionage” against the United States.281

The Chinese government could use the grant of authority to China Mobile 

USA to further its cyber and economic espionage efforts against the United States. 

Team Telecom repeatedly warned that the Chinese government could use the grant 

of authority to China Mobile USA to further its espionage efforts against the United 

States.282 Further, China Mobile USA could, at the request of the Chinese 

government, violate any security agreement with Team Telecom, as it may be 

required to do under Chinese law.283 Even if breaches were reported and resolved, 

“the potential harms could very likely not be remediated.”284 Finally, Team Telecom 

concluded that it would be unable to work effectively with China Mobile USA or its 

parent companies to identify and disrupt unlawful activities, or to assist in the 

investigation of past and current unlawful conduct.285

2. Ten Months after Team Telecom’s Recommendation, the FCC 

Denied China Mobile USA’s Application on National Security 

Grounds

In May 2019—nearly a year after Team Telecom’s July 2018 

recommendation—the FCC voted unanimously to deny China Mobile USA’s 

application.286 The FCC accepted Team Telecom’s national security rationale, 

explaining:

[D]ue to a number of factors related to China Mobile USA’s ownership 

and control by the Chinese government, grant of the application would 

raise substantial and serious national security and law enforcement 

risks that cannot be addressed through a [security] agreement. 

 281 Executive Branch Recommendation re China Mobile USA, supra note 56, at 11.

282 Executive Branch Recommendation re China Mobile USA, supra note 56, at 9–17. 

283 Executive Branch Recommendation re China Mobile USA, supra note 56, at 7.

284 Executive Branch Recommendation re China Mobile USA, supra note 56, at 16–17.

285 Executive Branch Recommendation re China Mobile USA, supra note 56.

286 In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3361, ¶ 1 (May 

10, 2019); Press Release, Fed. Commc’ns Comm’n, FCC Denies China Mobile USA Application to 

Provide Telecommunications Services (May 9, 2019), https://docs.fcc.gov/public/attachments/DOC357372A1.pdf. As noted above, during this time, China Mobile USA filed a reply to Team Telecom’s 

recommendation and NTIA, on behalf of Team Telecom and the other Executive Branch agencies, 

filed a reply. In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3361, 

¶ 1 (May 10, 2019). The FCC noted that staff “actively worked on the recommendation to deny from 

July 2018, when it was received” until the May 2019 order. It also suggested that it took longer to 

reach a decision because the “denial of an international Section 214 application on national security 

grounds was a case of first impression.” See Email from the Fed. Commc’ns Comm’n to the 

Subcommittee (June 2, 2020) (on file with the Subcommittee).
55

Therefore, grant of [the] application would not be in the public 

interest.287 

The FCC agreed that China Mobile USA was vulnerable to “exploitation, influence, 

and control by the Chinese government” and that there was a significant risk that 

the Chinese government would use the Section 214 authorization to further its 

economic and cyber espionage efforts against the United States.288

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.289 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.290 

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.291 CTA was founded in 2001 and obtained Section 214 authorization in 

2002.292 According to its website, CTA provides “a comprehensive range of high 

quality telecommunications services”293 with the mission of delivering “high-quality 

data and voice solutions and services between the Americas and China to 

businesses and carriers.”294 

Team Telecom recently recommended the FCC revoke and terminate CTA’s 

Section 214 authorizations. Although Team Telecom has recently begun exercising 

 287 In the Matter of China Mobile Int’l (USA) Inc., FCC No. 19-38, 34 FCC Rcd 3361, 3361, ¶ 1 (May 

10, 2019).

288 Id. at ¶¶ 8, 14–19, 30–33. 

289 Overview, CHINA TELECOM, https://www.chinatelecom-h.com/en/company/company_overview.php.

290 See CHINA TELECOM FY2019 FORM 20-F, supra note 96, at 23; Company Overview, CHINA 

TELECOM AMERICAS, https://www.ctamericas.com/company/company-overview/. 291 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/. 292 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).

293 Global Network, CHINA TELECOM AMERICAS, https://www.ctamericas.com/company/globalnetwork/. 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).

294 Company Overview – Mission, CHINA TELECOM AMERICAS, 

https://www.ctamericas.com/company/company-overview/. 
56

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 2001295 and 

CTA separately applied for Section 214 authorization in 2002,296 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.297 Since entering 

the security agreement, Team Telecom conducted just two site visits in 13 years.298 

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.299 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.300 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.301 China Telecom sought to provide 

“facilities-based and resale services between the [United States] and permissible 

international points, except China.”302 Although the FCC referred the application to 

Team Telecom,303 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 

 295 Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. No. 

TEL-00417S, at 2 (July 6, 2001). 296 Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. No. 

TEL-00558S, at 2 (Aug. 7, 2002). 297 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).

298 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.

299 See, e.g., Toonk, supra note 121; Madory, supra note 121; Shavitt & Demchak, supra note 109. 

300 See, e.g., Toonk, supra note 121; Madory, supra note 121; Diaz, supra note 121. 301 See Int’l Bureau Selected Applications Listing, File No. ITC-214-20010613-00346, FED. 

COMMC’NS COMM’N, https://licensing.fcc.gov/cgibin/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). 302 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). 303 See FCC-PSI-000019–20.
57

after accepting it for filing.304 In June 2002, after establishing CTA, China Telecom 

assigned its Section 214 authorization to its American subsidiary.305 

The 2001 authorization limited CTA to providing international services 

between the United States and international points, other than China.306 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.307 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 . . . .”308 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.309 

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.310 In 2007, 

 304 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 Rcd 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).

305 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00576, DA No. 02-2234, 17 FCC Rcd 16825, 16829 (Sept. 12, 2002) (listing the consummation date of 

the transfer as June 7, 2002). 306 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00423, DA No. 01-1794, 16 FCC Rcd 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.

307 See Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. 

No. TEL-00558S, at 2 (Aug. 7, 2002).

308 FCC-PSI-000040–41.

309 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 Rcd 16199, 16201 (Aug. 22, 2002) 

(listing the authorization “date of action” as August 21, 2002—14 days after accepting the 

application for filing).

310 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, 
58

China Telecom restructured its operations, with China Telecom Corporation 

Limited (“CTCL”)—also a Chinese company—acquiring full equity interest in CTA 

from China Telecom.311 The stated purpose of the ownership change was for China 

Telecom to “structure its business and operations in an efficient manner.”312 But, 

the change had no impact on CTA’s ultimate ownership.313 

Pre-Transaction Structure

314

 

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. 311 China Telecom (USA) Corp. Application for International Section 214 Authorization for 

Assignment or Transfer of Control, https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17

&filing_key=-133273. 312 Id. at Attach. 1. 313 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).

314 See TT-DOJ-001–10, at TT-DOJ-012.
59

Post-Transaction Structure

315

As required under FCC regulations, CTA notified the FCC of the change in 

ownership on July 25, 2007.316 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.”317 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.318

 

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 

 315 See id. at TT-DOJ-013.

316 See China Telecom (USA) Corp. Application for International Section 214 Authorization for 

Assignment or Transfer of Control, https://licensing.fcc.gov/cgibin/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/cgibin/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. 

317 China Telecom (USA) Corp. Notification of International Section 214 Authorization Assignment 

or Transfer of Control, at Attach. 1, p.4, https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17

&filing_key=-133273. 318 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. 
60

anticipated providing in the future.319 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.320 Notably, CTA stated that it did not market domestic U.S. voice or data 

services; rather, it was focused on international data services.321 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.322 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.”323

324

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.325 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.326 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.327

 319 See TT-DOJ-001–10. The Department of Justice was unable to locate the correspondence in 

which it transmitted questions to China Telecom Americas.

320 See id. at TT-DOJ-001.

321 Id.

322 Id. at TT-DOJ-006.

323 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.”).

324 The diagram is derived from information contained at TT-DOJ-001–10.

325 TT-DOJ-001–10, at TT-DOJ-001.

326 Id. at TT-DOJ-002.

327 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).
61

In the May 2007 submission, CTA provided Team Telecom with a list of its 

top three executives—all of whom were Chinese nationals.328 The only American 

CTA mentioned was its external legal counsel, who it also designated as the point of 

contact for law enforcement officials.329 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.330

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.331 The parties 

negotiated a three-page security agreement.332 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.333

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].”334 The FCC approved transfer of control on August 15, 2007, 

 328 TT-DOJ-001–10, at TT-DOJ-003–04.

329 Id. at TT-DOJ-004.

330 Id. at TT-DOJ-005.

331 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/cgibin/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).

332 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). 333 Id.

334 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-
62

conditioned on CTA abiding by the commitments and undertakings contained in the 

July 2007 security agreement.335

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.336 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.337 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.338 Officials also pointed to Team Telecom’s lack of a 

compliance process before 2010.339 Further, one official noted that Team Telecom’s 

understanding of the risks associated with China and its state-owned entities

evolved over time.340 Still, even after 2011, Team Telecom believed it should 

complete review of China Mobile USA’s pending application, as those deliberations 

 

bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=69776&acct=434900&id_form_num=17

&filing_key=-133273. 

335 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL01179, DA 07-3632, 22 FCC Rcd 15266, 15268 (Aug. 16, 2007) (listing the authorization “date of 

action” as August 15, 2007).

336 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. 

337 See TT-DOJ-157–59, at TT-DOJ-158.

338 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). 339 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020).

340 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).
63

would be applicable to the existing authorizations of other Chinese state-owned 

carriers.341

 

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.342 Thus, it was a logical sequence to then assess Chinese 

state-owned carriers with existing authorizations.343 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.344 During that visit, CTA explained that its budget was subject to 

approval by China Telecom Global (“CTG”)345 and that CTG consulted on “technical 

matters that relate to the establishment of network points of presence . . . within 

the United States.”346 In fact, CTA noted that it established “a [new] Dallas [point 

of presence]” after “discussion” with CTG.347 When asked, a current Team Telecom 

official described this as a traditional relationship between a state-owned enterprise 

and its subsidiary.348 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.349 

During the 2017 site visit, Team Telecom also identified concerns related to 

CTA’s storage of U.S. customer data.350 Team Telecom records indicate that, for a 

period of time, CTA’s records were stored in China; they were transferred back to 

 341 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).

342 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).

343 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).

344 See generally DHS00473PSI–76; TT-DOJ-495–99; TT-DOJ-500–06.

345 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.

346 See DHS00473PSI–76, at DHS00473PSI; TT-DOJ-495–99, at TT-DOJ-497.

347 See DHS00473PSI–76, at DHS00473PSI; TT-DOJ-495–99, at TT-DOJ-497.

348 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). 349 Id.

350 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.
64

the United States in 2014.351 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.352 Team Telecom, 

however, noted that CTA passed certain customer data to CTG staff “at overseas 

network operations centers to manage enterprise data services . . .”353 and that CTA 

“store[d] [U.S.] customer data in the [United States] and Hong Kong.”354 Team 

Telecom also flagged that CTA relied on China Telecom’s network operations 

centers located in Beijing and Shanghai.355 CTA informed the Subcommittee that 

customer information has always “remained available in the United States,” with 

CTA being able to access the information.356

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.357 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.358 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.359 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.360

Team Telecom conducted a second site visit in April 2018.361 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.362 Handouts provided during the visit indicate CTA 

 351 TT-DOJ-500–06, at TT-DOJ-502.

352 TT-DOJ-495–99, at TT-DOJ-499.

353 Id.; DHS00473PSI–76, at DHS00475PSI.

354 TT-DOJ-500–06, at TT-DOJ-502.

355 Id.

356 Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) 

(on file with the Subcommittee).

357 TT-DOJ-500–06, at TT-DOJ-502–03.

358 See TT-DOJ-495–99, at TT-DOJ-496. 

359 See Email from the Dep’t of Homeland Sec. to the Subcommittee (Feb. 14, 2020) (on file with the 

Subcommittee).

360 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). 361 See generally DHS00477PSI–99; TT-DOJ-507–20. 

362 DHS00477PSI–99, at DHS00478PSI; TT-DOJ-507–20, at TT-DOJ-508.
65

had points of presence in 11 U.S. cities, as well as eight data centers in four U.S. 

cities.363

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.364 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.365 

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.366 Public reports allege that China 

Telecom and its affiliates have hijacked and rerouted data through China on 

multiple occasions for more than a decade.367 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.368 Customers of 

Telefonica, Qwest, Deutsche Telekom, Level 3 Communications, AT&T, and NTT 

allegedly had their communications hijacked and rerouted through China.369 

According to analysts, “China absorbed 15% of the traffic from U.S. military and 

civilian networks.”370 According to the U.S.-China Economic and Security Review 

Commission,

 363 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-DOJ515.

364 TT-DOJ-180–81.

365 TT-DOJ-189–91.

366 Shavitt & Demchak, supra note 109, at 3. 367 See, e.g., Shavitt & Demchak, supra note 109, at 3. 368 U.S.-CHINA ECON. & SEC. REVIEW COMM’N, REPORT TO CONGRESS 1, 243–44 (2010); Toonk, supra 

note 121. 369 Toonk, supra note 121. 370 Diaz, supra note 121. See also U.S.-CHINA ECONOMIC & SECURITY REVIEW COMMISSION, REPORT 

TO CONGRESS 244 (2010). Cf. Toonk, supra note 121. 
66

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.371 

The Commission also noted that the disruption could allow the carrier to 

“compromise the integrity of supposedly secure encrypted sessions.”372 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.”373 

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.374 The 

routing was allegedly the result of China Telecom advertising false routes for 

approximately nine hours.375 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.376 SK Broadband then 

promoted those false routes to other carriers, including Telia, Tata, GTT, and 

Vodafone.377 Networks around the world that accepted these routes inadvertently 

sent traffic to Verizon APAC through China Telecom.378 Verizon informed the 

Subcommittee that its investigation into the alleged hijacking found no link to 

China Telecom, the Chinese government, or malicious activity.379 Rather, it 

determined that the “hijack” was the result of human error by one of Verizon’s 

peering partners.380 

 371 U.S.-CHINA ECON. & SEC. REVIEW COMM’N, REPORT TO CONGRESS 1, 244 (2010).

372 Id.

373 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.”). 

374 Andree Toonk, Facebook's detour through China and Korea, BGPMON (Mar. 26, 2011), 

https://bgpmon.net/facebooks-detour-through-china-and-korea/.

375 Id.

376 Madory, supra note 121. 377 Madory, supra note 121. 378 Madory, supra note 121. 379 Briefing with Verizon (Sept. 4, 2019). 380 Id. The peering partner was not a Chinese carrier. Id.
67

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.381 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.382 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.383 

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.384 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.”385 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.386

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.387 “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.”388 

 381 Shavitt & Demchak, supra note 109.

382 Shavitt & Demchak, supra note 109, at 5–7. 

383 Madory, supra note 121. In describing the allegations, Madory referred to the incidents as 

“misdirections.” See Madory, supra note 121. 384 See Shavitt & Demchak, supra note 109, at 5–7.

385 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/.

386 Briefing with BGProject (July 1, 2019).

387 Ameet Naik, Internet Vulnerability Takes Down Google, THOUSAND EYES BLOG (Nov. 12, 2018), 

https://blog.thousandeyes.com/internet-vulnerability-takes-down-google/. 388 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 
68

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.389

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.”390 CTA added that routing problems are common and occur 

on all networks, despite the best efforts of responsible operators.391 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.392

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.393 CTA denied the allegations, arguing that it had never engaged 

in hijacking and had no incentive to do so.394 CTA also noted that the public 

allegations contained no evidence of intentional or malicious wrongdoing.395 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.396 

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.

 

Alleged “Hijacking Internet Traffic” (Nov. 22, 2018), https://www.chinatelecomh.com/en/media/news/p181122.php. 389 Executive Branch Recommendation re CTA, supra note 56, at 49–50.

390 Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (June 2, 2020) 

(on file with the Subcommittee).

391 Id.

392 Id.

393 TT-DOJ-264–69.

394 Id.

395 Id. See also Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee 

(June 2, 2020) (on file with the Subcommittee).

396 TT-DOJ-264–69.
69

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.397 

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.398 Team Telecom’s arguments for 

revocation generally fell into the following categories.399

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.”400 Team Telecom warned that, 

with its facilities-based authorization, CTA does not require further FCC approval 

to expand its network or upgrade its equipment.401 “The potential for [CTA] to 

increase its capabilities . . . heightens the national security and law enforcement 

concerns . . . .”402

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.403 CTA has already 

established relationships with major U.S. carriers, including Verizon, CenturyLink, 

 397 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.

398 Executive Branch Recommendation re CTA, supra note 56, at 1–2.

399 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).

400 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. 

401 Executive Branch Recommendation re CTA, supra note 56, at 11–12.

402 Executive Branch Recommendation re CTA, supra note 56, at 12.

403 Executive Branch Recommendation re CTA, supra note 56, at 11–12.
70

and AT&T.404 These relationships primarily include the provision of network or 

other retail services.405 Verizon maintains an interconnection agreement and 

peering arrangement with CTA, as well as separate agreements with its Chinese 

parent companies.406 Although CenturyLink does not maintain any formal 

partnership or arrangement with CTA, it does have a limited commercial 

relationship with the company.407 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.408 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.409

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 freeof-charge peering arrangement.411 Further, the companies established a joint 

venture—Shanghai Symphony Telecommunications—in 2001.412 While China 

Telecom is the majority stakeholder, AT&T owns a 25 percent stake in the 

venture.413 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 IPbased services throughout China.414 The joint venture is set to expire in 2039.415

Neither Verizon, AT&T, nor CenturyLink maintains any mitigation or other 

agreement focused on network security with CTA or its parent company.416 The 

 404 Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with 

AT&T (Sept. 17, 2019). 405 Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing with 

AT&T (Sept. 17, 2019). 406 Briefing with Verizon (Sept. 4, 2019). 407 Briefing with CenturyLink (Sept. 10, 2019). 408 Id.

409 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.

410 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). 411 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. 412 Id. 413 Id. 414 Teleconference with Gibson, Dunn & Crutcher LLP, counsel to AT&T (Oct. 15, 2019). 415 Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 2020) 

(on file with the Subcommittee). 416 See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing 

with AT&T (Sept. 17, 2019).
71

contractual service agreements with the Chinese state-owned carriers contain 

standard provisions indicating that the parties agree to deliver traffic to the 

intended recipient.417 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.418

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.419 

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.420 Team Telecom also found that CTA’s lack of 

trustworthiness negated the effectiveness of the security agreement and any further

mitigation efforts.421 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.422 

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:

 417 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).

418 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). 419 Executive Branch Recommendation re CTA, supra note 56, at 17.

420 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. 421 Executive Branch Recommendation re CTA, supra note 56, at 53–56. 422 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.
72

423

Due to this ownership, Team Telecom warned that CTA “is vulnerable to 

exploitation, influence, and control by the Chinese government.”424 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.425

In addition to its Chinese government ownership, CTA provides services to 

Chinese government facilities in the United States.426 

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.427 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 

 423 Executive Branch Recommendation re CTA, supra note 56, at 33. 424 Executive Branch Recommendation re CTA, supra note 56, at 34.

425 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). 

426 Letter from Morgan, Lewis & Bockius LLP, counsel to CTA, to the Subcommittee (May 22, 2020) 

(on file with the Subcommittee).

427 Executive Branch Recommendation re CTA, supra note 56, at 41–42.
73

carriers than it would have otherwise.”428 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.429 Team Telecom also highlighted allegations 

that China Telecom hijacked data on a number of occasions dating back to 2010.430

* * * * *

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.431 That order is currently pending; CTA is 

required to submit its response by June 8, 2020.432

C. China Unicom and China Unicom (Americas) Operations Limited

China United Network Communications Group Company Limited (“China 

Unicom”) is considered the seventh largest mobile operator in the world based on 

number of subscribers.433 According to its most recent 20-F filing with the SEC, 

China Unicom served approximately 318 million mobile subscribers worldwide as of 

December 31, 2019 and a reported revenue of nearly $42 billion.434 

China Unicom’s origins date back to 1994, when its predecessor company was 

founded by the Chinese government to compete with China Mobile, China’s 

incumbent wireless provider.435 In 2008, among other restructuring efforts, China 

Unicom’s predecessor company merged with China Network Communications 

 428 Executive Branch Recommendation re CTA, supra note 56, at 41.

429 Executive Branch Recommendation re CTA, supra note 56, at 42–43.

430 Executive Branch Recommendation re CTA, supra note 56, at 44–50. 

431 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. 432 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).

433 The ranking is based on number of subscribers as of January 2019. See Abayomi Jegede, Top 10 

Largest Mobile Networks in the World by Subscribers, THE DAILY RECORDS (Jan. 1, 2019), 

http://www.thedailyrecords.com/2018-2019-2020-2021/world-famous-top-10-list/highest-sellingbrands-products-companies-reviews/best-largest-mobile-networks-world-by-subscribers-telecomcompanies-revenue/12837/. 434 CHINA UNICOM (HONG KONG) LTD. ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SEC.

EXCH. ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2019 (FORM 20-F), COMM. FILE NO. 1-

15028, at 2, 27 (filed Apr. 22, 2020), https://www.chinaunicom.com.hk/en/ir/reports/2019_20f.pdf

[hereinafter CHINA UNICOM FY2019 FORM 20-F].

435 Briefing with China Unicom Americas (Apr. 16, 2020).
74

Group Corporation (“China Netcom”).436 China Unicom was the resulting 

company.437 

China Unicom (Americas) Operations Limited (“CUA”) is China Unicom’s 

American subsidiary and largest international affiliate.438 CUA has operated in the 

United States since 2002, when it was granted its international Section 214 

authorization.439 Team Telecom, however, has never required CUA to enter into a 

security agreement, meaning it has not engaged CUA since its establishment.440 

Yet, CUA shares many characteristics with CTA and China Mobile USA, including 

government ownership, relationship to its parent entity, similar services and 

infrastructure across the United States, and partnerships with major U.S. 

carriers.441 

1. The FCC Approved CUA’s Section 214 Application in Two Weeks

after Team Telecom Raised No Concerns

CUA applied for Section 214 authorization in July 2002 to provide facilitiesbased and resale services between the United States and all permissible 

international points, including China.442 In mid-August 2002, consistent with its 

standard practice, the FCC asked Team Telecom to review the application for any 

 436 CHINA UNICOM FY2019 FORM 20-F, supra note 434, at 21–22. The Chinese government 

established China Netcom in 1999 to serve as the incumbent wireline provider in Northern China. 

However, by 2008, the Chinese government determined that China Netcom was too small to enjoy a 

competitive advantage and merged it with China Unicom. Briefing with China Unicom Americas 

(Apr. 16, 2020). 437 Company Profile, CHINA UNICOM GROUP, https://www.chinaunicomglobal.com/us/company. See 

also Briefing with China Unicom Americas (Apr. 16, 2020). 438 Briefing with China Unicom Americas (Apr. 16, 2020).

439 CUA was initially established under the name China Unicom USA LLC. It converted from an 

LLC to a corporation in 2003. The company’s name was officially changed to CUA following China 

Unicom’s merger with China Netcom. See Briefing with China Unicom Americas (Apr. 16, 2020); 

Letter from Squire Patton Boggs, counsel to CUA, to the Subcommittee (Apr. 29, 2020) (on file with 

the Subcommittee).

440 Briefing with China Unicom Americas (Apr. 16, 2020); Briefing with the Dep’t of Justice (Apr. 3, 

2020); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020); Briefing with the Dep’t of Justice 

(Aug. 1, 2019).

441 In discussions with the Subcommittee, CUA stressed that it also differs significantly from China 

Mobile USA and CTA with respect to shareholding structure, corporate governance, and history of 

compliance with the U.S. government. It further noted that there are many government-owned 

telecommunications carriers operating in the United States with operations and infrastructure 

similar to CUA. See Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 

2020) (on file with the Subcommittee).

442 See Int’l Bureau Selected Applications Listing, File No. ITC-214-20020724-00427, FED. 

COMMC’NS COMM’N, https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/swr031b.hts?q_set=V_SITE_ANTENNA_FREQ.file_numberC/File+

Number/%3D/ITC2142002072400427&prepare=&column=V_SITE_ANTENNA_FREQ.file_numberC/

File+Number (listing a filing date of July 24, 2002). As noted above, at the time of the application, 

the company was named China Unicom USA LLC. See supra note 439.
75

national security or law enforcement risks.443 The FCC’s referral noted that CUA’s 

ultimate parent company was a state-owned enterprise.444 The FCC asked that 

Team Telecom relay any concerns by September 3, 2002 “because [the FCC was]

prepared to take action on the[ ] application[ ].”445

Neither the FCC nor Team Telecom had any record of Team Telecom raising 

concerns about the application. On September 13, 2002, the FCC issued a public 

notice formally accepting CUA’s application for filing.446 Because Team Telecom

raised no concerns about the application, the FCC granted the application two 

weeks later.447

2. Team Telecom Has Never Engaged in Post-Authorization 

Oversight of CUA

Team Telecom never entered into a security agreement with CUA, despite 

CUA having filed pro forma notices with the FCC giving Team Telecom the 

opportunity to request such an agreement. For example, CUA filed notices in 2008 

and 2009 regarding organizational changes associated with the Chinese 

government’s restructuring of the Chinese telecom industry, China Unicom’s 

merger with China Netcom, and changes to the company name.448 More recently, in 

 443 See FCC-PSI-000213–14. 444 See id. 

445 See id.

446 See Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. 

No. TEL-00575S, at 2 (Sept. 13, 2002). 447 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00581, DA No. 02-2500, 17 FCC Rcd 19181, 19182 (Oct. 3, 2002) (listing the “date of action” 

authorizing the application as September 27, 2002 – 14 days after FCC’s acceptance of filing public 

notice). China Netcom (USA) Operations Limited also applied for Section 214 authorization in 2002

to serve as a facilities based carrier. Fed. Commc’ns Comm’n, Public Notice – International 

Applications Accepted for Filing, Rep. No. TEL-00568S, at 2 (Aug. 28, 2002). The FCC referred the 

application to Team Telecom, see FCC-PSI-000227–28, but Team Telecom never raised any concerns 

about the application. The FCC approved the application two weeks after accepting it for filing. See

Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL-00576, 

DA 02-2234, 17 FCC Rcd 16825, 16826 (Sept. 12, 2002) (listing the “date of action” authorizing China 

Netcom’s application as September 11, 2002—14 days after acceptance of filing). As part of a 

government-organized restructuring, effective January 1, 2009, China Netcom, China Netcom USA’s 

parent company, was merged with and into China Unicom. As part of the merger, China Netcom 

USA was merged into CUA, effective August 31, 2009, and China Netcom USA’s Section 214 

authorization was assigned to CUA. See Fed. Commc’ns Comm’n, Public Notice – International 

Authorizations Granted, Rep. No. TEL-01391, DA 09-2218, 24 FCC Rcd 12611, 12613 (Oct. 15, 2009) 

(“Notification filed September 30, 2009 of the pro forma assignment of international section 214 

authorization, ITC-214-20020728-00361, held by China Netcom (USA) Operations Limited (‘China 

Netcom USA’) to China Unicom (Americas) Operations Limited, effective August 31, 2009.”). As a 

result, CUA currently holds two international Section 214 authorizations.

448 See, e.g., Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. 

TEL-01331, DA 08-2650, 23 FCC Rcd 17386, 17387 (Dec. 4, 2008) (File No. ITC-T/C-20081114-00499

& ITC-T/C-20081114-00500 referencing a restructuring of ownership interests as a result of China 
76

2017, CUA filed a pro forma notice of transfer of control, when China Unicom 

Global Limited became the direct owner of CUA following a restructuring of the 

parent companies.449 When questioned by Subcommittee staff, Team Telecom 

officials stated they were not aware of the 2017 filing and could not explain why it 

did not prompt a security review by Team Telecom.450 One Team Telecom official 

noted that the U.S. government’s understanding of the risks posed by Chinese 

state-owned entities evolved over time and that Team Telecom believed the 

appropriate sequencing was to complete review of China Mobile USA’s application 

before assessing Chinese state-owned carriers with existing authorizations.451

Because no security agreement exists between Team Telecom and CUA, 

Team Telecom is not “directly in privity”452 with the company and has no insight 

into its operations.453 CUA representatives confirmed that it has not engaged with 

Team Telecom in the nearly 20 years since obtaining Section 214 authorization.454 

Team Telecom officials acknowledged that, without a security agreement, they have 

no ability to engage CUA.455 One official suggested that Team Telecom could 

 

Unicom’s merger with China Netcom); Fed. Commc’ns Comm’n, Public Notice – International 

Authorizations Granted, Rep. No. TEL-01351, DA 09-677, 24 FCC Rcd 3644, 3647 (Mar. 26, 2009) 

(File No. ITC-T/C-20090204-00082 & ITC-T/C-20090204-00083 referencing restructuring involving 

China Netcom’s merger with China Unicom); Fed. Commc’ns Comm’n, Public Notice – International 

Authorizations Granted, Rep. No. TEL-01391, DA 09-2218, 24 FCC Rcd 12611, 12613 (Oct. 15, 2009) 

(File No. ITC-ASG-20090930-00433 referencing assignment of China Netcom USA’s authorization to 

CUA); Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Report No. TEL01396, DA 09-2406, 24 FCC Rcd 13706, 13708 (Nov. 12, 2009) (File No. ITC-214-20020724-00427 

referencing that “[b]y letter filed September 30, 2009, Applicant notified the Commission that it 

changed its name from China Unicom USA Corporation to China Unicom (Americas) Operations 

Limited (China Unicom Americas), effective August 31, 2009”). Typically, the FCC does not request 

that Team Telecom review these pro forma notices. FCC PROPOSED EXECUTIVE BRANCH REVIEW 

REFORM, supra note 154, at ¶ 47.

449 See China Unicom (Americas) Operations Limited, Notification of Pro Forma Transfer of Control 

of Section 214 Authority, File No. ITC-T/C-20170301-00025, Attach. 1 (filed Mar. 1, 2017), 

https://fcc.report/IBFS/ITC-T-C-20170301-00025 (unofficial website); Fed. Commc’ns Comm’n, Public 

Notice – International Authorizations Granted, Rep. No. TEL-01840, DA 17-297, 32 FCC Rcd 2087, 

2094 (Mar. 30, 2017). The restructuring “did not change the ultimate ownership or control of [China 

Unicom Americas] as the [Chinese] government continues to maintain ownership and control over 

[China Unicom Americas] and will continue to do so.” See China Unicom (Americas) Operations 

Limited, Notification of Pro Forma Transfer of Control of Section 214 Authority, File No. ITC-T/C20170301-00025, Attach. 1 (filed Mar. 1, 2017), https://fcc.report/IBFS/ITC-T-C-20170301-00025

(unofficial website). 450 Briefing with the Dep’t of Justice (Apr. 3, 2020); Briefing with the Dep’t of Homeland Sec. (Feb. 7, 

2020). Officials noted that the FCC does not refer pro forma notices to Team Telecom, see Email 

from the Dep’t of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee); 

yet, it was a similar notice from CTA that led to its 2007 security agreement.

451 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).

452 Briefing with the Dep’t of Justice (Aug. 1, 2019).

453 Id.; Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020).

454 Briefing with China Unicom Americas (Apr. 16, 2020).

455 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020).
77

proactively reach out to CUA and ask questions, but CUA might be unwilling to 

comply.456 CUA representatives informed the Subcommittee that the company 

would engage in discussions with Team Telecom if approached.457 It has also 

recently publicly expressed that it “would be willing to engage in discussions with 

the [FCC] and the other relevant U.S. government agencies regarding . . . an 

agreement that would be acceptable to resolve any national security concerns.”458

3. CUA Shares Characteristics Highlighted by Team Telecom about 

China Mobile USA and CTA

CUA has been providing international telecommunications services pursuant 

to Section 214 authorizations granted nearly 20 years ago with no oversight by 

Team Telecom.459 Nevertheless, CUA and its operations share some similar 

characteristics with China Mobile USA and CTA.460 CUA is ultimately majorityowned by the Chinese government, it provides a range of telecommunications 

services in the United States and can expand those services without further FCC 

approval, and it has established relationships with major U.S. carriers.

CUA is ultimately majority owned by the Chinese government. China Unicom

is a state-owned entity that is ultimately owned by SASAC.461 SASAC currently 

owns approximately 98 percent of China Unicom.462 Over time, China Unicom has 

added additional ownership layers, including holding companies jointly owned by 

 456 Id. 

457 See Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee).

458 In the Matter of China Unicom (Americas) Operations Limited, Response to Order to Show Cause, 

GN Docket No. 20-110, at 15 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-32708&f_number=ITC2142002072800361. 459 CUA stressed to the Subcommittee that, as a U.S. company, it is subject to U.S. corporate laws, 

has a good record of compliance with its FCC regulatory obligations, and is willing to cooperate with 

U.S. law enforcement agencies when asked. See Email from Squire Patton Boggs, counsel to CUA, to 

the Subcommittee (June 3, 2020) (on file with the Subcommittee).

460 As noted above, CUA explained to the Subcommittee that it also differs significantly from China 

Mobile USA and CTA with respect to shareholding structure, corporate governance, and history of 

compliance with the U.S. government. It further noted that there are many government-owned 

telecommunications carriers operating in the United States with operations and infrastructure 

similar to CUA. See Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 

2020) (on file with the Subcommittee).

461 See CHINA UNICOM FY2019 FORM 20-F, supra note 434, at 72 (indicating that the ultimate 

controlling shareholder is Unicom Group, which is controlled by SASAC); Company Profile, CHINA 

UNICOM, https://www.chinaunicom.com.hk/en/about/profile.php; Briefing with China Unicom 

Americas (Apr. 16, 2020); China Unicom (Americas) Operations Limited, Notification of Pro Forma 

Transfer of Control of Section 214 Authority, File No. ITC-T/C-20170301-00025, Attach. 1 (filed Mar. 

1, 2017), https://fcc.report/IBFS/ITC-T-C-20170301-00025 (unofficial website).

462 In the Matter of China Unicom (Americas) Operations Limited, Response to Order to Show Cause, 

GN Docket No. 20-110, at 18 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-32708&f_number=ITC2142002072800361.
78

public shareholders.463 CUA is a wholly-owned subsidiary of China Unicom Global 

Limited, which is wholly-owned by China Unicom (Hong Kong) Limited.464 Through 

multiple intervening holding companies, China Unicom owns approximately 52.1

percent of China Unicom Hong Kong.465 Thus, China Unicom and the Chinese 

government—through intermediary companies—own CUA. The diagram below 

depicts the relevant ownership structure:

466

CUA’s parent company influences CUA’s operations and has access to U.S. 

customer records. China Unicom Global (“CUG”), which is based in Hong Kong,

plays an important role in CUA’s operations. It appoints CUA’s management team, 

sets CUA’s budget, and provides support for technical solutions, among other 

 463 Id. at 32. See also Briefing with China Unicom Americas (Apr. 16, 2020).

464 See generally China Unicom (Americas) Operations Limited, Notification of Pro Forma Transfer of 

Control of Section 214 Authority, File No. ITC-T/C-20170301-00025, Attach. 1 (filed Mar. 1, 2017), 

https://fcc.report/IBFS/ITC-T-C-20170301-00025 (unofficial website).

465 In the Matter of China Unicom (Americas) Operations Limited, Response to Order to Show Cause, 

GN Docket No. 20-110, at 18 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-32708&f_number=ITC2142002072800361. 466 The diagram is based on information from the following: CHINA UNICOM FY2019 FORM 20-F, supra

note 434; Company Profile, CHINA UNICOM, https://www.chinaunicom.com.hk/en/about/profile.php; 

Briefing with China Unicom Americas (Apr. 16, 2020); In the Matter of China Unicom (Americas) 

Operations Limited, Response to Order to Show Cause, GN Docket No. 20-110, at Exhibit 2 (June 1, 

2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-

32708&f_number=ITC2142002072800361.
79

items.467 CUA also consults with its parent company before establishing any point 

of presence in the United States.468

CUG also manages CUA’s U.S. customer records. According to a CUA 

representative, customer records are stored on servers in Hong Kong and 

maintained by CUG.469 CUA and CUG have signed a confidentiality agreement 

that governs access to the records and also establishes procedures to protect 

customer proprietary network information.470 Access to U.S. records is governed by 

this agreement, which includes requiring those seeking access to have a business 

justification; however, CUA representatives suggested that CUG decides what 

constitutes a sufficient justification.471 When questioned about this arrangement, 

CUA representatives explained that it is necessary for CUG to have access to all 

customer records given the nature of the international services provided by CUG’s

subsidiaries.472 The representatives described this treatment as “common among 

international carriers.”473 They also indicated that, for enterprise customers, the 

information shared between affiliates is that which is necessary for provisioning 

and customer service.474 For mobile virtual network operator (“MVNO”) services, 

CUA chooses to use a service platform in Hong Kong because “the subscriber base 

does not warrant a standalone U.S. platform.”475 

CUA also informed the Subcommittee that its parent company monitors 

CUA’s network operations to ensure that the global network is performing 

consistently.476 CUA also leverages CUG’s network operations center, located in 

Hong Kong, for technical support.477 CUA engineers manage CUA’s U.S.-based 

network equipment; however, representatives confirmed that CUG can remotely 

configure CUA’s network equipment.478 

 467 Briefing with China Unicom Americas (Apr. 16, 2020). See also In the Matter of China Unicom 

(Americas) Operations Limited, Response to Order to Show Cause, GN Docket No. 20-110, at 20 

(June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-

32708&f_number=ITC2142002072800361. 468 Briefing with China Unicom Americas (Apr. 16, 2020). 

469 Id. 470 Id. See also Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 

2020) (on file with the Subcommittee). 

471 Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee); Briefing with China Unicom Americas (Apr. 16, 2020). 

472 Briefing with China Unicom Americas (Apr. 16, 2020). 473 Id. 474 Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee).

475 Id.

476 Briefing with China Unicom Americas (Apr. 16, 2020). 

477 Id. 478 Letter from Squire Patton Boggs, counsel to CUA, to the Subcommittee (Apr. 29, 2020) (on file 

with the Subcommittee).
80

CUA provides a range of communications services in the United States with 

its Section 214 authorizations. Like CTA, CUA is an international common carrier 

authorized to provide facilities-based and resale-based services.479 Under its 

Section 214 authorizations, CUA may provide “international basic switched, private 

line, data, television and business services” directly through its own facilities or by 

reselling the services of any other authorized common carrier.480 CUA informed the 

Subcommittee that it primarily resells the services of U.S. carriers, given that it 

does not own transmission infrastructure within the United States.481 

CUA offers “reliable end-to-end global integrated telecommunication services 

and solutions” and “provides personal customers with premium voice and mobility 

services.”482 CUA advertises that it provides a range of services, including global 

connectivity services, global internet access, cloud, video conferencing, and content 

and security services.483 As highlighted by Team Telecom in connection with CTA, 

some of these services are regulated by Section 214 and others are not.484 For 

example, CUA operates as a MVNO, reselling mobile services of major U.S. 

providers to retail customers.485 CUA’s retail customers are primarily Chinese 

speaking individuals visiting or living in the United States.486 CUA offers a “onecard-multiple-number” service that provides customers in the United States with a 

Chinese telephone number so that individuals in China can call the Chinese 

number to reach the U.S. customer without paying international toll charges.487 

U.S. customers in the United States can also use the service to call China using a 

local number.488

 479 See Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00581, DA 02-2500, 17 FCC Rcd 19181, 19182 (Oct. 3, 2002). See also Fed. Commc’ns Comm’n, 

Public Notice – International Authorizations Granted, Rep. No. TEL-00576, DA 02-2234, 17 FCC Rcd 

16825, 16826 (Sept. 12, 2002) (China Netcom USA’s 2002 authorization). China Netcom USA’s 

authorization was subsequently assigned to CUA. See Fed. Commc’ns Comm’n, Public Notice –

International Authorizations Granted, Rep. No. TEL-01391, DA 09-2218, 24 FCC Rcd 12611, 12613 

(Oct. 15, 2009). 480 47 C.F.R. § 63.22(d) (facilities-based international common carrier); 47 C.F.R. § 63.23(c) (resalebased international common carrier).

481 Briefing with China Unicom Americas (Apr. 16, 2020).

482 About—China Unicom Americas, LINKEDIN, https://www.linkedin.com/company/china-unicomamericas. 483 Id.

484 Briefing with China Unicom Americas (Apr. 16, 2020); Executive Branch Recommendation re 

CTA, supra note 56, at 7–9 (Apr. 9, 2020).

485 Briefing with China Unicom Americas (Apr. 16, 2020).

486 Id.

487 Id.; Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee).

488 Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee).
81

CUA also provides a range of business data services, including international 

private lines and lease circuits.489 According to CUG’s website, private lines provide 

customers “end to end dedicated and permanent digital point to point connectivity 

between two regions.”490 CUA also provides end-to-end connectivity through 

international Ethernet connections and multi-protocol label switching (“MPLS”)

VPN.491 MPLS VPN is either “built on the IP carrier network” or uses a “series of 

virtual switches leased to” customers to allow them to securely transmit data, such 

as internal data, voices, images and videos, between different locations.492 

CUA’s primary business line is broadband internet services for customers in 

both the United States and China.493 CUG “ha[s] direct connection[s] to major 

[internet service providers] in many countries makes [sic] Internet access faster and 

minimizes distance delays.”494 CUA informed the Subcommittee that it peers with 

26 IP partners for the exchange of internet traffic.495 CUA also provides data 

center, and cloud computing services,496 for which Section 214 authorization is not 

needed.497

To provide these services, CUA has established 11 points of presence—five on 

the East coast, five on the West coast, and one in the Midwest.498 The points of 

presence consist of CUA-owned routers installed in colocation facilities leased from

third-parties.499 China Unicom also advertises that it operates points of presence 

across the world, specifically mentioning the locations in Los Angeles, New York, 

and San Jose, which “provide . . . for customer and partner network 

interconnections.”500 In fact, China Unicom promotes its international MPLS VPN 

 489 Briefing with China Unicom Americas (Apr. 16, 2020). See also Customer Solutions, CHINA 

UNICOM GLOBAL, at 15, 

https://www.chinaunicomglobal.com/group1/M00/00/08/CngaWFo0fQOAfarRAPYieoOnUf8345.pdf. 490 See Customer Solutions, CHINA UNICOM GLOBAL, at 15, 

https://www.chinaunicomglobal.com/group1/M00/00/08/CngaWFo0fQOAfarRAPYieoOnUf8345.pdf. 491 Briefing with China Unicom Americas (Apr. 16, 2020). In its recommendation to revoke CTA’s 

authorizations, Team Telecom described MPLS VPN services as falling into a “regulatory gray area.” 

Executive Branch Recommendation re CTA, supra note 56, at 7–9 (Apr. 9, 2020). 

492 See MPLS VPN, CHINA UNICOM GLOBAL, https://www.chinaunicomglobal.com/hk/mplsvpn. 493 Briefing with China Unicom Americas (Apr. 16, 2020).

494 See Customer Solutions, CHINA UNICOM GLOBAL, at 25, 

https://www.chinaunicomglobal.com/group1/M00/00/08/CngaWFo0fQOAfarRAPYieoOnUf8345.pdf. 495 Briefing with China Unicom Americas (Apr. 16, 2020); Email from Squire Patton Boggs, counsel 

to CUA, to the Subcommittee (June 3, 2020) (on file with the Subcommittee).

496 Briefing with China Unicom Americas (Apr. 16, 2020). CUA resells the services of a data center 

provider. It does not own, control, or manage the data center itself. Id.

497 Executive Branch Recommendation re CTA, supra note 56, at 10. 498 Briefing with China Unicom Americas (Apr. 16, 2020). The points of presence are located in (1) 

Seattle, WA; (2) Hillsboro, OR; (3) Palo Alto, CA; (4) San Jose, CA; (5) Los Angeles, CA; (6) Dallas, 

TX; (7) Reston, VA; (8) Ashburn, VA; (9) Chicago, IL; (10) New York, NY; and (11) Miami, FL. 

499 Id. The routers are used for CUA’s 3 IP data networks. Id.

500 See Customer Solutions, CHINA UNICOM GLOBAL, at 17, 

https://www.chinaunicomglobal.com/group1/M00/00/08/CngaWFo0fQOAfarRAPYieoOnUf8345.pdf.
82

service, noting that through its “international network and comprehensive 

worldwide partnerships, [its] global MPLS VPN service allows customers to gain 

access to extensive international network infrastructure, in-country facilities and 

committed services[,] and support resources.”501

CUA has built relationships with major U.S. carriers. CUA does not own 

transmission networks in the United States.502 It leases transmission circuits from

major U.S. carriers for data capacity between CUA’s points of presence, as well as 

between those points of presence and CUA’s end customers.503 Through these 

connections, CUA ensures that its U.S.-based customers can connect between the 

United States and China, or other international points.504 CUA informed the 

Subcommittee that its U.S. carrier partners operate the same way to reach U.S. 

customers in China. For example, a U.S. carrier with customers in mainland China 

would lease network capacity in China from China Unicom to connect to the U.S.

carrier’s end-customer.505

CUA has established relationships with AT&T, Verizon, and CenturyLink, 

among other U.S. carriers.506 These relationships include the provision of network 

or other retail services.507 Verizon maintains an interconnection agreement and 

peering arrangement with CUA, as well as separate agreements with its Chinese 

parent companies.508 AT&T sells voice and data transport services, which CUA 

uses to provide services to its customers in the United States.509 Although it did not 

specify the particular services sold to CUA, CenturyLink informed the 

Subcommittee that it has limited commercial relationships with all of the Chinese 

carriers, which include selling network services, circuits, or collocation services.510 

 501 See id. at 19. 

502 Briefing with China Unicom Americas (Apr. 16, 2020). 

503 Id.; Email from Squire Patton Boggs, counsel to CUA, to the Subcommittee (June 3, 2020) (on file 

with the Subcommittee). 

504 Briefing with Verizon (Sept. 4, 2019); Briefing with AT&T (Sept. 17, 2019); Briefing with 

CenturyLink (Sept. 10, 2019). 505 Briefing with China Unicom Americas (Apr. 16, 2020); Email from Squire Patton Boggs, counsel 

to CUA, to the Subcommittee (June 3, 2020) (on file with the Subcommittee). 

506 Briefing with Verizon (Sept. 4, 2019); Briefing with AT&T (Sept. 17, 2019); Briefing with 

CenturyLink (Sept. 10, 2019). 507 Briefing with Verizon (Sept. 4, 2019); Briefing with AT&T (Sept. 17, 2019); Briefing with 

CenturyLink (Sept. 10, 2019). 508 Briefing with Verizon (Sept. 4, 2019). 509 Briefing with AT&T (Sept. 17, 2019). As with CTA, AT&T representatives told the Subcommittee 

that the revenue generated by its agreements with CUA 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). 510 Briefing with CenturyLink (Sept. 10, 2019).
83

These services allow CUA to deliver traffic from a CUA point of presence through 

CenturyLink’s network to a CUA customer located in the United States.511 

Neither Verizon, AT&T, nor CenturyLink maintains any mitigation or other 

agreement focused on network security with CUA.512 As noted above, however, the 

U.S. carriers employ security measures that apply regardless of whether an 

interconnection agreement exists.513 

* * * * *

On April 24, 2020, the FCC issued an order requiring CUA to demonstrate 

why its Section 214 authorizations should not be revoked.514 CUA responded to the 

order on June 1, 2020.515 CUA argued that it has complied with FCC regulations 

and provided quality services to its customers for over two decades.516 Further, 

CUA stressed that it is subject to U.S. corporate laws and has “demonstrated 

willingness to cooperate with U.S. law enforcement agencies when asked.”517 CUA 

also argued that the federal government has not highlighted any CUA activity that 

might endanger national security, aside from partial and indirect ownership by the 

Chinese government.518 The latter, according to CUA, is not a sufficient basis for 

revocation.519 Finally, CUA detailed why it is not subject to exploitation, influence, 

or control by the Chinese government.520 The FCC is evaluating the information 

CUA submitted and considering whether to revoke its authorizations.

Similarly, in anticipation of this report being released, CUA submitted a 

letter to the Subcommittee seeking to distinguish CUA from “other, similar 

companies in the market in terms of shareholding structure, corporate governance, 

 511 Id. CenturyLink purchases the same network services from the Chinese carriers in China, to 

allow CenturyLink to deliver traffic to a CenturyLink customer based in China. Id.

512 See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Briefing 

with AT&T (Sept. 17, 2019). Verizon representatives indicated that the company’s contractual 

agreements with CUA are substantially identical to those it maintains with other carriers. 

Teleconference with Verizon (June 2, 2020).

513 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). 514 See In the Matter of China Unicom (Americas) Operations Limited, Order to Show Cause, DA 20-

449 (Apr. 24, 2020), https://docs.fcc.gov/public/attachments/DA-20-449A1.pdf. 515 See In the Matter of China Unicom (Americas) Operations Limited, Response to Order to Show 

Cause, GN Docket No. 20-110 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=-32708&f_number=ITC2142002072800361. 516 Id. at i.

517 Id. at ii.

518 Id. at ii, 2.

519 Id. at 9–10.

520 Id. at 30–32.
84

and other areas.”521 In the letter, CUA reiterated many of the points made in its 

response to the FCC’s show cause order. This includes that CUA has complied with 

U.S. laws, has never been accused of criminal conduct or violation of FCC 

regulations, and is not subject to the exploitation, influence, or control of the 

Chinese government.522 The letter also details CUG’s and China Unicom Hong 

Kong’s independence and describes recent actions taken by CUA to strengthen its 

corporate governance and compliance program.523 

D. ComNet (USA) LLC and Pacific Networks Corp.

ComNet (USA) LLC (“ComNet”) (formerly known as CM Tel (USA) LLC524) is 

a telecommunications service provider that “offer[s] telecom partners and operators 

international termination services, calling card[s] and global SIM card[s].”525 Its 

website also states that it provides “enterprise business phones system, 

[messaging], managed network and IT service, website and WeChat related 

development, etc.”526 ComNet (then CM Tel (USA) LLC) was incorporated in 

Delaware in July 1999.527 At that time, the company was a subsidiary of CM 

Telecom International Limited, a Hong Kong based company.528 In 2009, ComNet 

was acquired by CITIC Telecom International Holdings Limited (“CITIC”),529 which 

describes itself as one of Asia Pacific’s leading telecommunications service providers

of “mobile international roaming, international voice, international SMS, 

international data and international value-added telecommunications services, etc. 

 521 Letter from Squire Patton Boggs to Rob Portman, Chairman, Permanent Subcomm. on 

Investigations, and Tom Carper, Ranking Member, Permanent Subcomm. on Investigations (June 3, 

2020). 

522 Id.

523 Id.

524 CM Tel (USA) LLC changed its name to ComNet in 2009. See ComNet Presentation to the 

Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).

525 About Us, COMNET (USA) LLC, https://www.comnet-telecom.us/about-us. ComNet resells SIM 

cards of mobile wireless companies; it does not provide wireless service over its network. Letter from 

Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the 

Subcommittee). 

526 See ComNet (USA) LLC, LINKEDIN, https://www.linkedin.com/company/comnet-telecom. 527 COMNET (USA) LLC, STATEMENT OF INFORMATION FOR THE FISCAL YEAR ENDED DEC. 31, 2018

(LLC-12) FILED WITH THE SEC’Y OF STATE OF THE STATE OF CALIFORNIA, FILE NO. 19-C86032 (July 29,

2019), https://businesssearch.sos.ca.gov/Document/RetrievePDF?Id=199920510003-26628618; 

ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).

528 See In the Matter of CM Tel (USA) LLC Application for Authority Pursuant to Section 214 of the 

Communications Act of 1934, as Amended, for Global Authority to Operate as an International 

Facilities-Based and Resale Carrier (Sept. 27, 1999), https://fcc.report/IBFS/ITC-214-19990927-

00607 (unofficial website).

529 See CITIC PACIFIC, ANNUAL REPORT 183 (2010), 

https://www.citic.com/uploadfile/2017/0525/20170525102539646.pdf (“In 2009 a listed subsidiary 

group of the Company CITIC Telecom acquired the remaining 51% equity interest in CM Tel (USA) 

LLC (renamed as ComNet (USA) LLC in July 2009 . . . .”). At this time, CM Tel (USA) LLC formally 

changed its name to ComNet (USA) LLC. ComNet Presentation to the Subcommittee (Apr. 13, 2020) 

(on file with the Subcommittee).
85

to global carriers.”530 At the time CITIC acquired ComNet, it also owned Pacific 

Networks Corp. (“Pacific Networks”), another U.S. company.531 In integrating 

ComNet into its corporate organization, CITIC made ComNet a wholly-owned 

subsidiary of Pacific Networks.532 

The integration of the companies prompted Team Telecom to enter into a 

security agreement with the companies in March 2009. Yet, like CTA, Team 

Telecom has exercised minimal oversight of the companies and their operations in 

the United States—relying on intermittent email communication and completing 

only two site visits in more than ten years. 

1. ComNet’s Initial Section 214 Authorization Did Not Require Team 

Telecom’s Review

ComNet (then CM Tel (USA) LLC) applied for international Section 214 

authorization in 1999 to provide global international facilities-based and resale 

services between the United States and all international points.533 ComNet 

certified that it had no affiliation with any foreign or U.S. facilities-based carrier.534 

The FCC did not refer the application to Team Telecom. The application was 

accepted for filing on October 13, 1999535 and granted on October 27, 1999.536

 530 Corporate Profile, CITIC TELECOM INTERNATIONAL, https://www.citictel.com/about-us/corporateprofile/.

531 See CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 

Authority, File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), 

https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website); CM Tel (USA) LLC, Application 

for Transfer of Control of International Section 214 Authority, File No. ITC-T/C-20080913-00428, 

Supplement (filed Sept. 25, 2008), https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial 

website) (stating “CITIC 1616 [Holdings Limited] will acquire CM Tel (USA) LLC through CITIC 

1616’s indirectly wholly owned subsidiary, Pacific Networks Corp.”). 

532 See CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 

Authority, File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), 

https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website).

533 See In the Matter of CM Tel (USA) LLC Application for Authority Pursuant to Section 214 of the 

Communications Act of 1934, as Amended, for Global Authority to Operate as an International 

Facilities-Based and Resale Carrier (Sept. 27, 1999), https://fcc.report/IBFS/ITC-214-19990927-

00607 (unofficial website).

534 See id. at 5.

535 Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for Filing, Rep. No. 

TEL-00144S, at 2 (Oct. 13, 1999).

536 Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL00151, DA No. 99-2328, 14 FCC Rcd 17862, 17864 (Oct. 28, 1999) (listing the “date of action” 

authorizing the application as October 27, 1999). 
86

2. Pacific Networks’ Initial Section 214 Authorization Prompted 

Team Telecom Review and Resulted in a Security Agreement

Pacific Networks applied for international Section 214 authorization in 2007

to provide international resale services between the United States and permissible 

international points, including China, solely by reselling unaffiliated U.S. facilitiesbased carriers’ international switched services.537 Although not majority owned, 

Pacific Networks disclosed that it was affiliated with the Chinese government, 

which held a 14 percent indirect ownership (29 percent attributable interest) in 

Pacific Networks through numerous intervening foreign organized holding 

companies.538 The FCC referred the application to Team Telecom on September 14, 

2007.539 

Unlike the initial CTA and CUA applications, Team Telecom requested that 

Pacific Networks’ application be removed from streamlining.540 It engaged Pacific 

Networks to better understand the company’s existing and anticipated activities, 

employees, and infrastructure.541 Pacific Networks informed Team Telecom that it 

was not providing services to customers within the United States at the time it 

applied for Section 214 authorization.542 However, Pacific Networks anticipated 

providing “international resold voice and data service for U.S. customers,” including 

voice and SMS services, resale of leased circuit services, and internet exchange 

services.543 Pacific Networks further explained that it planned to establish three 

points of presence within the United States—two in California and one in New 

York—and to interconnect with Qwest to relay calls to other carriers.544 Pacific 

Networks indicated that it would not directly provide access to the public switched 

telephone network, but rather make such connections available through other local 

carriers, including AT&T and Qwest.545 In addition to its written responses, Pacific 

Networks provided copies of its standing operating procedures for its network 

operations center, interface control documents, SMS service description, list of 

equipment, and point of presence configurations.546

Nearly a year after the FCC referred the application, in September 2008, 

Team Telecom alerted the FCC that it had completed its review and had no 

 537 See Pacific Networks Corp., International Section 214 Application File No. ITC-214-20070907-

00368, https://fcc.report/IBFS/ITC-214-20070907-00368/590946 (unofficial website). See also

DHS00460PSI.

538 Pacific Networks Corp., International Section 214 Application File No. ITC-214-20070907-00368, 

at Attach. 1, https://fcc.report/IBFS/ITC-214-20070907-00368/590946 (unofficial website). 539 FCC-PSI-000412–13.

540 FCC-PSI-000415.

541 Cf. TT-DOJ-045–60.

542 See id. at TT-DOJ-045.

543 See id. 

544 Id. at TT-DOJ-056.

545 Id. at TT-DOJ-056–57.

546 See generally TT-DOJ-061–101.
87

objection to the FCC approving the application, provided that the FCC condition its 

approval on Pacific Networks’ agreement to abide by the commitments and 

undertakings it made to DOJ, and DHS.547 Those commitments and undertakings

were outlined in a September 2, 2008 letter from Pacific Networks to Team 

Telecom, which included some of the same commitments contained in CTA’s 2007 

security agreement.548 For example, among other items, Pacific Networks 

committed to (1) ensuring that U.S. records were made available in response to 

lawful U.S. process; (2) ensuring that U.S. records were 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 a point 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 DOJ and DHS of any 

material changes in any of the facts in the security agreement, including any 

increase or decrease in foreign government control.549 The FCC granted Pacific 

Networks’ application effective September 3, 2008, conditioned on Pacific Networks 

abiding by its commitments to Team Telecom.550

3. ComNet’s Integration with Pacific Networks Prompted Further 

Team Telecom Scrutiny and Resulted in a Security Agreement

As noted above, CITIC acquired ComNet and made ComNet a wholly-owned 

subsidiary of Pacific Networks.551 In connection with this organizational change, 

ComNet sought FCC approval to transfer control of a portion of its 1999 Section 214 

authorization to Pacific Networks—specifically, with respect to the U.S.-China and 

U.S.-Hong Kong routes, the authority to provide switched services through the 

resale of unaffiliated U.S. facilities-based carriers’ international switched 

 547 In the Matter of Pacific Networks Corp. Application for Authority to Provide Switched Resale 

Service Between the United States and Permissible Int'l Points (File No. ITC-214-20070907-00368) –

Petition to Adopt Conditions to Authorizations and Licenses (filed Sept. 3, 2008), 

https://fcc.report/IBFS/ITC-214-20070907-00368/661672 (unofficial website). 548 Letter from Yuen Kee Tong, Chairman, Pacific Networks Corp., to Stewart Baker, Assistant Sec’y 

for Policy, Dep’t of Homeland Sec., & Patrick Rowan, Acting Assistant Att’y Gen. for Nat’l Sec., Dep’t 

of Justice (Sept. 2, 2008). 549 Id.

550 Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL01304, DA No. 08-2037, 23 FCC Rcd 13265, 13266 (Sept. 4, 2008) (listing the “date of action” 

authorizing the application as September 3, 2008).

551 CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 Authority, 

File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), https://fcc.report/IBFS/ITC-T-C20080913-00428 (unofficial website).
88

services.552 The FCC referred ComNet’s transfer of control application to Team 

Telecom for review.553

In December 2008, Pacific Networks filed a notice of surrender of its 

September 2008 Section 214 authorization with the FCC.554 Pacific Networks 

claimed the surrender was the result of “necessary financial circumstances” leading 

Pacific Networks’ indirect parent company to undergo “a transfer of control that 

cannot be delayed pending Commission approval.”555 The relevant transfer of 

control involved a consolidation of some CITIC holding companies, resulting in the 

Chinese government acquiring a greater interest in CITIC, and by extension Pacific 

Networks and ComNet.556 

In January 2009, Pacific Networks applied for a new international Section 

214 authorization.557 This time, Pacific Networks sought authority to provide resale 

services to all international routes.558 It subsequently clarified with the FCC that it 

sought authority to provide resale service on all U.S. routes except to China and 

Hong Kong; with respect to those two locations, the company would be authorized to 

 552 Id.; Letter from Joshua T. Guyan to Fed. Commc’ns Comm’n Int’l Bureau (Apr. 22, 2009). Resale 

could be done directly or indirectly through the resale of another U.S. resale carrier’s international 

switched services. 

553 FCC-PSI-000154–55. At the time the transfer request was sent to Team Telecom, the Chinese 

Government held a 14 percent indirect ownership (29 percent attributable interest) in ComNet 

through various intervening companies, and therefore, ComNet was considered “affiliated with 

Chinese carriers owned or controlled by the Chinese Government.” See id. The Chinese government 

increased its indirect holdings in CITIC in January 2009, as described more below.

554 See Letter from Joshua T. Guyan to Fed. Commc’ns Comm’n Int’l Bureau (Dec. 23, 2008). 555 See id. Prior to surrendering the authorization, Pacific Networks filed for special temporary 

authority to “transfer control of Pacific Networks Corporation from CITIC Pacific Limited to CITIC 

Group pending Commission action on an underling transfer of control application.” See FCC-PSI000510–26. Pacific Networks indicated that the transfer of control was necessary to strengthen its 

liquidity due to certain realized losses and was unrelated to telecommunications services. See FCCPSI-000510–26. It appears that the FCC did not rule on the special temporary authority request 

prior to Pacific Networks surrendering its authorization. The FCC issued a public notice of the 

surrender on January 2, 2009. Fed. Commc’ns Comm’n, Public Notice – International Authorizations 

Granted, Rep. No. TEL-01335, DA 09-2, 24 FCC Rcd 16, 19–20 (Jan. 2, 2009) (listing the effective 

date of the surrender as Dec. 23, 2008). 

556 Compare Pacific Networks Corp., International Section 214 Application File No. ITC-214-

20070907-00368, Attach. 1, https://fcc.report/IBFS/ITC-214-20070907-00368 (unofficial website) 

(referencing the Chinese Government’s 14 percent indirect ownership (29 percent attributable 

interest)) with Pacific Networks Corp., International Section 214 Application File No. ITC-214-

20090105-00006, Attach. 1, https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=76226&acct=575631&id_form_num=2&

filing_key=-158718 (referencing the Chinese government’s 57.6 percent attributable interest).

557 See Pacific Networks Corp., International Section 214 Application File No. ITC-214-20090105-

00006, https://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=76226&acct=575631&id_form_num=2&

filing_key=-158718; Fed. Commc’ns Comm’n, Public Notice – International Applications Accepted for 

Filing, Rep. No. TEL-01338S, at 2 (Jan. 16, 2009).

558 Id.
89

provide switched services, either directly or indirectly through the resale of another 

U.S. resale carrier’s international switched services.559 The FCC referred Pacific 

Networks’ application to Team Telecom for review.560

Team Telecom engaged both ComNet and Pacific Networks on perceived 

national security risks associated with their applications.561 Team Telecom’s 

questions focused on the companies’ integration, as well as their creation of 

operating and security procedures to protect against unauthorized access to, or 

disclosure of, U.S. records.562 Team Telecom also sought to ensure the companies 

had identified a law enforcement point of contact.563

Ultimately, Team Telecom determined that the risks it identified could be 

mitigated through a security agreement, signed jointly by ComNet and Pacific 

Networks.564 The companies, along with DHS and DOJ, executed the agreement on 

March 3, 2009.565 The agreement included many of the same general provisions as 

other security agreements, as well as certain new requirements. This included, 

among others (1) making U.S. records available within the United States in

response to lawful U.S process; (2) providing DHS and DOJ with descriptions of the

companies’ physical and logical technical security architecture, security policies and 

standards, and information technology governance controls; (3) ensuring that U.S. 

records are not made subject to mandatory destruction under any foreign laws; (4) 

taking all practicable measures to prevent unauthorized access to, or disclosure of 

the content of, communications or U.S. records; (5) maintaining at least one point of 

contact within the United States to oversee compliance with law enforcement 

requests; (6) notifying DOJ and DHS of changes to services, ownership, or 

operations; (7) notifying DOJ and DHS of any malicious cybersecurity attacks

detected on systems used to provide services within the U.S. domestic 

 559 See Letter from Joshua T. Guyan to Fed. Commc’ns Comm’n Int’l Bureau (Apr. 22, 2009). 560 FCC-PSI-000478–79.

561 Cf. DHS00460PSI (noting that the security agreement signed with ComNet in 2009 took into 

account (1) ComNet’s transfer of control application and (2) Pacific Networks’ new Section 214 

application). 

562 See TT-DOJ-120–22.

563 See id. 

564 In the Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific 

Networks Corp. (File No. ITC-214-20090105-00006) – Petition to Adopt Conditions to Authorizations 

and Licenses (Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial 

website); Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel 

(USA) LLC to Stephen Heifetz, Deputy Assistant Sec’y for Policy Dev., Dep’t of Homeland Sec. & 

Matthew Olsen, Acting Assistant Att’y Gen., Nat’l Sec. Div., Dep’t of Justice (Mar. 3, 2009). 565 Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) 

LLC to Stephen Heifetz, Deputy Assistant Sec’y for Policy Dev., Dep’t of Homeland Sec. & Matthew

Olsen, Acting Assistant Att’y Gen., Nat’l Sec. Div., Dep’t of Justice (Mar. 3, 2009). See also In the 

Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific Networks Corp. 

(File No. ITC-214-20090105-00006) – Petition to Adopt Conditions to Authorizations and Licenses 

(Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial website). 
90

communications infrastructure; and (8) agreeing to allow DOJ and DHS to visit any 

domestic facility within 48 hours’ notice.566

On March 30, 2009, Team Telecom informed the FCC that it had no objection 

to the FCC approving the applications, provided that the FCC condition approval on 

ComNet and Pacific Networks abiding by the commitments and undertakings listed 

in the March 3, 2009 agreement.567 The FCC granted the authorizations in April 

2009.568 

4. Despite a Security Agreement, Team Telecom Conducted Limited 

Post-Authorization Monitoring

Team Telecom’s oversight of ComNet in the 11 years since executing the 

security agreement has been minimal.569 Neither DOJ nor DHS were able to locate 

any communications demonstrating Team Telecom’s engagement of ComNet prior 

to 2012. In 2009 and 2010, Team Telecom’s monitoring consisted of receiving 

unprompted written updates from ComNet.570 For example, in November 2009, 

ComNet notified Team Telecom about changes in CITIC’s board of directors.571 In 

2010, ComNet alerted Team Telecom as to its name change from CM Tel to ComNet 

and also provided Team Telecom with a new law enforcement point of contact.572 

Neither DOJ nor DHS were able to locate any communications with ComNet in 

2011.

 566 See generally Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM 

Tel (USA) LLC to Stephen Heifetz, Deputy Assistant Sec’y for Policy Dev., Dep’t of Homeland Sec. & 

Matthew Olsen, Acting Assistant Att’y Gen., Nat’l Sec. Div., Dep’t of Justice (Mar. 3, 2009). 567 In the Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific 

Networks Corp. (File No. ITC-214-20090105-00006) – Petition to Adopt Conditions to Authorizations 

and Licenses (Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial 

website). 568 Fed. Commc’ns Comm’n, Public Notice – International Authorizations Granted, Rep. No. TEL01357, DA 09-1030, 24 FCC Rcd 5376, 5379 (May 7, 2009) (listing the “date of action” authorizing the 

transfer as April 24, 2009); Fed. Commc’ns Comm’n, Public Notice – International Authorizations 

Granted, Rep. No. TEL-01353, DA 09-799, 24 FCC Rcd 4155, 4156 (Apr. 9, 2009) (listing the “date of 

action” authorizing the application as April 8, 2009) (corrected Fed. Commc’ns Comm’n, Public 

Notice – International Authorizations Granted, Rep. No. TEL-01355, DA 09-898, 24 FCC Rcd 6379, 

6384 (Apr. 23, 2009)).

569 In discussions with the Subcommittee and its response to the FCC’s Show Cause Order, ComNet 

stressed that it has regularly updated Team Telecom on its operations, provided a substantial 

amount of information to the agencies, and always responded to promptly to requests for 

information. See Briefing with ComNet (Apr. 13, 2020); Letter from Lerman Senter PLLC, counsel 

to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee); In the Matter of 

Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 

20-111, at 7–9, Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199. 570 See, e.g., TT-DOJ-309–18; DHS00133PSI–44.

571 TT-DOJ-309–17.

572 TT-DOJ-318.
91

In 2012, Team Telecom proactively engaged ComNet. After ComNet alerted 

Team Telecom about a corporate restructuring of its parent company,573 a DHS 

official sent ComNet written inquiries and deliverable requests.574 The requests 

sought information related to ComNet’s (1) technical architecture; (2) security 

policies and standards; (3) governance controls for its U.S. facility; (4) law 

enforcement point of contact; (5) operational and IT auditing; and (6) other 

confirmations relating to the requirements outlined in the 2009 security 

agreement.575 ComNet provided this information.576 Officials informed the 

Subcommittee that Team Telecom determined no further action was required, as 

nothing ComNet provided suggested non-compliance with the terms of the security 

agreement.577 In 2013, Team Telecom again asked for a “brief, up-to-date company 

overview.”578

For approximately five years after signing the security agreement with 

ComNet, Team Telecom relied on these written representations as to ComNet’s 

compliance with the 2009 security agreement. Although one official explained that 

Team Telecom generally waited to visit the offices of Chinese carriers with existing 

Section 214 authorizations during consideration of China Mobile USA’s 

application,579 Team Telecom conducted a site visit to ComNet’s offices in February 

2014.580 A memo summarizing the 2014 visit suggests that the meeting may have 

been prompted by CITIC’s application for Section 214 authority.581 That application 

was referred to Team Telecom for review, and “in light of the pre-existing 

agreement with [Pacific Networks] and ComNet, [Team Telecom] determined a visit 

to . . . ComNet’s domestic facility to be in order.”582 

Team Telecom met with representatives from ComNet and CITIC to discuss 

ComNet’s corporate structure, telecommunications infrastructure, security policies 

and procedures, and law enforcement processes.583 ComNet generally noted that no

 573 DHS00159PSI–60; DHS00176PSI–77.

574 Cf. DHS00178PSI–81 (referencing a July 23, 2012 email from Team Telecom requesting 

particular deliverables) (attachments omitted).

575 Id.

576 DHS00178PSI–311.

577 Email from the Dep’t of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the 

Subcommittee).

578 See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show 

Cause, GN Docket No. 20-111, at Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199

(Letter from Bruce Olcott, Counsel to ComNet & Pacific Networks, to Hunter Deeley, Foreign 

Investment Review Staff, Nat’l Sec. Div., Dep’t of Justice (Oct. 10, 2013)).

579 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020).

580 DHS00460PSI–465. Although not a party to the 2009 security agreement, a representative from 

the Department of Defense’s Chief Information Office also attended the site visit. See id. at 

DHS00460PSI. 581 Id. at DHS00461PSI.

582 Id.

583 See generally DHS00460PSI–65.
92

ownership changes had occurred since it executed the 2009 security agreement.584 

ComNet represented during the meeting that the Chinese government had

“passive” involvement in the company’s day-to-day operations, providing no input 

into operational decision-making.585 In terms of law enforcement processes, 

ComNet confirmed its ability to implement call monitoring within one hour of a 

lawful requests.586 The call monitoring included determining telephone numbers of 

call parties and monitoring specific calling card accounts.587 

Ultimately, Team Telecom made no findings or recommendations specific to 

ComNet. The memo noted that Team Telecom should

reassess [its] collective strategy in dealing with foreign state-owned 

companies . . . that provide telecommunications services in the United 

States. Further recommendations regarding [ComNet’s] license are 

pending the completion of [Team Telecom’s] ongoing comprehensive 

review of foreign state-owned companies holding telecommunications 

licenses in coordination with the FCC.588

According to one official, the recommendation was a reference to Team Telecom’s 

review of China Mobile USA’s application and reflected Team Telecom’s evolving 

understanding regarding foreign state-owned companies, particularly Chinese 

companies.589

Between March 2014 and late 2017, Team Telecom officials provided the 

Subcommittee with one communication with ComNet—a July 2015 letter ComNet 

submitted in response to a Team Telecom request for an update on any operational 

changes since the February 2014 site visit.590 In September 2017, Team Telecom 

contacted ComNet’s external counsel, who confirmed “ComNet and Pacific 

Networks . . . remain in operation.”591 A month later, Team Telecom requested 

 584 Id. at DHS00460PSI–61.

585 Id. at DHS00462PSI. ComNet informed the Subcommittee that it has “consistently” informed 

Team Telecom and the FCC that the Chinese government has indirect ownership in the companies, 

has not been involved in operational decision-making, and has not been involved “passive or 

otherwise” in ComNet’s or Pacific Networks’ day-to-day operations. Letter from Lerman Senter 

PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee). 

586 DHS00460PSI–465, at DHS00464PSI.

587 DHS00460PSI–465. 588 Id. at DHS00460PSI.

589 Briefing with the Dep’t of Homeland Sec. (Feb. 7, 2020). 590 DHS00321PSI–22. In its recent response to the FCC’s Show Cause Order, ComNet included a 

September 2014 email in which it provided Team Telecom with copies of the company’s corporate 

charts. See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to 

Show Cause, GN Docket No. 20-111, at Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199

(Email from Tammie Tam, Legal Consultant, CITIC Telecom Int’l Holdings Ltd. to Dep’t of 

Homeland Sec. & Dep’t of Justice (Sept. 3, 2014) (other senders and recipients redacted)).

591 TT-DOJ-392–99, at TT-DOJ-398.
93

copies of ComNet’s physical and logical technical security architecture, security 

policies, and IT governance controls, noting that Team Telecom was in the process 

of “updat[ing] [its] files.”592 After receiving the requested documents, a Team 

Telecom official asked to visit ComNet’s offices sometime in “early-mid March . . . 

[to] meet with a few people to discuss on-going compliance with the [security 

agreement].”593 

The requested site visit occurred on March 22, 2018.594 According to one 

Team Telecom member’s memo summarizing the site visit, the purpose was to, in 

part, “evaluate the efficacy of a [security agreement] governing the operations of a 

foreign state-owned company providing telecommunications services within the 

United States.”595 The meeting lasted two and a half hours and again focused on 

ComNet’s “corporate structure, ownership and management, products and services, 

telecommunications infrastructure, security policies and procedures, procedures 

regarding the handling of legal process, and compliance with CALEA.”596 Among 

the updates provided to Team Telecom were ComNet’s recent office change—from 

Los Angeles to West Covina, California—and its introduction of Voice over Internet 

Protocol (“VoIP”) and basic enterprise IT services.597

Team Telecom concluded that ComNet was “responsive to [all] comments and 

questions.”598 However, Team Telecom noted: 

New services (VoIP, IT, etc.) were not contemplated when the USG 

parties negotiated the [security agreement] in 2009. Accordingly, the 

reporting requirements under the [security agreement] do little to 

address any new risks that may arise as ComNet expands its service 

offerings into new markets and grows its customer base.599

The Team Telecom officials attending the site visit recommended that:

USG parties should . . . continue to monitor compliance under the [2009 

security agreement] as ComNet expands its new services. This 

situational awareness will help inform the USG Parties [sic] on-going 

discussions concerning the [agreement’s] ability to address potential 

 592 Id. at TT-DOJ-397.

593 Id. at TT-DOJ-396.

594 See TT-DOJ-400–03; TT-DOJ-521–23.

595 TT-DOJ-521–23, at TT-DOJ-521.

596 Id. See also DHS00466PSI–71.

597 TT-DOJ-521–23, at TT-DOJ-522; DHS00466PSI–71, at DHS00467PSI. ComNet reported that the 

revenue associated with the recently introduced services was “insignificant.” At the time of the 

meeting, ComNet reported having only one VoIP customer. See TT-DOJ-521–23, at TT-DOJ-522; 

DHS00466PSI–71, at DHS00467PSI.

598 TT-DOJ-521–23, at TT-DOJ-522. 599 Id.
94

risks to national security and law enforcement equities arising from 

ComNet’s operations in the United States and similarly situated 

telecommunications companies operating pursuant to similar 

mitigation agreements.600 

In July 2018, Team Telecom provided a “feedback letter” to ComNet, 

summarizing the March 2018 site visit.601 Team Telecom officials and ComNet 

representatives informed the Subcommittee that Team Telecom has had no 

substantive engagement with ComNet since the site visit.602

5. ComNet Shares Characteristics Team Telecom Highlighted 

regarding China Mobile USA and CTA

ComNet has been providing international telecommunications services 

pursuant to Section 214 authorizations granted over a decade ago with little

oversight by the U.S. government. As described above, Team Telecom highlighted 

concerns about China Mobile USA’s proposed and CTA’s actual operations in the 

United States. ComNet shares similar characteristics as the other Chinese 

carriers.603 It is ultimately majority-owned by the Chinese government; its parent 

company reviews its budget and locations in the United States; it provides a range 

of telecommunications services in the United States; and it has built relationships 

with U.S. carriers. Without proper oversight by Team Telecom, these risks have 

gone unmitigated. 

ComNet is ultimately majority-owned by the Chinese government. As noted 

above, ComNet became a wholly-owned subsidiary of Pacific Networks as part of its 

acquisition by CITIC. CITIC is majority-owned by CITIC Group Corporation

(“CITIC Group”),604 “a wholly state-owned company in the [People’s Republic of 

China].”605 According to CITIC’s website, CITIC Group was “established in 

1979 . . . with the support of late Chinese leader Deng Xiaoping” and “since its 

inception, CITIC Group has been a pilot for national economic reform and an 

 600 Id. at TT-DOJ-522–23.

601 TT-DOJ-481–83.

602 See Email from the Dep’t of Homeland Sec. to the Subcommittee (Feb. 14, 2020) (on file with the 

Subcommittee); Briefing with ComNet (Apr. 13, 2020). 603 In discussions with the Subcommittee and in its response to the FCC’s Order to Show Cause, 

ComNet distinguished its operations from China Mobile USA and CTA. According to ComNet, the 

companies differ in terms of company size, scope of business operations, corporate ownership 

structure, history of operations in the United States, and employment of U.S. citizens. See Letter 

from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the 

Subcommittee); In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order 

to Show Cause, GN Docket No. 20-111, at 19–26 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199. 604 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee). 

605 CITIC TELECOM INTERNATIONAL, ANNUAL REPORT 248 (2019), https://www.citictel.com/wpcontent/uploads/2020/03/EW01883_AR_20200327.pdf.
95

important window on China’s opening to the outside world.”606 The diagram below 

depicts the relevant ownership structure:

607

CITIC reviews ComNet’s budget and U.S. locations and may be able to access 

U.S. customer records. During the 2014 site visit, ComNet representatives told 

Team Telecom officials that the Chinese government’s ownership in ComNet was 

passive and that it provided no input into the company’s operational decisions.608 

ComNet representatives similarly informed the Subcommittee that its daily 

operations are managed by its local management team in California.609 The 

representatives, however, acknowledged that CITIC reviews the company’s budget 

and U.S. locations.610 CITIC also guides ComNet on its information security 

 606 Major Shareholder – About CITIC Group, CITIC TELECOM INTERNATIONAL, 

https://www.citictel.com/about-us/major-shareholder/. 607 The diagram is derived from information ComNet provided to the Subcommittee, as well as 

publicly available information. See Major Shareholder – About CITIC Group, CITIC TELECOM 

INTERNATIONAL, https://www.citictel.com/about-us/major-shareholder/; CITIC TELECOM 

INTERNATIONAL, ANNUAL REPORT 99, 250 (2019), https://www.citictel.com/wpcontent/uploads/2020/03/EW01883_AR_20200327.pdf; ComNet Presentation to the Subcommittee 

(Apr. 13, 2020) (on file with the Subcommittee); In the Matter of Pacific Networks Corp. and ComNet 

(USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at Exhibit A (June 1, 2020), 

http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199. 608 DHS00460PSI–65, at DHS00462PSI.

609 Briefing with ComNet (Apr. 13, 2020).

610 Id.
96

policies.611 ComNet maintains a company-specific policy, but that policy was 

drafted based on CITIC’s guidance.612

 

ComNet leverages CITIC’s network operations center (“NOC”), located in 

Hong Kong, for “first tier monitoring” against cyber incidents or disruptions.613 “All 

system alarms and network management data are sent to the NOC . . . .”614 

Further, CITIC’s NOC maintains records of all alarms and access logs generated by 

ComNet’s systems.615 

ComNet representatives informed the Subcommittee that its data center and 

all backed-up information are located in the United States and that it controls 

access to all U.S. records and data systems.616 However, records of Team Telecom’s 

site visits indicate that ComNet used CITIC’s data center in Hong Kong as a backup 

and that ComNet’s wholesale billing records “are maintained in Hong Kong.”617

Team Telecom’s records from the 2018 site visit also note that ComNet’s VoIP 

customer and billing records are accessible to Hong Kong personnel.618 ComNet 

informed the Subcommittee, by contrast, that its parent companies do not have 

direct access to these records and that they would need to request access from 

ComNet and follow ComNet’s local procedures.619

ComNet provides various communications services in the United States with 

its Section 214 authorizations. ComNet provides international telecommunication 

services, consisting of wholesale direct dial services, wholesale SMS services, retail 

prepaid calling card services, and VoIP services.620 Pacific Networks primarily 

provides international resold data services.621 Together, the companies serve a mix 

of carrier customers, individual end-customers, and enterprise customers in the 

United States.622

 611 Id.

612 Id.

613 Id.

614 DHS00460PSI–65, at DHS00462PSI.

615 Id.

616 Briefing with ComNet (Apr. 13, 2020). 617 DHS00460PSI–65, at DHS00463PSI; DHS00466–71, at DHS00468PSI.

618 DHS00466–71, at DHS00470PSI.

619 See Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on 

file with the Subcommittee).

620 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

DHS00462PSI, DHS00467PSI.

621 DHS00462PSI.

622 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020). 
97

Through its wholesale international direct dial services, ComNet handles 

inbound and outbound voice traffic for U.S. carrier customers.623 International 

voice traffic is routed through ComNet’s global MPLS network.624 Thus, ComNet 

uses a routing approach that allows data to be directed from one node to the next 

based on routing labels.625 Data is aggregated on its voice communications

platform, which is located at ComNet’s point of presence in Los Angeles.626 From 

there, data is transmitted to the end-user through either an internet connection 

provided by Cogent or through a time-division multiplexing (“TDM”) connection

operated by U.S. carriers.627 According to ComNet representatives, customers select 

which TDM vendor ComNet uses to route communications.628 ComNet also 

provides SMS services to U.S. carrier customers. Unlike the voice communications 

platform housed at ComNet’s Los Angeles facility, however, SMS communications 

are aggregated on CITIC’s SMS hub platform in Hong Kong.629 Thus, all 

international SMS communications are routed through CITIC’s servers.630

ComNet’s retail calling cards are targeted towards end-users in the United 

States.631 The calls are routed in a similar manner as international voice calls, but 

customers in the United States must dial local access numbers.632 ComNet obtains 

these numbers from major U.S. carriers.633 

In 2017, ComNet began offering VoIP services to business customers.634 

These services allow office users the functions of an office telephone system.635 

Through VoIP phones provided either by ComNet or by the business itself, users 

 623 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

624 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

625 Multiprotocol Label Switching, TECH TARGET, 

https://searchnetworking.techtarget.com/definition/Multiprotocol-Label-Switching-MPLS. 626 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

627 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020); DHS00466–71, at DHS00468PSI. The TDM connection is a 

physical fiber line that connects two points. Briefing with ComNet (Apr. 13, 2020).

628 Briefing with ComNet (Apr. 13, 2020).

629 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

630 Cf. Briefing with ComNet (Apr. 13, 2020).

631 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

632 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020).

633 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020); Letter from Lerman Senter PLLC, counsel to ComNet, to the 

Subcommittee (June 2, 2020) (on file with the Subcommittee).

634 DHS00466–71, at DHS00468PSI; TT-DOJ-521–23, at TT-DOJ-522.

635 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

DHS00466–71, at DHS00468PSI.
98

can make both domestic and international calls through ComNet’s voice services 

platform.636 According to Team Telecom, incoming VoIP calls are delivered to endcustomers through 7G Network.637 Team Telecom’s records also indicate that 

ComNet provided basic enterprise IT services, such as video conferencing and 

website and software development.638 Team Telecom flagged that these services 

were not contemplated at the time the security agreement was entered into and 

thus, the existing reporting requirements did little to address the associated 

risks.639

Unlike the other carriers discussed above, ComNet has only one point of 

presence in the United States, located in Los Angeles, California.640 Team Telecom 

records describe the Los Angeles facility as “the premier communications hub of the 

Pacific Rim and arguably the single most important point of connectivity in the 

Western United States.”641 ComNet’s servers, equipment, and data center are all 

housed at the Los Angeles facility, including the servers that support its various 

services and a billing server.642 

ComNet has built relationships with major U.S. carriers. Like the other 

Chinese carriers, ComNet does not own transmission networks in the United 

States. It leases network capacity and equipment from major U.S. carriers to 

transport data from the Los Angeles facility to its end customers.643 ComNet has 

established relationships with Verizon and CenturyLink, among other U.S. 

carriers.644 Verizon maintains an interconnection agreement with ComNet and

leases customer premise equipment, Ethernet private lines, general internet access, 

and private IP access.645 Although not providing specifics, CenturyLink indicated 

that it had some limited commercial relationships with ComNet related to providing 

 636 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

DHS00466–71, at DHS00468PSI.

637 DHS00466–71, at DHS00468PSI. 7G Network is a U.S.-based telecommunications company. 

About—7G Network, Inc., LINKEDIN, https://www.linkedin.com/company/7g-network-inc-/about/. 638 DHS00466–71, at DHS00467PSI; TT-DOJ-521–23, at TT-DOJ-522.

639 TT-DOJ-521–23, at TT-DOJ-522.

640 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee). 641 DHS00460PSI–65, at DHS00463PSI; DHS00466–71, at DHS00468PSI.

642 ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); 

Briefing with ComNet (Apr. 13, 2020). 643 See generally DHS00460PSI–65; TT-DOJ-521–23.

644 Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019). As noted 

above, in addition to voice and data termination services, ComNet obtains local access numbers 

needed for its retail calling card services from local carriers. Briefing with ComNet (Apr. 13, 2020); 

Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file 

with the Subcommittee). Unlike its relationships with CTA and CUA, AT&T’s relationship with 

ComNet is limited to providing ComNet retail telephone and TV services for its own consumption. 

See Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 

2020) (on file with the Subcommittee). 645 Briefing with Verizon (Sept. 4, 2019). 
99

network services, circuits, or collocation services.646 As with CTA and CUA, neither 

Verizon nor CenturyLink maintains any mitigation or other agreement focused on 

network security with ComNet under their current arrangements.647 The U.S. 

carriers do, however, employ security measures that apply regardless of whether an 

interconnection agreement exists.648

* * * * *

On April 24, 2020, the FCC issued an order requiring ComNet (and Pacific 

Networks) to demonstrate why its Section 214 authorizations should not be 

revoked.649 The companies jointly responded to the order on June 1, 2020.650 The 

companies stressed that they have successful business records and have complied 

fully with FCC regulatory requirements and Team Telecom requests.651 Further, 

the companies stated that they have never been “asked by the Chinese government 

or the Chinese Communist Party to take any action that would ‘jeopardize the 

national security and law enforcement interests of the United States’ or would 

suggest that the Companies are vulnerable ‘to the exploitation, influence, and 

control of the Chinese government.’”652 As with CUA, ComNet and Pacific 

Networks noted that the federal government has not highlighted any activity taken 

by either company that might endanger national security, aside from being 

“ultimately owned by public companies with partial Chinese state ownership.”653 

The companies distinguished their licensing history from that of China Mobile 

USA.654 ComNet and Pacific Networks concluded their response by noting, 

although revocation is not warranted, should additional mitigation be deemed 

necessary, they are open to discussing appropriate conditions with the FCC or Team 

Telecom.655 The FCC is evaluating the information ComNet and Pacific Networks

submitted and considering whether to revoke their authorizations.

 646 Briefing with CenturyLink (Sept. 10, 2019). 647 See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019). According 

to Verizon, its agreements are consistent with those it has with other carriers. Teleconference with 

Verizon (June 2, 2020).

648 See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); 

Teleconference with Verizon (June 2, 2020); Email from CenturyLink to the Subcommittee (June 2, 

2020) (on file with the Subcommittee).

649 See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Order to Show Cause, DA 

20-450 (Apr. 24, 2020), https://docs.fcc.gov/public/attachments/DA-20-450A1.pdf. 650 In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show 

Cause, GN Docket No. 20-111 (June 1, 2020), http://licensing.fcc.gov/cgibin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199. 651 Id. at i, 2, 20. 

652 Id. at i–ii, 2, 19.

653 Id. at 2.

654 Id. at 22–23.

655 Id. at 31–32. 
100

VI. CONCLUSION

It is well understood that the national security environment evolves over 

time. It is this constant evolution that highlights a major flaw with the FCC’s 

Section 214 authorizations: once authorized, a company can operate indefinitely 

without any oversight. Without proper oversight, foreign carriers operating in the 

United States can expose the United States to potential economic, national security, 

and law enforcement risks. The federal government has highlighted the potential 

risks associated with Chinese telecommunications carriers operating in the United 

States. Three particular carriers have been operating in the United States for 

approximately 20 years, without sufficient oversight from the FCC and the 

Executive Branch. Especially when dealing with state-owned telecommunications 

carriers, greater controls are needed, and the Administration and Congress must 

work together to ensure sufficient safeguards and oversight mechanisms are in 

place.