China Unicom, China Telecom in Crosshairs After FCC Denies Certification for China Mobile

The FCC is looking at revoking Communications Act Section 214 certifications of China Unicom and China Telecom, Chairman Ajit Pai said after the commissioners’ meeting Thursday. Commissioners voted 5-0 to deny China Mobile’s long-standing Section 214 application. Commissioners Jessica Rosenworcel and Geoffrey Starks, as expected (see 1905060057), said the FCC is going too little to shore up 5G security.

Pai said he met Wednesday with members of Senate Select Committee on Intelligence as part of an administration briefing on 5G security. “When it comes to our national security, we cannot afford to make risky choices and just hope for the best,” Pai said. “We must have a clear-eyed view of the threats that we face and be prepared to do what is necessary to counter those threats.” Pai declined to provide more information on the investigation into the certification of the other companies.

House Commerce Committee leaders wrote Pai just before the start of the Thursday meeting, urging him to use the newly rechartered Communications Security, Reliability and Interoperability Council to closely examine 5G security. That issue was already the subject of Capitol Hill interest earlier this year and will be the focus of a planned Tuesday Senate Judiciary Committee hearing (see 1905080080). “As our U.S. network operators, from the largest to the smallest, gear up for significant infrastructure buildout for 5G and other advanced technologies, security should be a critical consideration and associated rules and regulations should be as clear as possible,” wrote four House Commerce leaders.

“Although 5G security is apparently not an explicit focus of CSRIC VII, you have the opportunity to expand to additional issues as you so choose,” the House Commerce leaders said. “We believe that policymakers and industry alike would benefit greatly from a thoughtful, careful consideration of these important issues by the FCC and CSRIC.” The lawmakers are Chairman Frank Pallone, D-N.J.; committee ranking member Greg Walden, R-Ore.; House Communications Subcommittee Chairman Mike Doyle, D-Pa.; and subcommittee ranking member Bob Latta, R-Ohio.

Pai responded at the meeting that CSRIC was going to look at 5G security. He welcomed the letter.

Commissioners Comment

Rosenworcel said the China Mobile order doesn’t advance the FCC beyond the status quo. “Please don’t get confused by the performative security associated with this decision,” she said. “This application has been in these halls for more than eight years. It has been on permanent pause.”

Rosenworcel called on the FCC to take a number of steps, including making “cyber hygiene” a priority. “We are going to need routine practices that increase security and reduce exposure to attack,” she said: “The agency must build these policies into its day-to-day work. As the number of devices using radiofrequency expands with the internet of things, the agency should use its equipment authorization process to encourage device manufacturers to build security into new products.”

The FCC has “more work to do” on security, Starks said. “Congress has charged our agency with protecting the national defense and the safety of life and property,” he said. While the agency may share this role with federal partners, the commission “still has the responsibility and expertise to ensure that carriers comprehensively protect the security of our telecommunications networks,” he said. Legacy and new networks are vulnerable to “location tracking, interception, denial of service attacks and account fraud or modification,” he said.

There’s no question the Chinese government owns and controls China Mobile, Carr said. There's “substantial evidence” it surveils “persons within our borders, for government security and spying advantage, as well as for intellectual property and a business edge," he said: “Security threats have evolved over the many years since those companies were granted interconnection rights to U.S. networks in the early 2000s."

Carr called for a proceeding on whether to revoke authorizations for other Chinese providers. China Unicom and China Telecom hold the same Section 214 authorizations that China Mobile sought, he said. Carr told us after the meeting he hadn’t been informed of the broader investigation looking at other providers, already underway.

“As a fierce supporter of promoting competition, permitting foreign ownership and facilitating open markets, I nonetheless find the situation confronting us to be extremely serious, and the action we take today to block China Mobile from accessing the U.S. telecommunications market to be a necessary step, drastic though it may be,” said Commissioner Mike O’Rielly.

China Mobile sought certification in September 2011, and NTIA didn’t file the recommendation to deny it on behalf of Team Telecom (DOD, DOJ and Department of Homeland Security), until July 2018, O’Rielly said. “I understand that these issues are complex, but all applicants deserve timely responses, and this decision, while inevitable, was far from timely.”

The ruling against China Mobile comes as a Chinese delegation arrives in Washington for discussions on the U.S.-China trade dispute.

"Promoting secure communications is a long-standing FCC priority," said an FCC news release. "Today’s action is the result of a careful review by the Commission and close consultation with Executive Branch agencies having expertise in national security and law enforcement." The Chinese companies didn't comment.

Huawei

Federal restrictions on Huawei technology could particularly hurt the company's Tier III wireless provider customers in rural America, Huawei Technologies USA Chief Security Officer Andy Purdy said in an interview for C-SPAN's The Communicators to be televised this weekend. Purdy said U.S. national security concerns about Huawei tech is "a country focus more than a company focus," with geopolitics and the rise of China being key. The FY 2019 National Defense Authorization Act bars U.S. agencies from using “risky” technology produced by the company or fellow Chinese firm ZTE (see 1903070041). Purdy said Defense Authorization Act provisions don't kick in until August but for now the company's revenues are stable.

Huawai is "probably one of the most-examined companies in the world," with evaluations of risk and product testing being done by parties ranging from the Canadian government to AT&T in Mexico, the executive said. He said Huawei hopes to set up a similar such evaluation in the U.S., similar to the risk mitigation programs that Nokia and Ericsson -- both of which have huge operations in China -- operate under.

Purdy repeatedly distanced Huawei from the Chinese government. "We don't speak through the China government and they don't speak for us," he said. Asked about the company supposedly receiving sizable China government subsidies, he said that it's "typical of the type of allegation with no basis in fact."

833 Experiment

Commissioners unanimously approved an 833 toll-free number public notice seeking comment on proposed auction rules.

It would be an experiment in how the auction itself proceeds and with respect to issues of subsequent toll-free auctions or of secondary toll-free markets, Wireline Bureau Chief Kris Monteith said. "We'll look at how it goes," she said. “First-come, first-served may not be the best way to allocate scarce resources" like toll-free numbers, Pai said.

The PN asks about procedures ranging from auction application requirements to bidding procedures (see draft here). The approved version wasn't released Thursday, but the bureau said no significant changes were made.

Pointing to a “robust black market” for toll-free numbers, Rosenworcel said its existence “tells you everything you need to know” about how successful the FCC ban on such a secondary market has been. She said it’s “reasonable” for the agency to look at better routes for managing the scarce resource of toll-free numbers. The results from the 833 experiment should help, she said. Commissioners also approved authorization for Theia Holdings' satellite constellation, though disagreed about the FCC's role in overseeing orbital debris (see 1905090031).

VRS

Members approved revised rules for the video relay service 5-0.

They allow qualified entities to enter video-capable customer support phone numbers in the telecom relay service numbering directory. “This will make it possible for VRS users to make direct point-to-point video calls to customer support call centers and to speak directly with a sign-language-fluent customer support agent, without the need for an interpreter and at no cost to the program,” the FCC said. To guard against waste, fraud and abuse, the rules require validation of each caller’s registration through the TRS directory.

The rules also prohibit providers from offering “non-service-related inducements to encourage consumers to sign up for or use a VRS provider’s service,” the FCC said. “Such inducements could be used to encourage unlawful or unnecessary participation and thus waste money better utilized elsewhere in the program.”

Apple “changed the world” when it offered FaceTime, Pai said. “What’s since become an enjoyable luxury for many of us, being able to see the person you’re talking to on a screen [is] a necessity for individuals who are deaf, hard of hearing, or otherwise speech-disabled,” he said. Commissioners also approved a Further NPRM asking about additional changes to program rules.