Senate investigators concluded the federal government had failed to oversee the operation of Chinese state-run telecom companies inside the United States properly for years, a failure that poses a threat to national security.
The Permanent Subcommittee on Investigations, led by Republican chairman Sen. Rob Portman of Ohio and Democratic ranking member Sen. Tom Carper of Delaware, released a 104-page report on Tuesday titled "Threats to U.S. Networks: Oversight of Chinese Government-Owned Carriers," which details how the federal government “has provided little-to-no oversight of Chinese state-owned telecommunications carriers operating in the United States for nearly twenty years” and how China is targeting U.S. communications the same way it has targeted education, research, and personal data.
The Federal Communications Commission denied Chinese state-owned China Mobile USA’s application to provide international telecommunications services in May 2019, but the Senate subcommittee spent a year reviewing three other Chinese government-owned telecom companies, China Telecom Americas, China Unicom Americas, and ComNet USA, which have all been authorized by the agency since the early 2000s to provide the same sort of domestic and international communications services.
The Senate investigation found the Chinese government “exerts control over China’s domestic telecommunications industry and state-owned carriers” while it “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 report noted that both Team Telecom, an informal group composed of officials from the Justice Department, Homeland Security Department, and the Pentagon, and the FCC “have recognized the national security risks posed by Chinese state-owned carriers” in the U.S. Team Telecom recommended in April that the FCC revoke China Telecom Americas’s authorization to operate in the U.S. and then issued a notice to each Chinese state-owned carrier requiring it to explain why its authorizations should not be terminated.
But the Senate investigators said the FCC and Team Telecom “failed to monitor these three Chinese government-owned carriers.“ The subcommittee’s report documents how Team Telecom had little oversight over China Telecom Americas and ComNet USA until recently, only visiting each of the two carriers twice in more than a decade. The subcommittee also found that Team Telecom has had no oversight of China Unicom Americas since the FCC authorized it in 2002.
"This lack of oversight undermined the safety of American communications and endangered our national security," the subcommittee concluded.
The report did acknowledge that agencies have recently increased their oversight of the Chinese state-owned carriers and that President Trump issued an executive order establishing a formal committee to review the national security risks posed by foreign carriers operating in the U.S. But the report warned that “our country, our privacy, and our information remain at risk.”
Trump's April executive order established the “Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” after years of there being an informal Team Telecom. The order said the “security, integrity, and availability” of U.S. telecom networks was “vital” to U.S. national security.
Attorney General William Barr was named the formal head of Team Telecom, tasked with working with the FCC to ensure foreign foes do not gain undue access to or control over U.S. communications networks.
The Senate subcommittee said “commercial interests" the U.S. might have with China "must be balanced against national security interests.”
“Some foreign governments seek to exploit the openness of America’s telecommunications market to advance their own national interests,” the report said. “One such country is China.”
The Senate report noted the Chinese Communist Party viewed telecommunications as a “strategic” industry and the expansion of Chinese telecoms “raises national security concerns” because 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.”
"This bipartisan report demonstrates that federal agencies have done little to protect the integrity of U.S. telecommunications networks and counter national security threats from China,” Portman said Tuesday. “The Chinese Communist Party uses its state-owned enterprises to further its cyber and economic espionage efforts against the United States, and they’ve been exploiting our telecommunications networks for nearly two decades while the federal government historically put in little effort to stop it."
Carper added the report “reveals how little oversight has been done of Chinese telecommunications carriers that operate here in the United States” and “highlights how we’ve allowed Chinese government-owned companies to gain a foothold in our telecommunications industry while their American competitors face significant barriers to entry in China.”
The Senate report concluded that the FCC should swiftly complete its review of China Telecom Americas, China Unicom Americas, and ComNet. The panel said the commission needed to establish a clear standard and process for revoking a foreign carrier’s existing authorizations. The investigators also said lawmakers should pass laws stating that foreign telecoms be reviewed by the FCC on a regular basis and that strengthen Team Telecom’s power to scrutinize threats.
The subcommittee previously released reports detailing China’s malign influence on U.S. campuses through foreign funding and Confucius Institutes, which spurred the Education Department to launch its own nationwide investigation, and highlighting China’s theft of U.S. scientific research and its cyberattacks against U.S. companies.
The Justice Department backed the FCC’s successful plan late last year to block Chinese telecommunications companies such as Huawei and ZTE from receiving federal money to help build U.S. broadband infrastructure and supported the FCC’s proposal to replace any broadband equipment already in place that uses the Chinese company's equipment.
The U.S. also charged Huawei in a global racketeering scheme earlier this year, and U.S. intelligence agencies believe Huawei, ZTE, and other Chinese companies are working hand in hand with the Chinese Communist Party.
The Justice Department has increased its scrutiny of China’s activities in recent years, charging an increased number of espionage cases, cracking down on hacking schemes, prosecuting efforts to steal trade secrets, going after its Thousand Talents Program, and more.