The US subsidiary of China Telecom is said to cease its services in the US. The responsible regulatory authority FCC decided unanimously on Tuesday (procedure RM 20-109). The decision gives five reasons for the license withdrawal: The company is controlled by the government of the People’s Republic, endangers law enforcement and national security, was dishonest in regulatory procedures, failed to comply with obligations entered into in 2007, and there are no more lenient means of remedying these abuses.
The reasons for the decision are all based on publicly available information. In addition, the FCC has reportedly received secret documents that contain further allegations against China Telecom Americas and that there is no prospect of an effective, milder remedy than the license withdrawal. The authority gives the company 60 days to process its operations, to inform customers and, if necessary, to export their phone numbers to other providers.
China Telecom Americas operates in the USA and Canada as a virtual mobile network operator (MVNO) under the CTExcel brand, which is aimed in particular at Chinese overseas. In addition to a North American number, customers can also have a Chinese number on the same cell phone and use it in the People’s Republic of China.
China Telecom Americas can appeal the decision. Should the court grant suspensive effect, operations could continue for even longer. However, the company could find it difficult to acquire new customers if its continuation is uncertain. Because the FCC’s competence only extends to federal affairs, China Telecom Americas should theoretically still enable telecommunications connections that only run within individual US states and do not cross their borders. It is unlikely that such niche services can be offered profitably.
China Mobile should lock up in Canada
Like China Telecom, the larger China Mobile is more than 70 percent owned by the People’s Republic of China. China Mobiles license was declared invalid by the FCC in 2019.
This August, the Canadian regulatory authority CRTC China Mobile also ordered to sell its Canadian subsidiary China Mobile International Canada (CMIC) or to cease operations in Canada. The Canadians also fear that the Chinese telecom operators are not just pursuing economic purposes, but could be used for sabotage and espionage.
China Mobile appealed the Canadian decision in September. The world’s largest mobile communications provider is also active in Canada as an MVNO, as a reseller of Internet access and in the areas of data analysis and marketing. However, from 2015 to 2020 the company “forgot” to notify the Canadian authorities of the establishment of its Canadian subsidiary as required. This failure triggered the official proceedings against China Mobile International Canada last year.