Senate report: Chinese telecom firms operated in US without proper oversight for decades

Three Chinese telecommunications firms were allowed to operate for roughly 20 years in the U.S. without appropriate oversight, according to a bipartisan report released by the Senate Permanent Subcommittee on Investigations released early Tuesday.

The report focuses on China Telecom Americas, China Unicom Americas and ComNet USA, claiming that appropriate agencies have failed to respond to national security threats they pose

The Federal Communications Commission (FCC) relied on “Team Telecom” — an informal group drawing from the departments of Justice, Homeland Security and Defense — for its national security oversight of foreign telecom companies, according to the report.

But the group allegedly lacked the statutory authority or resources to fill that role.

Team Telecom only visited China Telecom Americas and ComNet USA twice in a decade and never interacted with China Unicom Americas, according to the report.

The report calls on the FCC to conduct a full review of the three companies and establish a clear process for revoking authorizations if need be.

It also lays out a series of steps for Congress to take on the issue, including formalizing Team Telecom and giving it official authority while preserving its composition.

“Since the Subcommittee launched its investigation, the agencies have increased their oversight of the Chinese state-owned carriers,” the members wrote in the report. “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.”

However, the members concluded that “the new committee’s authorities remain limited, and as a result, our country, our privacy, and our information remain at risk.”

Subcommittee Chairman Rob Portman (R-Ohio) said in a statement that he intends to work with ranking member Tom Carper (D-Del.) to put forward legislation “to ensure federal agencies have the oversight and enforcement tools necessary to protect our telecommunications networks going forward.”

Portman added that “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 also vowed to do more to counter threats from Chinese telecom groups. 

“Our bipartisan report reveals how little oversight has been done of Chinese telecommunications carriers that operate here in the United States,” Carper said in a statement. “Today’s report highlights how we’ve allowed Chinese government-owned companies gain a foothold in our telecommunications industry while their American competitors face significant barriers to entry in China.”

In addition to concerns over the Chinese telecom groups, the subcommittee also concluded that China does not provide reciprocal access to markets that the U.S. has previously given to Chinese companies, and that Chinese telecom groups pose a national security threat. 

The report was published in the midst of increasing tensions between Washington and Beijing due to the COVID-19 pandemic, along with long-standing trade disputes and concerns over China’s recent crackdown on Hong Kong. 

The Trump administration has pushed back strongly against Chinese telecom groups in the past year. 

The departments of Justice, Homeland Security, Defense, State and Commerce recommended in April that the FCC strip China Telecom of its federal authorizations, pointing to potential national security threats. The FCC separately voted last year to block China Mobile from American markets. 

The Commerce Department, meanwhile, added Chinese telecom group Huawei, the largest 5G equipment manufacturer in the world, to the entity list last year, effectively blacklisting it. The FCC also classified both Huawei and ZTE as national security threats late last year, and President Trump earlier this year signed into law legislation that bans the use of federal funds to purchase Huawei equipment. 

These steps were taken largely in response to concerns around a 2017 Chinese intelligence law that requires Chinese companies and citizens to disclose user data to the government if requested.