U.S. Commerce Department Cracks Down on China Telecom

By David Shepardson and Alexandra Alper

WASHINGTON (Reuters) – The U.S. Commerce Department is tightening restrictions on China Telecom's U.S. unit due to concerns it may misuse American data through its cloud and internet services. A source confirmed to Reuters that the department has issued a preliminary determination that the company's U.S. operations pose national security risks, allowing it 30 days to respond.

In 2021, the Federal Communications Commission (FCC) revoked China Telecom Americas' authorization to operate in the U.S. due to similar national security fears. China Telecom Americas did not respond immediately to requests for comments.

Concerns have escalated in Washington regarding China's infiltration efforts, dubbed Salt Typhoon, aimed at stealing telecommunications data. Senators have indicated that this might be the largest telecom hack in U.S. history.

Reuters reported in June that the Biden administration was investigating China Telecom along with China Mobile and China Unicom over their U.S. operations. Additionally, the FCC aimed to enhance internet routing security following concerns about China's potential to misroute domestic traffic.

Though these Chinese companies have limited presence in the U.S., they still provide cloud services and handle wholesale internet traffic, accessing American consumer data despite restrictions on phone and retail internet services.

The Border Gateway Protocol (BGP), vital for global internet routing, has seen vulnerabilities exploited by China Telecom on several occasions, misrouting U.S. internet traffic.

The FCC had previously revoked China Unicom's operating authorization in 2022 and rejected China Mobile's bid for U.S. services in 2019. Commissioner Geoffrey Starks expressed concerns that Chinese firms could circumvent restrictions by offering data center services, emphasizing the need for further security measures.