CHU China Unicom Ltd

By Kate O'Keeffe 

WASHINGTON -- The Federal Communications Commission ordered four Chinese state-owned telecommunications operators to explain why it shouldn't withdraw permission for them to operate in the U.S., paving the way for likely license revocations.

The FCC sent orders Friday to the U.S. units of state-owned carriers China Telecom Corp. and China Unicom, as well as to Pacific Networks Corp. and ComNet (USA) LLC, both of which are controlled by Chinese government investment firm Citic Group Corp.

In a statement, the FCC said its orders "give the companies the opportunity to demonstrate that they are not subject to the influence and control of the Chinese government."

The move is part of a recent push by U.S. regulators to root out Chinese links to U.S. telecommunications infrastructure.

The orders "reflect our deep concern -- one shared by the U.S. Departments of Commerce, Defense, Homeland Security, Justice and State and the U.S. Trade Representative -- about these companies' vulnerability to the exploitation, influence and control of the Chinese Communist Party, given that they are subsidiaries of Chinese state-owned entities," FCC Chairman Ajit Pai said in the statement.

The FCC is giving the Chinese companies 30 days to respond. It is also instructing China Telecom to respond to allegations made against it by other U.S. regulators who this month accused it of presenting national security risks and who recommended its licenses to operate in the U.S. be revoked.

Representatives for the Chinese companies didn't immediately provide comment; neither did the Chinese embassy in Washington.

China Unicom's U.S. unit and ComNet and Pacific Networks previously said their businesses have always complied with U.S. laws and regulations. China Telecom has denied the allegations against it made by the officials who make up a Justice Department-led group of regulators known as Team Telecom.

The Wall Street Journal reported Sunday on findings by the Senate Permanent Subcommittee on Investigations, led by Sens. Rob Portman (R., Ohio) and Tom Carper (D., Del.), that U.S. regulators historically exercised poor or no oversight of the four carriers targeted by the new FCC orders. A Team Telecom official said in response that that era was over.

The FCC last year denied a separate application by the American arm of China Mobile Ltd., another Chinese state-owned giant, to secure licenses to operate in the U.S.

Write to Kate O'Keeffe at kathryn.okeeffe@wsj.com

(END) Dow Jones Newswires

April 24, 2020 15:34 ET (19:34 GMT)

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