Washington moves to boost crackdown on China Telecom’s US unit, source says

By David Shepardson and Alexandra Alper

WASHINGTON (Reuters) -The U.S. Commerce Department is moving to further crack down on China Telecom (NYSE:CHA)’s U.S. unit over concerns it could exploit access to American data through their U.S. cloud and internet businesses by providing it to Beijing, a source told Reuters.

The source confirmed a New York Times (NYSE:NYT) report that the department last week sent China Telecom (BCBA:TECO2m) Americas a preliminary determination that its presence in U.S. networks and cloud services poses U.S. national security risks and gave the company 30 days to respond.

In 2021, the Federal Communications Commission revoked China Telecom Americas’ authorization to operate in the United States, citing national security concerns.

China Telecom Americas did not immediately respond to a request for comment.

There is growing alarm in Washington about China’s alleged efforts known as Salt Typhoon to infiltrate American telecommunications companies and steal data about U.S. calls. Senators have said the attack likely represents the largest telecommunications hack in U.S. history.

Reuters first reported in June that the Biden administration was investigating China Telecom, China Mobile (NYSE:CHL) and China Unicom (NYSE:CHU) over their U.S. cloud and internet businesses.

In June, the FCC (BME:FCC) advanced a proposal to boost internetrouting security on networks in the face of concerns raised by U.S. officials about China’s ability to divert internet traffic.

The Chinese companies still have a small presence in the United States, for example, providing cloud services and routing wholesale U.S. internet traffic. That gives them access to Americans’ data even after the FCC barred them from providing telephone and retail internet services in the United States.

The Border Gateway Protocol (BGP) is central to the internet’s global information routing system. The FCC said China Telecom had used BGP vulnerabilities “to misroute United States internet traffic on at least six occasions.

The FCC in 2022 revoked China Unicom America’s authorization to operate in the United States. In 2019, the FCC rejected China Mobile bid to provide U.S. telecommunications services.

FCC Commissioner Geoffrey Starks in 2022 raised alarm, saying Chinese telecom firms could “continue to offer data center services to American consumers” despite the revocation and urged further action to address security concerns posed by the centers.