FCC Rejects China Mobile Request for U.S. Market Entry

Acting on the recommendation of executive branch agencies which are tasked with assessing the national security implications of requests by foreign entities to access the U.S. market, the FCC voted unanimously yesterday to deny China Mobile USA’s application for Section 214 authority to offer telecommunications services between the U.S. and foreign destinations.

Issued in the midst of an escalating trade dispute between the U.S. and China that was put on display yesterday by the Trump Administration’s decision to boost tariffs on imported Chinese goods, the FCC’s vote caps an eight-year review of the China Mobile application by the FCC and by the Justice Department, the Department of Homeland Security, the National Telecommunications Information Administration (NTIA) and other executive branch agencies known as “Team Telecom.” While Team Telecom often finds no national security or related issues with foreign entry or recommends FCC approval with conditions designed to resolve such concerns, observers say the case at hand represents the first instance in which Team Telecom has recommended denial of an FCC application filed by a foreign entity to offer service in the U.S.

China Mobile USA is a Delaware corporation that is ultimately owned and controlled by the People’s Republic of China. Following on the submission of similar requests by Chinese state-owned China Telecom and China Unicom which the FCC approved in the early 2000s, China Mobile USA filed an application in 2011 requesting authority under Section 214 of the Communications Act and Section 63.18 of the FCC’s rules to provide international facilities-based and resale services between the United States and foreign destinations. As is the case with many license applications and requests for merger approval that involve foreign telecommunications companies, the FCC deferred action on the China Mobile application pending completion of Team Telecom review. Although China Mobile offered various remedies in an attempt to resolve U.S. national security concerns and concerns about Chinese government influence over telecom networks, Team Telecom recommended against FCC approval. Speaking on behalf of Team Telecom, NTIA Administrator David Redl (who announced plans this week to step down from his position) told reporters that, “after significant engagement with China Mobile, concerns about risks to law enforcement and national security interests were unable to be resolved.” Accordingly, in its order denying the application, the FCC declared that China Mobile USA “has not demonstrated that its application . . . is in the public interest” and that the national security and law enforcement risks of the company’s proposed U.S. entry “cannot be addressed through a mitigation agreement between China Mobile and the U.S. government.” 

In statements supporting the vote, several FCC’s commissioners proclaimed that the China Mobile case highlights the need for stronger FCC action to address network security as the transition to fifth-generation technology and the Internet of Things picks up pace. As FCC Chairman Ajit Pai emphasized that “at the intersection of national security and communications lies a strong bipartisan consensus in favor of proactive measure to protect our networks at the front end,” Commissioner Brendan Carr suggested it may also be time for the FCC—working in tandem with Team Telecom—to reevaluate authorizations for international Section 214 authority issued 15 years ago to China Telecom and China Unicom. Informed of the FCC’s planned vote, a representative of China Mobile told the FCC earlier this month that the company believes “this action is guided more by tensions in the bilateral U.S.-China relationship than an absence” of options to mitigate U.S. national security concerns.

FCC Solicits Additional Comment on Proposals to Enable Terrestrial Wireless Usage of C-Band

Following on the launch of proceedings last summer to consider rules that would open 3.7-4.2 GHz C-band channels to terrestrial fifth-generation (5G) wireless services, the FCC issued a public notice last Friday requesting additional input on various issues that were raised by stakeholders during the initial round of comments submitted last year.

The 3.7-4.2 GHz band has long been the domain of fixed satellite service (FSS) space and earth station operations as well as fixed point-to-point microwave services. As part of its rulemaking proceeding, the FCC is assessing various proposals to allocate spectrum in the 3.7-4.2 GHz band for mobile 5G use through market-based mechanisms or other possible means. One of the approaches under consideration is the market-based solution proposed jointly by members of the “C-Band Alliance” which include satellite network operators Intelsat, SES, Eutelsat and Telesat. That solution would provide wireless broadband carriers with the opportunity to reach commercial agreements with FSS operators who would clear portions of the C-band for “flexible terrestrial mobile use.” In addition to ensuring that incumbent FSS operators “will be able to facilitate terrestrial mobile use in a manner that fully accounts for their costs,” the proposed market-based framework would also ensure “that incumbent FSS operations will be protected from harmful interference.”

Noting that commenters have “weighed in by supporting or opposing a variety of clearing mechanisms,” the FCC’s public notice asserts that these comments “raise additional issues concerning the Commission’s authority to employ elements of those mechanisms.” As such, the public notice solicits “focused, additional comment” on the following questions, among others: (1) what are the enforceable interference protection rights, if any, granted to space station operators against coprimary terrestrial operations, (2) do these protection rights depend on the extent to which incumbent earth stations receive their transmissions within the U.S., and (3) what limits, if any, does Section 316 of the 1934 Communications Act place on the proposals raised by the Commission or by the commenters in the FCC’s proceeding? (Under Section 316, the FCC has the authority to modify any station license—contingent upon providing sufficient notice to the licensee and an opportunity for the licensee to protest—if the FCC determines that such action “will promote the public interest, convenience and necessity.”) Comments are due 30 days after the public notice is published in the Federal Register.