The United States federal government has rejected the application of China Mobile Communications Corporation to do business, citing the Chinese telecom firm as a danger and threat to U.S. national security.
In 2011, China Mobile through its subsidiary, China Mobile International (USA), applied for a certificate to conduct business under Section 214 of the Communications Act. After what it said was a thorough review of the application, the federal government concluded that allowing China Mobile access to U.S. telecommunications networks carries with it a "substantial and unacceptable risk" to national security and law enforcement.
It also emphasized that China Mobile's doing business in the U.S. will lead to an increase in Chinese espionage directed against the government and private firms. It contends that phone calls and other communications from U.S. government agencies to international destinations handled by China Mobile's network will be bugged and recorded by Chinese intelligence agencies.
The decision against China Mobile was handed down by the National Telecommunications and Information Administration (NTIA), a branch of the U.S. Department of Commerce. NTIA recommended the U.S. Federal Communications Commission (FCC), which has oversight on telecom firms, reject China Mobile's business application.
"Because China Mobile is subject to exploitation, influence, and control by the Chinese government, the Executive Branch believes that granting China Mobile's application ... would produce substantial and unacceptable national security and law enforcement risks," wrote the NTIA in its recommendation to the FCC.
NTIA was supported in its recommendation by the Departments of Defense, State, Justice, Homeland Security and Commerce, as well as the Offices of Science and Technology Policy and the U.S. Trade Representative.
The Executive Branch told the FCC that China Mobile International (USA) is wholly owned by China Mobile Hong Kong. This firm is 70 percent owned by China Mobile Communications Corporation, which is wholly owned by the Chinese central government.
China Mobile hasn't issued a statement about the U.S. decision. But the decision immediately hit its shares in Hong Kong, which fell two percent to HK$63.80 on Tuesday. This was the stock's biggest percentage decline in three weeks.
China Mobile, the world's largest telecom carrier with some 900 million subscribers, provides mobile voice and multimedia services through mobile telecommunications network. It applied for a Section 214 facilities-based license to build its own telecommunications network in the U.S. and to connect this network to those run by domestic operators. It also planned to use these facilities to offer mobile, broadband and other telecoms services to consumers and business firms.
