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China Telecom Vows to Defy FCC Eviction, Keep Operating in U.S.

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(Bloomberg) — China Telecom (Americas) Corp. said it intends to continue most of its U.S. operations despite an order from regulators to stop due to espionage concerns.

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China Telecom said in a filing that its business-focused telecommunications operations in the U.S. aren’t common-carrier services as the Federal Communications Commission categorized them so the agency’s order doesn’t affect those services.

“CTA intends to continue offering them on a private-carrier basis after January 3, 2022, to honor its contractual obligations and avoid undue disruption to its customers’ operations,” China Telecom said in a Dec. 20 letter to FCC Chairwoman Jessica Rosenworcel.

The FCC cited espionage concerns as it voted unanimously in October to revoke permission to operate in the U.S. for China Telecom, one of three leading communications providers in China. The order is to take effect 60 days after its Nov. 2 release.

The FCC didn’t reply to a request for comment Wednesday.

Analysts Skeptical

China Telecom’s argument met a skeptical response from some security experts.

For one thing, the White House could step in and sanction China Telecom, according to James Lewis, director of the Strategic Technologies Program at the Washington-based Center for Strategic & International Studies. “If I were China Telecom, I’d start packing.”

U.S. security and trade agencies “are persuaded that China Telecom is engaged in dubious behavior,” Lewis said in an interview. The FCC in its decision referred to classified evidence from federal agencies.

China Telecom’s argument is “a classic case of law-fare, where China’s government is using the American legal system against itself,” said Martijn Rasser, director of the Technology and National Security Program at the Washington-based Center for a New American Security.

‘Intriguing Ploy’

“That’s an intriguing ploy, but I don’t see that working,” Rasser said in an interview.

The action against China Telecom relates to worries over potentially illicit data flows from the U.S. to China. Another target of U.S. government sanctions is China-based gear maker Huawei Technologies Co.

The FCC is separately considering acting against surveillance-camera makers Hangzhou Hikvision Digital Technology Co. and Dahua Technology Co., and Congress is contemplating restrictions on drone maker SZ DJI Technology Co.

China Telecom earlier said it would discontinue its mobile operations offered under the brand name CTExcel, which are offered widely and are used by Chinese students and expatriates.

(Updates with comment from security experts beginning in sixth paragraph.)

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