Sino-American telecoms tussle drags in China Mobile

Ian Scales
By Ian Scales

Jul 4, 2018

via Flickr © Cory M. Grenier (CC BY-SA 2.0)

via Flickr © Cory M. Grenier (CC BY-SA 2.0)

  • The world’s largest mobile operator (by subscribers) has been deemed a US national security risk
  • Has had its long-standing application to provide US services turned down
  • Chinese government involvement the key security sticking point

The US administration appears to be upping the stakes in its trade struggle (war is probably too strong a term at this stage) with China. This time it’s China Mobile’s turn. The world’s largest telco has been singled out by the US National Telecommunications and Information Administration (NTIA) as a possible risk to national security and it has issued an advisory to the FCC that the giant telco shouldn’t be given leave to operate in the US. China Mobile had applied for FCC permission to provide US services as far back as 2011, but the application has been stalled in the FCC’s pending tray until now.

This is just the latest development in a series of telecoms industry disputes between the US and China. Both ZTE and Huawei are have been branded security risks for telecoms infrastructure and the US administration has discouraged the big US telcos from stocking Huawei smartphones. It also spiked the takeover of Qualcomm by then Singapore-based Broadcom (in April Broadcom brought itself back to the US), on the basis of Chinese influence on the merged company.

Most of the actions so far undertaken against China by the US have been under the guise of ‘national security’.  While the US tariffs imposed on steel and aluminium imports to the US were also ostensibly national security-based, it is obvious to all that these were bargaining chips thrown down by Trump on a slow fuse to try to draw the recipients to the negotiating table. But even that’s debatable since it’s not entirely clear what the negotiation would be about.

The alternative theory is that Trump is simply trying to destabilise the global multilateral trading system or, even more reprehensibly, simply giving the appearance of standing up for America to curry favour with US voters. Perhaps he’s not even sure himself.

The dispute with China is different because there is at least some substance to the national security issue as it’s presented.

The NTIA points out that China Mobile was around three quarters owned by the Chinese government when it applied for services permission from the FCC in 2011. Under its rules any company more than 10 per cent owned by a  foreign government gets scrutinized by the NTIA. Given that China Mobile is obviously under heavy government influence it’s not surprising that the NTIA would view it as a high risk proposition. Even if China Mobile established services in the US using only US certified infrastructure and nothing from Huawei or ZTE, it explains, there could be no assurance that it couldn’t, over time, get up to all sorts of surveillance and espionage tricks. After all, China already has a record of “intelligence activities and economic espionage targeting the United States”, so having its own telco enmeshed (literally) in the US’s, increasingly software-controlled telecoms infrastructure would be like a sword of Damocles hanging over the US cyber security effort.

But under or over pinning this is good old economic competitiveness. Trump is known to be highly alarmed at the Chinese government targets for 2025.  That’s the date at which it’s aiming to be technologically independent and establishing its dominance (or joint dominance at least) in key technology sectors.  

Preventing China Mobile getting a toe-hold in the US market is unlikely slow China Inc down on the technology front, but it is another way of ramping up the perceived aggression.

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