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FCC Denies China Mobile USA Application

The U.S. Federal Communications Commission (FCC) has denied an application from a Chinese company to provide telecommunications services between the U.S. and other countries.

In a Memorandum Opinion and Order issued earlier this month, the Commission determined that granting the applicant, China Mobile International (USA), permission to provide international telecommunications services “would raise substantial and serious national security and law enforcement risks that cannot be addressed through a mitigation agreement.” The Memorandum Opinion and Order cites the company’s ownership and control by the Chinese government as the principle reason why granting the application “would not be in the public interest.”

According to the FCC, China Mobile USA is a Delaware-based corporation that “is indirectly and ultimately owned and controlled by the Chinese government.” In the Memorandum Opinion and Order, the FCC traces the company’s ownership through a series of holding companies and other entities based in Hong Kong and the British Virgin Islands. The ownership trail, according to the FCC, ultimately leads back to China Mobile Communications Corporation, which is 100% owned by the Chinese government and subject to the supervision of that country’s State-Owned Assets Supervision and Administration Commission.

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China Mobile USA filed its original application in September 2011 to provide international interexchange services and international private line circuits, as well as mobile virtual network operator (MVNO) services. In its application, the company also indicated plans to offer data center and cloud services, which do not require FCC authorization.

A subsequent review of the application by the Commission involved Executive Branch agencies in the federal government including U.S. intelligence agencies. Ultimately the National Telecommunications Administration (NTIA) under the Department of Commerce filed a request with the Commission to deny the application “due to substantial national security and law enforcement risks,” reportedly the first instance in which an Executive Branch agency has recommended such action.

Read the complete text of the FCC’s Memorandum Opinion and Order in connection with China Mobile.

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