On April 24, 2020, the Federal Communications Commission (FCC) issued Orders to Show Cause (Show Cause Orders) against four companies that provide domestic and international telecommunications services pursuant to FCC authorizations.
Each of those companies is ultimately owned and controlled by the government of the People’s Republic of China (Chinese government).
This unusual proactive review by the FCC marks another lever the Trump administration can bring to bear relative to Chinese (particularly state-owned enterprises) influence and access in U.S. industry.
It follows the Trump administration’s increased scrutiny in the national security space of Chinese involvement in telecommunications, semiconductor, sensitive data, and critical infrastructure sectors in particular, and appears consistent with the recent increased scrutiny by the Committee on Foreign Investment in the United States (CFIUS), even post-closing, of foreign investment transactions in the United States.
The Show Cause Order directs the companies – China Telecom (Americas) Corporation (China Telecom), China Unicom (Americas) Operations Limited, Pacific Networks Corp., and ComNet (USA) LLC (collectively, China-owned Companies) – to explain why the FCC should not commence proceedings to revoke their domestic and international Section 214 authorizations. Revocation of these authorizations would significantly impact businesses that purchase telecommunications services directly from the China-owned Companies, as well as businesses that rely on communications networks that utilize the China-owned Companies’ services.
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