Trump seeks to block China Mobile, cites security concerns

05 July, 2018, 11:40 | Author: Brooke Harris
  • The Commerce Department headquarters in Washington

Growing tensions between the United States and China have been evidenced after President Trump's administration moved to block the expansion of China Mobile. "Therefore, the Executive Branch of the USA government, through the National Telecommunications and Information Administration pursuant to its statutory responsibility to coordinate the presentation of views of the Executive Branch to the FCC, recommends that the FCC deny China Mobile's Section 214 license request".

"China Mobile is vulnerable to exploitation, influence and control by the Chinese government", according to the filing. It remains unclear if the differences can be bridged before the first round of tariffs take effect.

The bill must still be reconciled with a version previously approved by the House, and the White House is pushing negotiators to revise the ZTE language in the joint conference committee.

But, Lu Kang, the Chinese foreign ministry spokesperson said when asked about the matter: "We urge the relevant side in the United States to abandon Cold War thinking and zero-sum games".

China Mobile's shares were down 2%, the lowest it has been for more than four years according to Reuters.

Neither China Mobile nor the FCC were immediately available for comment on what their next steps would be. However, this was not the case for China's second biggest telecommunications equipment maker, ZTE which was forced to halt production following a United States supplier ban.

However, following some pressure from Beijing, the U.S. struck a deal with ZTE that would involve the firm paying a $1bn penalty, hiring a compliance team chosen by the USA, and replacing much of its management board, among other measures.

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China Mobile is the largest mobile telecommunications corporation by market capitalization and the largest mobile phone operator by total number of subscribers, with more than 902 million subscribers as of June 2018.

While ZTE has been hit hard by the ban as nearly a third of the components used in its equipment come from US suppliers, China Mobile, according to an analyst, will not be hurt much if blocked since it derives most of its income from home.

The petition, issued by the National Telecommunications and Information Administration (NTIA), stated that, though an open market benefits consumers and businesses, "the deepening integration of the global telecommunications market has created risks and vulnerabilities in a sector replete with a broad range of malicious activities".

If China Mobile's application went through, it would enable the Chinese government to use it to spy on United States government agencies and other targets on domestic phone networks, the agency alleged.

Mobile carrier Wind Tre signed Ericsson to provide base stations for 60 per cent of its network, Bloomberg said, displacing ZTE from a billion-dollar deal signed two years ago when the operator was named VimpelCom.

"In the current national security environment, it is the view of the Executive Branch, after consultation with the USA intelligence community, and after consideration of additional information submitted by the applicant, that China Mobile's application does not serve the public interest", the NTIA noted in its lengthy report on the topic.

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