China Mobile faces the US ban UU By spying on fears

  What made ZTE really wrong?

The Trump administration has moved to block a state-owned Chinese wireless operator from linking up with the US market, citing national security concerns.

China Mobile ( CHL ) wanted to provide cell phone services and other communication services between the United States and other countries. He submitted a license application to US regulators in 2011.

On Monday, the National Telecommunications and Information Administration, a branch of the US Department of Commerce. UU., Recommended that the Federal Communications Commission reject the request.

The move against a high profile Chinese company could add to the bitter dispute between Washington and Beijing over trade and technology.

"Because China Mobile is subject to exploitation, influence and control by the Chinese government, the executive branch believes that granting China Mobile's application … would produce substantial and unacceptable risks of national security and law enforcement "said the telecommunications agency. in a presentation to the FCC.

Related: Huawei's top executive criticizes US lawmakers for "closed and informed" & # 39;

Giving China Mobile access to the US telecommunications market could lead to an increase in Chinese espionage, he said. Telephone calls or other communications from US government agencies UU International destinations could pbad through China Mobile's network, even if the agencies are not customers of the operator, according to the information.

China Mobile, which has more than 900 million mobile phone customers, did not immediately respond to a request for comments on Tuesday. The company did not seek to offer mobile services directly to US customers, according to the US filing.

The FCC was not immediately available for comments outside of regular business hours.

The rejection of the USA is expected UU Have little impact on the company's income. According to Ramakrishna Maruvada, an badyst at Daiwa Capital Markets, the international call business represents only a small part of China Mobile's revenues.

Increased tensions

The recommendation against China Mobile comes at a time of rising trade tensions and national security between the United States and China.

The Trump administration is trying to counter China's ambitions to become a global technology leader, accusing China of pressuring companies and stealing intellectual property to get ahead. Beijing denies the accusations.

A number of technology and telecommunications companies have had difficulties due to possible security problems.

The administration of Trump in March blocked the chip maker Broadcom [196590004] ( AVGO ) $ 117 billion offer for the rival Qualcomm ( QCOM ) . One of the concerns he cited was that the agreement could cause the United States to delay the development of 5G technology and allow China to take the initiative.

Chinese smart phone and telecommunications company ZTE ( ZTCOF ) has been in crisis since April when the US Department of Commerce banned US companies from selling their vital components.

Related: Where is ZTE? Executives leave AWOL at China's big smart phone fair

The Department of Commerce said it imposed a ban on ZTE because it failed to honor a 2017 agreement in which it agreed to pay a fine for violating sanctions on Iran and Korea from North.

The Trump administration reached a new agreement with the company earlier this month to end the ban in exchange for an additional fine and a drastic overhaul of the management. But ZTE still faces an uncertain future, and some members of Congress are seeking to keep the ban in place.

The US government UU It has long been suspicious that Chinese companies have access to US telecommunications networks. A 2012 congressional report found that ZTE and its biggest Chinese rival, Huawei, posed significant threats to national security and could not be trusted to be free from the influence of the foreign state.

Chinese companies vigorously questioned the findings of the report. But ZTE and Huawei remain largely excluded from the market for providing telecommunications network equipment to US operators.

Rob Mclean contributed to this report.

CNNMoney (Hong Kong) First publication on July 3, 2018: 1:11 am ET


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