Senate panel says U.S. telecoms failed for decades to prevent Chinese spying

WASHINGTON - The federal government failed for nearly two decades to properly guard against the cybersecurity risks posed by Chinese government-owned telecoms operating in the United States, a Senate report released Tuesday morning finds.

That resulted in four of China's largest such telecom companies being able to operate subsidiaries here with almost no oversight, according to the report from the Senate Homeland Security Committee's investigations panel.

It might also have allowed them to help the Chinese government spy on reams of data from U.S. companies by routing their phone and Internet traffic through China, the report finds.

The report is the latest in a series of reviews by Congress and elsewhere pointing out shoddy and haphazard U.S., preparation for the cybersecurity threats posed by China's rise to global power. In a 2019 report, the subcommittee, led by Sens. Rob Portman, R-Ohio, and Tom Carper, D-Del., slammed U.S. companies including Equifax and Marriott for not protecting themselves against a barrage of Chinese data theft.

In telecommunications, in particular, U.S. companies largely abandoned building the hardware that will run the next generation of super-fast telecom networks known as 5G. As a result, American officials have been fighting a rear-guard action for the past two years trying to stop China's Huawei from dominating the global market.

The failure to adequately review Chinese telecoms' national security risk was mainly due to an "informal" and "ad hoc" process.

That process was run by just a handful of people at the departments of Justice, Defense and Homeland Security that advised the Federal Communications Commission. The informal panel dubbed "Team Telecom" typically conducted years-long security reviews that FCC commissioners described as an "inextricable black hole."

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The panel also rarely followed up once those reviews were complete. For example, the group created security agreements to limit the risk of two Chinese government-owned telecoms' U.S. operations - China Telecom Americas in 2007 and ComNet in 2009 - but did little to ensure the companies were abiding by them.

The agreements authorized Team Telecom to conduct inspections of the companies' U.S. operations, but the group only conducted two such inspections for each company over more than a decade. And none of those inspections occurred before 2017.

Team Telecom never entered into a security agreement with another Chinese firm, China Unicom Americas, and so "ha[d] no oversight authority to assess the company's operations in the United States," the report notes.

The group finally did recommend in 2019 that the FCC block another major Chinese telecom, China Mobile, from operating in the United States. But it was only after a seven-year investigation, and it was the first time Team Telecom had made such a recommendation.

The panel similarly recommended banning China Telecom Americas last month, citing concerns that its state-owned parent company poses unacceptable risks of Chinese spying.

The Senate report comes after the federal government has already started to clean up its act. President Donald Trump issued an executive order in April that replaced the informal Team Telecom system with a far more stringent review process led by the attorney general. The new group is tasked with reviewing any foreign telecom requests to operate in the United States and reviewing any existing licenses that pose cybersecurity or national security risks.

The FCC also wrote to China Telecom Americas, China Unicom Americas, ComNet and another Chinese firm, Pacific Networks, in April demanding they explain why they shouldn't be banned over the same Chinese spying concerns as China Mobile.

FCC Chairman Ajit Pai said the letter reflects the commission's "deep concern . . . about these companies' vulnerability to the exploitation, influence, and control" of the Chinese government.

"We simply cannot take a risk and hope for the best when it comes to the security of our networks," he said.

The report's recommendations focus mainly on putting muscle behind the new review process and ensuring reviews move quickly.

The panel wants Congress to mandate the government review all foreign telecom licenses periodically. It also wants the licenses to automatically expire if they don't pass muster on national security grounds. Now, the licenses effectively exist forever unless the FCC revokes them.

Lawmakers also want Congress to set firm deadlines for how long reviews can last, though the report doesn't offer a specific time frame.

(COMMENT, BELOW)