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The FCC today rejected the ability of Pacific Networks Corp. and wholly-owned subsidiary ComNet (USA) LLC, to provide domestic interstate and international telecommunications services within the United States. A key concern was the companies’ ownership by a Chinese state-owned entity.

The companies must stop domestic and/or international services that they provide within 60 days.

The FCC said the action was taken to “safeguard” the nation’s telecommunications infrastructure from potential security threats. In March of last year, the regulator determined the companies hadn’t dispelled any of the FCC’s security concerns.

Today, based on the FCC’s public interest analysis and the totality of the extensive record, the Commission finds that the present and future public interest, convenience, and necessity is no longer served by the companies’ retention of their section 214 authority.

FCC Chinese Concerns

Specifically, the Order says:

  • As subsidiaries of a Chinese state-owned entity, the companies are subject to exploitation, influence and control by the Chinese government.
  • The companies’ conduct and representations to the FCC and Congress show a lack of trustworthiness and reliability.
  • Further mitigation wouldn’t address these significant concerns.
  • The companies violated the 2009 Letter of Assurances with the Executive Branch agencies
  • The companies’ ownership and control by the Chinese government poses significant national security and law enforcement risks because the companies, their parent entities and affiliates, and the Chinese government can interfere with U.S. communications, and engage in espionage and other harmful activities.

The Order is one of several steps the FCC has taken against Chinese companies, including equipment provider Huawei, due to security concerns.

The Order also reclaims two International Signaling Point Codes which had been provisionally assigned to ComNet in 2001 and in 2003. The action is effective 60 days from the Order release date.

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