The three carriers under investigation are China Mobile, China Telecom, and China Unicom. Although these companies have only a small presence in the US market and have been banned from providing phone hardware or Internet retail services, they still have access to user data in this market.

The investigation is Washington’s latest effort as part of a deepening tech war between the world’s two largest economies, and shows the US government is trying to block any avenues for targeting US user data.

The regulator could block deals that allow foreign companies to operate data centers and route data for internet providers, the sources said.

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The US is looking to plug all “data” loopholes. Photo: Business Standard

By being excluded from important transactions, the competitive strength of Chinese technology companies in the field of providing Internet and cloud services in the US in particular and globally in general will be seriously affected, even leading to paralysis in some cases.

Routing through China

China Telecom, China Mobile and China Unicom have long been in Washington's crosshairs. The FCC rejected China Mobile's application to provide telephone service in 2019 and revoked China Telecom and China Unicom's licenses to operate the same service in 2021 and 2022.

Last April, the FCC further banned the companies from providing broadband services. One of the main factors in the commission’s decision was that China Telecom misrouted Internet traffic through China, making it possible for the traffic to be intercepted, manipulated, or prevented from reaching its intended destination.

China Telecom denied all allegations by US regulators, saying routing problems were common across all networks.

The reach of Chinese telecom companies has extended deep into the US internet infrastructure.

According to China Telecom's official website, they have eight points of presence (PoPs) located at Internet exchange points, allowing large-scale networks to connect with each other and share routing information.

According to the FCC, there are “serious national security and law enforcement risks” posed by PoPs when operated by companies that pose a national security risk.

Bill Woodcock, CEO of Packet Clearing House, an intergovernmental treaty body responsible for securing critical Internet infrastructure, said traffic passing through these points is vulnerable to analysis, which can reveal key information about the origin, destination, size, and timing of each packet. They can also allow for deep packet inspection, in which parties can peer into the contents of the data and even decrypt it.

Regulators are concerned that companies could access personal information and intellectual property stored in their clouds and provide it to the Chinese government or disrupt Americans' access to that information.

(According to Bloomberg)