WHAT HAS HAPPENED TO THIRD PHL TELCO?

China Telecom ban latest in global pushback against Chinese intrusion

By Philip M. Lustre Jr.

ACTIONS by the U.S. Department of Justice and other federal agencies to terminate China Telecom’s authority to operate in the U.S. market constitute the latest developments in the mounting pushback against Chinese intrusion worldwide.

From geopolitical tension and Chinese aggression in the South China Sea to cooling China-Italy relations, to coronavirus-related disagreements with ally Iran, China’s recovery from COVID-19 and its attempts to aid the rest of the afflicted world have failed to give the goodwill and upper hand it seeks in the global stage.

This is being complicated by recent accusations that China is source of the destructive virus that has caused a pandemic, even as various entities have threatened they would bill China for the adverse effects of the virus and seek damages in various legal forums. China is now in a crisis public relations mode mainly to escape culpability or lessen the future damage to its global reputation.

In the U.S., the Department of Justice and the State Department were requesting the Federal Communications Commission (FCC) to revoke China Telecom’s license to carry out international telecommunications services to and from the U.S.. They are concerned that state-owned China Telecom is “vulnerable to exploitation, influence, and control” by the Chinese government.

In the Philippines, the entry and operations of Dito Telecommunity, the reputed third telecommunications firm after the PLDT Group and Globe Telecom, into the market could be adversely affected by the developments in the U.S. involving China Telecom, a part owner of Dito Telecom.

Because of the recent developments, Neri Colmenares, chair of leftwing Bayan Muna, said the government should scrutinize further the third telco player, saying it would require a congressional inquiry “in aid of legislation” since China’s entry into the domestic telecommunication sector is “a threat to the sovereignty of the country and national security.”

“This development in the U.S. will delay Dito Telecom’s rollout because it should now be subject to tighter scrutiny from government and requires a congressional investigation.  Because of its expansionism in the West Philippine Sea, the Chinese government is not a friend. We continue to assert that allowing China entry into our telecommunications sector is a threat to Philippine sovereignty and national security,” Colmenares said.

Dito Telecom has announced it has drawn out the initial $500 million (P25 billion) from state-owned Bank of China to lay down the infrastructure for its nationwide backbone. Adel Tamano, chief administrative office, announced the firm would start operations by March 1, 2021.

Dito Telecommunity Corp., formerly Mindanao Islamic Telephone Company Inc. (Mistel), is a "consortium" (not a joint venture- author) of Udenna Corp. of Davao City-based businessman Dennis Uy, and its subsidiary Chelsea Logistics Corporation and the China stated-owned China Telecommunications Corporation, a parent company of China Telecom.

Dito Telecom would have a hard time operating in the Philippines once the China Telecom is banned in the US mainly because of interconnection issues. Without interconnecting to other telecomunications firms, it is next to impossible to operate freely. Interconnection is regarded as the heart of sustainable and vigorous telecommunications sector.

Its rollout has been stalled thrice.  It was initially scheduled for inauguration in the final quarter of 2019. Its operation was later moved to July 2020, but now has been programmed for a March 2021 opening.

Its unveiling is in danger of being put off anew following the opposition of several U.S. departments in the operation of the China Telecom (Americas) Corp. in the U.S. Several U.S. departments had encouraged the Federal Communications Commission (FCC) to revoke China Telecom (Americas) Corp’s authorization to provide international telecommunications services to and from the U.S.

“This recommendation reflects the substantial and unacceptable national security and law enforcement risks associated with China Telecom’s continued access to US telecommunications infrastructure,” said the group of departments, which include State, Justice, Defense, Homeland Security, and Commerce, in a statement, along with the United States Trade Representative, in a statement regarding the filling at the FCC recently.

The call is in the midst of the continuous scrutiny being done by FCC to China Telecom in an investigation that was started last year. The US subsidiary of the Chinese state-owned telecommunications company holds the license to grant service in the US since 2007.

The FCC united to vote May of last year to deny the request of another state-owned Chinese telecommunications company, the China Mobile, to grant service in the US. According to FCC chairman Ajit Pai, the Commission was able to determine following the vote that China Mobile was controlled by the Chinese government.

The U.S. government laid out several issues they had with China Telecom including the “increased knowledge of the People’s Republic of China’s role in malicious cyber activity targeting the U. S.” The agencies stressed that China Telecom is “vulnerable to exploitation, influence, and control by the PRC government”.

In Italy, China’s Belt and Road initiative has failed to develop stronger relations between the two countries mainly because the anticipated economic benefits for Italy have yet to materialize. Italy’s trade deficit with China had in fact widened further last year. The spread of COVID-19 did not help the situation as the Italian government moved to stop all flights to China over worries about the coronavirus.

Alongside stalled investments, trade benefits have failed to add up for Italy. Italian exports to China showed a 1% decline last year, even as overall foreign sales rose, according to preliminary figures released by statistics agency Istat in January. With Chinese imports growing, Italy’s total trade deficit with China climbed to €18.7 billion ($20 billion).

Immediate tensions related to the virus “will blow over once COVID-19 disappears,” said Jan Weidenfeld of the Mercator Institute for China Studies in Berlin. “But those more fundamental issues of reassessment of what doing business with China means, that is here to stay.”

China’s ties with Iran have also seen better days as Iranian health ministry spokesman Kianush Jahanpur criticized Chinese government statistics on the Wuhan coronavirus outbreak, appearing to blame those statistics for other countries’ slow response to the emerging pandemic.

“It seems statistics from China [were] a bitter joke, because many in the world thought this is just like influenza, with fewer deaths,” Jahanpur said during a video conference. “This [impression] were based on reports from China and now it seems China made a bitter joke with the rest of the world.” Jahanpur added, “If in China they say an epidemic was controlled in two months, one should really think about it.” The remarks sparked a row with Chinese officials, with China’s ambassador to Iran saying the country should “show respect to the truths and great efforts of the people of China.”

With no regard for the ongoing battles against COVID-19 around the world, China has also kept up its aggression in the South China Sea. Its Coast Guard and paramilitary vessels continue to harass fishing boats, military ships and oil and gas rigs in the area, and even sunk a Vietnamese fishing boat earlier this month.

“There’s no apparent pause or reduction at all” in Chinese activity in the South China Sea, added Collin Koh, a maritime security expert at Nanyang Technological University in Singapore. “It appears to be business as usual for the PLA, and for that matter, the China Coast Guard as well.”

The Philippines expressed support for Vietnam after Hanoi protested against what it called the ramming and sinking of a Vietnamese fishing boat by a Chinese coastguard vessel in the disputed South China Sea last April 3.

The Department of Foreign Affairs in Manila expressed deep concern over the reported sinking of the boat off the Paracel Islands, adding that the incident happened ‘at a time when a common approach was crucial in confronting the coronavirus pandemic.’

The Philippines has its own problems with its ‘China pivot’. China’s intrusion into the country is highlighted by the recent report of about 3,000 members of the Chinese People’s Liberation Army (PLA) entering Manila as tourists or workers in Philippine offshore gaming operators (POGOs).

The PLA report comes at the heels of security fears hounding the Philippines’ power and telecommunications sectors. China maintains ownership over the national grid as well as the Philippines’ third major telecoms firm – Dito Telecommunity, of which 40% of its equity is owned by China Telecom, the same company facing a potential US ban. #