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Threats to U.S. Networks/Section 5D

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Threats to U.S. Networks: Oversight of Chinese Government-Owned Carriers
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​D. ComNet (USA) LLC and Pacific Networks Corp.

ComNet (USA) LLC ("ComNet") (formerly known as CM Tel (USA) LLC[1]) is a telecommunications service provider that "offer[s] telecom partners and operators international termination services, calling card[s] and global SIM card[s]."[2] Its website also states that it provides "enterprise business phones system, [messaging], managed network and IT service, website and WeChat related development, etc."[3] ComNet (then CM Tel (USA) LLC) was incorporated in Delaware in July 1999.[4] At that time, the company was a subsidiary of CM Telecom International Limited, a Hong Kong based company.[5] In 2009, ComNet was acquired by CITIC Telecom International Holdings Limited ("CITIC"),[6] which describes itself as one of Asia Pacific's leading telecommunications service providers of "mobile international roaming, international voice, international SMS, international data and international value-added telecommunications services, etc. ​to global carriers."[7] At the time CITIC acquired ComNet, it also owned Pacific Networks Corp. ("Pacific Networks"), another U.S. company.[8] In integrating ComNet into its corporate organization, CITIC made ComNet a wholly-owned subsidiary of Pacific Networks.[9]

The integration of the companies prompted Team Telecom to enter into a security agreement with the companies in March 2009. Yet, like CTA, Team Telecom has exercised minimal oversight of the companies and their operations in the United States—relying on intermittent email communication and completing only two site visits in more than ten years.

1. ComNet's Initial Section 214 Authorization Did Not Require Team Telecom's Review

ComNet (then CM Tel (USA) LLC) applied for international Section 214 authorization in 1999 to provide global international facilities-based and resale services between the United States and all international points.[10] ComNet certified that it had no affiliation with any foreign or U.S. facilities-based carrier.[11] The FCC did not refer the application to Team Telecom. The application was accepted for filing on October 13, 1999[12] and granted on October 27, 1999.[13]

​2. Pacific Networks' Initial Section 214 Authorization Prompted Team Telecom Review and Resulted in a Security Agreement

Pacific Networks applied for international Section 214 authorization in 2007 to provide international resale services between the United States and permissible international points, including China, solely by reselling unaffiliated U.S. facilities-based carriers' international switched services.[14] Although not majority owned, Pacific Networks disclosed that it was affiliated with the Chinese government, which held a 14 percent indirect ownership (29 percent attributable interest) in Pacific Networks through numerous intervening foreign organized holding companies.[15] The FCC referred the application to Team Telecom on September 14, 2007.[16]

Unlike the initial CTA and CUA applications, Team Telecom requested that Pacific Networks' application be removed from streamlining.[17] It engaged Pacific Networks to better understand the company's existing and anticipated activities, employees, and infrastructure.[18] Pacific Networks informed Team Telecom that it was not providing services to customers within the United States at the time it applied for Section 214 authorization.[19] However, Pacific Networks anticipated providing "international resold voice and data service for U.S. customers," including voice and SMS services, resale of leased circuit services, and internet exchange services.[20] Pacific Networks further explained that it planned to establish three points of presence within the United States—two in California and one in New York—and to interconnect with Qwest to relay calls to other carriers.[21] Pacific Networks indicated that it would not directly provide access to the public switched telephone network, but rather make such connections available through other local carriers, including AT&T and Qwest.[22] In addition to its written responses, Pacific Networks provided copies of its standing operating procedures for its network operations center, interface control documents, SMS service description, list of equipment, and point of presence configurations.[23]

Nearly a year after the FCC referred the application, in September 2008, Team Telecom alerted the FCC that it had completed its review and had no ​objection to the FCC approving the application, provided that the FCC condition its approval on Pacific Networks' agreement to abide by the commitments and undertakings it made to DOJ, and DHS.[24] Those commitments and undertakings were outlined in a September 2, 2008 letter from Pacific Networks to Team Telecom, which included some of the same commitments contained in CTA's 2007 security agreement.[25] For example, among other items, Pacific Networks committed to (1) ensuring that U.S. records were made available in response to lawful U.S. process; (2) ensuring that U.S. records were not “made subject to mandatory destruction" under foreign laws; (3) take all practicable measures to prevent unauthorized access to, or disclosure of the content of, communications or U.S. records; (4) maintain a point of contact within the United States with the authority and responsibility for accepting and overseeing compliance with a lawful demand by U.S. law enforcement authorities; and (5) notify DOJ and DHS of any material changes in any of the facts in the security agreement, including any increase or decrease in foreign government control.[26] The FCC granted Pacific Networks' application effective September 3, 2008, conditioned on Pacific Networks abiding by its commitments to Team Telecom.[27]

3. ComNet's Integration with Pacific Networks Prompted Further Team Telecom Scrutiny and Resulted in a Security Agreement

As noted above, CITIC acquired ComNet and made ComNet a wholly-owned subsidiary of Pacific Networks.[28] In connection with this organizational change, ComNet sought FCC approval to transfer control of a portion of its 1999 Section 214 authorization to Pacific Networks-specifically, with respect to the U.S.-China and U.S.-Hong Kong routes, the authority to provide switched services through the resale of unaffiliated U.S. facilities-based carriers' international switched ​services.[29] The FCC referred ComNet's transfer of control application to Team Telecom for review.[30]

In December 2008, Pacific Networks filed a notice of surrender of its September 2008 Section 214 authorization with the FCC.[31] Pacific Networks claimed the surrender was the result of "necessary financial circumstances" leading Pacific Networks' indirect parent company to undergo "a transfer of control that cannot be delayed pending Commission approval."[32] The relevant transfer of control involved a consolidation of some CITIC holding companies, resulting in the Chinese government acquiring a greater interest in CITIC, and by extension Pacific Networks and ComNet.[33]

In January 2009, Pacific Networks applied for a new international Section 214 authorization.[34] This time, Pacific Networks sought authority to provide resale services to all international routes.[35] It subsequently clarified with the FCC that it sought authority to provide resale service on all U.S. routes except to China and Hong Kong; with respect to those two locations, the company would be authorized to ​provide switched services, either directly or indirectly through the resale of another U.S. resale carrier's international switched services.[36] The FCC referred Pacific Networks' application to Team Telecom for review.[37]

Team Telecom engaged both ComNet and Pacific Networks on perceived national security risks associated with their applications.[38] Team Telecom's questions focused on the companies' integration, as well as their creation of operating and security procedures to protect against unauthorized access to, or disclosure of, U.S. records.[39] Team Telecom also sought to ensure the companies had identified a law enforcement point of contact.[40]

Ultimately, Team Telecom determined that the risks it identified could be mitigated through a security agreement, signed jointly by ComNet and Pacific Networks.[41] The companies, along with DHS and DOJ, executed the agreement on March 3, 2009.[42] The agreement included many of the same general provisions as other security agreements, as well as certain new requirements. This included, among others (1) making U.S. records available within the United States in response to lawful U.S process; (2) providing DHS and DOJ with descriptions of the companies' physical and logical technical security architecture, security policies and standards, and information technology governance controls; (3) ensuring that U.S. records are not made subject to mandatory destruction under any foreign laws; (4) taking all practicable measures to prevent unauthorized access to, or disclosure of the content of, communications or U.S. records; (5) maintaining at least one point of contact within the United States to oversee compliance with law enforcement requests; (6) notifying DOJ and DHS of changes to services, ownership, or operations; (7) notifying DOJ and DHS of any malicious cybersecurity attacks detected on systems used to provide services within the U.S. domestic ​communications infrastructure; and (8) agreeing to allow DOJ and DHS to visit any domestic facility within 48 hours' notice.[43]

On March 30, 2009, Team Telecom informed the FCC that it had no objection to the FCC approving the applications, provided that the FCC condition approval on ComNet and Pacific Networks abiding by the commitments and undertakings listed in the March 3, 2009 agreement.[44] The FCC granted the authorizations in April 2009.[45]

4. Despite a Security Agreement, Team Telecom Conducted Limited Post-Authorization Monitoring

Team Telecom's oversight of ComNet in the 11 years since executing the security agreement has been minimal.[46] Neither DOJ nor DHS were able to locate any communications demonstrating Team Telecom's engagement of ComNet prior to 2012. In 2009 and 2010, Team Telecom's monitoring consisted of receiving unprompted written updates from ComNet.[47] For example, in November 2009, ComNet notified Team Telecom about changes in CITIC's board of directors.[48] In 2010, ComNet alerted Team Telecom as to its name change from CM Tel to ComNet and also provided Team Telecom with a new law enforcement point of contact.[49] Neither DOJ nor DHS were able to locate any communications with ComNet in 2011.

​In 2012, Team Telecom proactively engaged ComNet. After ComNet alerted Team Telecom about a corporate restructuring of its parent company,[50] a DHS official sent ComNet written inquiries and deliverable requests.[51] The requests sought information related to ComNet's (1) technical architecture; (2) security policies and standards; (3) governance controls for its U.S. facility; (4) law enforcement point of contact; (5) operational and IT auditing; and (6) other confirmations relating to the requirements outlined in the 2009 security agreement.[52] ComNet provided this information.[53] Officials informed the Subcommittee that Team Telecom determined no further action was required, as nothing ComNet provided suggested non-compliance with the terms of the security agreement.[54] In 2013, Team Telecom again asked for a "brief, up-to-date company overview."[55]

For approximately five years after signing the security agreement with ComNet, Team Telecom relied on these written representations as to ComNet's compliance with the 2009 security agreement. Although one official explained that Team Telecom generally waited to visit the offices of Chinese carriers with existing Section 214 authorizations during consideration of China Mobile USA's application,[56] Team Telecom conducted a site visit to ComNet's offices in February 2014.[57] A memo summarizing the 2014 visit suggests that the meeting may have been prompted by CITIC's application for Section 214 authority.[58] That application was referred to Team Telecom for review, and "in light of the pre-existing agreement with [Pacific Networks] and ComNet, [Team Telecom] determined a visit to . . . ComNet's domestic facility to be in order."[59]

Team Telecom met with representatives from ComNet and CITIC to discuss ComNet's corporate structure, telecommunications infrastructure, security policies and procedures, and law enforcement processes.[60] ComNet generally noted that no ​ownership changes had occurred since it executed the 2009 security agreement.[61] ComNet represented during the meeting that the Chinese government had "passive" involvement in the company's day-to-day operations, providing no input into operational decision-making.[62] In terms of law enforcement processes, ComNet confirmed its ability to implement call monitoring within one hour of a lawful requests.[63] The call monitoring included determining telephone numbers of call parties and monitoring specific calling card accounts.[64]

Ultimately, Team Telecom made no findings or recommendations specific to ComNet. The memo noted that Team Telecom should

reassess [its] collective strategy in dealing with foreign state-owned companies... that provide telecommunications services in the United States. Further recommendations regarding [ComNet's] license are pending the completion of [Team Telecom's] ongoing comprehensive review of foreign state-owned companies holding telecommunications licenses in coordination with the FCC.[65]

According to one official, the recommendation was a reference to Team Telecom's review of China Mobile USA's application and reflected Team Telecom's evolving understanding regarding foreign state-owned companies, particularly Chinese companies.[66]

Between March 2014 and late 2017, Team Telecom officials provided the Subcommittee with one communication with ComNet—a July 2015 letter ComNet submitted in response to a Team Telecom request for an update on any operational changes since the February 2014 site visit.[67] In September 2017, Team Telecom contacted ComNet's external counsel, who confirmed "ComNet and Pacific Networks . . . remain in operation."[68] A month later, Team Telecom requested ​copies of ComNet's physical and logical technical security architecture, security policies, and IT governance controls, noting that Team Telecom was in the process of "updat[ing] [its] files."[69] After receiving the requested documents, a Team Telecom official asked to visit ComNet's offices sometime in "early-mid March . . . [to] meet with a few people to discuss on-going compliance with the [security agreement]."[70]

The requested site visit occurred on March 22, 2018.[71] According to one Team Telecom member's memo summarizing the site visit, the purpose was to, in part, "evaluate the efficacy of a [security agreement] governing the operations of a foreign state-owned company providing telecommunications services within the United States."[72] The meeting lasted two and a half hours and again focused on ComNet's "corporate structure, ownership and management, products and services, telecommunications infrastructure, security policies and procedures, procedures regarding the handling of legal process, and compliance with CALEA."[73] Among the updates provided to Team Telecom were ComNet's recent office change—from Los Angeles to West Covina, California—and its introduction of Voice over Internet Protocol ("VoIP") and basic enterprise IT services.[74]

Team Telecom concluded that ComNet was "responsive to [all] comments and questions."[75] However, Team Telecom noted:

New services (VoIP, IT, etc.) were not contemplated when the USG parties negotiated the [security agreement] in 2009. Accordingly, the reporting requirements under the [security agreement] do little to address any new risks that may arise as ComNet expands its service offerings into new markets and grows its customer base.[76]

The Team Telecom officials attending the site visit recommended that:

USG parties should . . . continue to monitor compliance under the [2009 security agreement] as ComNet expands its new services. This situational awareness will help inform the USG Parties [sic] on-going discussions concerning the [agreement's] ability to address potential ​risks to national security and law enforcement equities arising from ComNet's operations in the United States and similarly situated telecommunications companies operating pursuant to similar mitigation agreements.[77]}}

In July 2018, Team Telecom provided a "feedback letter" to ComNet, summarizing the March 2018 site visit.[78] Team Telecom officials and ComNet. representatives informed the Subcommittee that Team Telecom has had no substantive engagement with ComNet since the site visit.[79]

5. ComNet Shares Characteristics Team Telecom Highlighted regarding China Mobile USA and CTA

ComNet has been providing international telecommunications services pursuant to Section 214 authorizations granted over a decade ago with little oversight by the U.S. government. As described above, Team Telecom highlighted concerns about China Mobile USA's proposed and CTA's actual operations in the United States. ComNet shares similar characteristics as the other Chinese carriers.[80] It is ultimately majority-owned by the Chinese government; its parent company reviews its budget and locations in the United States; it provides a range of telecommunications services in the United States; and it has built relationships with U.S. carriers. Without proper oversight by Team Telecom, these risks have gone unmitigated.

ComNet is ultimately majority-owned by the Chinese government. As noted above, ComNet became a wholly-owned subsidiary of Pacific Networks as part of its acquisition by CITIC. CITIC is majority-owned by CITIC Group Corporation ("CITIC Group"),[81] "a wholly state-owned company in the [People's Republic of China]."[82] According to CITIC's website, CITIC Group was "established in 1979 . . . with the support of late Chinese leader Deng Xiaoping" and "since its inception, CITIC Group has been a pilot for national economic reform and an ​important window on China's opening to the outside world."[83] The diagram below depicts the relevant ownership structure:

[84]

CITIC reviews ComNet's budget and U.S. locations and may be able to access U.S. customer records. During the 2014 site visit, ComNet representatives told Team Telecom officials that the Chinese government's ownership in ComNet was passive and that it provided no input into the company's operational decisions.[85] ComNet representatives similarly informed the Subcommittee that its daily operations are managed by its local management team in California.[86] The representatives, however, acknowledged that CITIC reviews the company's budget and U.S. locations.[87] CITIC also guides ComNet on its information security ​policies.[88] ComNet maintains a company-specific policy, but that policy was drafted based on CITIC's guidance.[89]

ComNet leverages CITIC's network operations center ("NOC"), located in Hong Kong, for "first tier monitoring" against cyber incidents or disruptions.[90] "All system alarms and network management data are sent to the NOC . . . ."[91] Further, CITIC's NOC maintains records of all alarms and access logs generated by ComNet's systems.[92]

ComNet representatives informed the Subcommittee that its data center and all backed-up information are located in the United States and that it controls access to all U.S. records and data systems.[93] However, records of Team Telecom's site visits indicate that ComNet used CITIC's data center in Hong Kong as a backup and that ComNet's wholesale billing records "are maintained in Hong Kong."[94] Team Telecom's records from the 2018 site visit also note that ComNet's VoIP customer and billing records are accessible to Hong Kong personnel.[95] ComNet informed the Subcommittee, by contrast, that its parent companies do not have direct access to these records and that they would need to request access from ComNet and follow ComNet's local procedures.[96]

ComNet provides various communications services in the United States with its Section 214 authorizations. ComNet provides international telecommunication services, consisting of wholesale direct dial services, wholesale SMS services, retail prepaid calling card services, and VoIP services.[97] Pacific Networks primarily provides international resold data services.[98] Together, the companies serve a mix of carrier customers, individual end-customers, and enterprise customers in the United States.[99]

​Through its wholesale international direct dial services, ComNet handles inbound and outbound voice traffic for U.S. carrier customers.[100] International voice traffic is routed through ComNet's global MPLS network.[101] Thus, ComNet uses a routing approach that allows data to be directed from one node to the next. based on routing labels.[102] Data is aggregated on its voice communications platform, which is located at ComNet's point of presence in Los Angeles.[103] From there, data is transmitted to the end-user through either an internet connection provided by Cogent or through a time-division multiplexing ("TDM") connection operated by U.S. carriers.[104] According to ComNet representatives, customers select which TDM vendor ComNet uses to route communications.[105] ComNet also provides SMS services to U.S. carrier customers. Unlike the voice communications platform housed at ComNet's Los Angeles facility, however, SMS communications are aggregated on CITIC's SMS hub platform in Hong Kong.[106] Thus, all international SMS communications are routed through CITIC's servers.[107]

ComNet's retail calling cards are targeted towards end-users in the United States.[108] The calls are routed in a similar manner as international voice calls, but customers in the United States must dial local access numbers.[109] ComNet obtains these numbers from major U.S. carriers.[110]

In 2017, ComNet began offering VoIP services to business customers.[111] These services allow office users the functions of an office telephone system.[112] Through VoIP phones provided either by ComNet or by the business itself, users ​can make both domestic and international calls through ComNet's voice services platform.[113] According to Team Telecom, incoming VoIP calls are delivered to end-customers through 7G Network.[114] Team Telecom's records also indicate that ComNet provided basic enterprise IT services, such as video conferencing and website and software development.[115] Team Telecom flagged that these services were not contemplated at the time the security agreement was entered into and thus, the existing reporting requirements did little to address the associated risks.[116]

Unlike the other carriers discussed above, ComNet has only one point of presence in the United States, located in Los Angeles, California.[117] Team Telecom records describe the Los Angeles facility as "the premier communications hub of the Pacific Rim and arguably the single most important point of connectivity in the Western United States."[118] ComNet's servers, equipment, and data center are all housed at the Los Angeles facility, including the servers that support its various services and a billing server.[119]

ComNet has built relationships with major U.S. carriers. Like the other Chinese carriers, ComNet does not own transmission networks in the United States. It leases network capacity and equipment from major U.S. carriers to transport data from the Los Angeles facility to its end customers.[120] ComNet has established relationships with Verizon and Century Link, among other U.S. carriers.[121] Verizon maintains an interconnection agreement with ComNet and leases customer premise equipment, Ethernet private lines, general internet access, and private IP access.[122] Although not providing specifics, Century Link indicated that it had some limited commercial relationships with ComNet related to providing ​network services, circuits, or collocation services.[123] As with CTA and CUA, neither Verizon nor CenturyLink maintains any mitigation or other agreement focused on network security with ComNet under their current arrangements.[124] The U.S. carriers do, however, employ security measures that apply regardless of whether an interconnection agreement exists.[125]

＊＊＊＊＊

On April 24, 2020, the FCC issued an order requiring ComNet (and Pacific Networks) to demonstrate why its Section 214 authorizations should not be revoked.[126] The companies jointly responded to the order on June 1, 2020.[127] The companies stressed that they have successful business records and have complied fully with FCC regulatory requirements and Team Telecom requests.[128] Further, the companies stated that they have never been “asked by the Chinese government or the Chinese Communist Party to take any action that would ‘jeopardize the national security and law enforcement interests of the United States’ or would suggest that the Companies are vulnerable ‘to the exploitation, influence, and control of the Chinese government.’”[129] As with CUA, ComNet and Pacific Networks noted that the federal government has not highlighted any activity taken by either company that might endanger national security, aside from being “ultimately owned by public companies with partial Chinese state ownership.”[130] The companies distinguished their licensing history from that of China Mobile USA.[131] ComNet and Pacific Networks concluded their response by noting, although revocation is not warranted, should additional mitigation be deemed necessary, they are open to discussing appropriate conditions with the FCC or Team Telecom.[132] The FCC is evaluating the information ComNet and Pacific Networks submitted and considering whether to revoke their authorizations.

  1. ↑ CM Tel (USA) LLC changed its name to ComNet in 2009. See ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  2. ↑ About Us, ComNet (USA) LLC, https://www.comnet-telecom.us/about-us. ComNet resells SIM cards of mobile wireless companies; it does not provide wireless service over its network. Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  3. ↑ See ComNet (USA) LLC, LinkedIn, https://www.linkedin.com/company/comnet-telecom.
  4. ↑ ComNet (USA) LLC, Statement of Information for the Fiscal Year Ended Dec. 31, 2018 (LLC-12) Filed with the Sec'y of State of the State of California, File No. 19-C86032 (July 29, 2019), https://businesssearch.sos.ca.gov/Document/RetrievePDF?Id=199920510003-26628618; ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  5. ↑ See In the Matter of CM Tel (USA) LLC Application for Authority Pursuant to Section 214 of the Communications Act of 1934, as Amended, for Global Authority to Operate as an International Facilities-Based and Resale Carrier (Sept. 27, 1999), https://fcc.report/IBFS/ITC-214-19990927-00607 (unofficial website).
  6. ↑ See CITIC Pacific, Annual Report 183 (2010), https://www.citic.com/uploadfile/2017/0525/20170525102539646.pdf ("In 2009 a listed subsidiary group of the Company CITIC Telecom acquired the remaining 51% equity interest in CM Tel (USA) LLC (renamed as ComNet (USA) LLC in July 2009 . . . ."). At this time, CM Tel (USA) LLC formally changed its name to ComNet (USA) LLC. ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  7. ↑ Corporate Profile, CITIC TELECOM INTERNATIONAL, https://www.citictel.com/about-us/corporate-profile/.
  8. ↑ See CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 Authority, File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website); CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 Authority, File No. ITC-T/C-20080913-00428, Supplement (filed Sept. 25, 2008), https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website) (stating "CITIC 1616 [Holdings Limited] will acquire CM Tel (USA) LLC through CITIC 1616's indirectly wholly owned subsidiary, Pacific Networks Corp.").
  9. ↑ See CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 Authority, File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website).
  10. ↑ See In the Matter of CM Tel (USA) LLC Application for Authority Pursuant to Section 214 of the Communications Act of 1934, as Amended, for Global Authority to Operate as an International Facilities-Based and Resale Carrier (Sept. 27, 1999), https://fcc.report/IBFS/ITC-214-19990927-00607 (unofficial website).
  11. ↑ See id. at 5.
  12. ↑ Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-00144S, at 2 (Oct. 13, 1999).
  13. ↑ Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-00151, DA No. 99-2328, 14 FCC Red 17862, 17864 (Oct. 28, 1999) (listing the "date of action" authorizing the application as October 27, 1999).
  14. ↑ See Pacific Networks Corp., International Section 214 Application File No. ITC-214-20070907-00368, https://fcc.report/IBFS/ITC-214-20070907-00368/590946 (unofficial website). See also DHS00460PSI.
  15. ↑ Pacific Networks Corp., International Section 214 Application File No. ITC-214-20070907-00368, at Attach. 1, https://fcc.report/IBFS/ITC-214-20070907-00368/590946 (unofficial website).
  16. ↑ FCC-PSI-000412-13.
  17. ↑ FCC-PSI-000415.
  18. ↑ Cf. TT-DOJ-045-60.
  19. ↑ See id. at TT-DOJ-045.
  20. ↑ See id.
  21. ↑ Id. at TT-DOJ-056.
  22. ↑ Id. at TT-DOJ-056-57.
  23. ↑ See generally TT-DOJ-061–101.
  24. ↑ In the Matter of Pacific Networks Corp. Application for Authority to Provide Switched Resale Service Between the United States and Permissible Int'l Points (File No. ITC-214-20070907-00368)—Petition to Adopt Conditions to Authorizations and Licenses (filed Sept. 3, 2008), https://fcc.report/IBFS/ITC-214-20070907-00368/661672 (unofficial website).
  25. ↑ Letter from Yuen Kee Tong, Chairman, Pacific Networks Corp., to Stewart Baker, Assistant Sec'y for Policy, Dep't of Homeland Sec., & Patrick Rowan, Acting Assistant Att'y Gen. for Nat'l Sec., Dep't of Justice (Sept. 2, 2008).
  26. ↑ Id.
  27. ↑ Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01304, DA No. 08-2037, 23 FCC Red 13265, 13266 (Sept. 4, 2008) (listing the "date of action" authorizing the application as September 3, 2008).
  28. ↑ CM Tel (USA) LLC, Application for Transfer of Control of International Section 214 Authority, File No. ITC-T/C-20080913-00428, Attach. 1 (filed Sept. 13, 2008), https://fcc.report/IBFS/ITC-T-C-20080913-00428 (unofficial website).
  29. ↑ Id.; Letter from Joshua T. Guyan to Fed. Commc'ns Comm'n Int'l Bureau (Apr. 22, 2009). Resale could be done directly or indirectly through the resale of another U.S. resale carrier's international switched services.
  30. ↑ FCC-PSI-000154-55. At the time the transfer request was sent to Team Telecom, the Chinese Government held a 14 percent indirect ownership (29 percent attributable interest) in ComNet through various intervening companies, and therefore, ComNet was considered "affiliated with Chinese carriers owned or controlled by the Chinese Government." See id. The Chinese government increased its indirect holdings in CITIC in January 2009, as described more below.
  31. ↑ See Letter from Joshua T. Guyan to Fed. Commc'ns Comm'n Int'l Bureau (Dec. 23, 2008).
  32. ↑ See id. Prior to surrendering the authorization, Pacific Networks filed for special temporary authority to "transfer control of Pacific Networks Corporation from CITIC Pacific Limited to CITIC Group pending Commission action on an underling transfer of control application." See FCC-PSI-000510-26. Pacific Networks indicated that the transfer of control was necessary to strengthen its liquidity due to certain realized losses and was unrelated to telecommunications services. See FCC-PSI-000510–26. It appears that the FCC did not rule on the special temporary authority request prior to Pacific Networks surrendering its authorization. The FCC issued a public notice of the surrender on January 2, 2009. Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01335, DA 09-2, 24 FCC Red 16, 19-20 (Jan. 2, 2009) (listing the effective date of the surrender as Dec. 23, 2008).
  33. ↑ Compare Pacific Networks Corp., International Section 214 Application File No. ITC-214-20070907-00368, Attach. 1, https://fcc.report/IBFS/ITC-214-20070907-00368 (unofficial website) (referencing the Chinese Government's 14 percent indirect ownership (29 percent attributable interest)) with Pacific Networks Corp., International Section 214 Application File No. ITC-214-20090105-00006, Attach. 1, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=76226&acct=575631&id_form_num=2&filing_key=-158718 (referencing the Chinese government's 57.6 percent attributable interest).
  34. ↑ See Pacific Networks Corp., International Section 214 Application File No. ITC-214-20090105-00006, https://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/attachment_menu.hts?id_app_num=76226&acct=575631&id_form_num=2&filing_key=-158718; Fed. Commc'ns Comm'n, Public Notice—International Applications Accepted for Filing, Rep. No. TEL-01338S, at 2 (Jan. 16, 2009).
  35. ↑ Id.
  36. ↑ See Letter from Joshua T. Guyan to Fed. Commc'ns Comm'n Int'l Bureau (Apr. 22, 2009).
  37. ↑ FCC-PSI-000478-79.
  38. ↑ Cf. DHS00460PSI (noting that the security agreement signed with ComNet in 2009 took into account (1) ComNet's transfer of control application and (2) Pacific Networks' new Section 214 application).
  39. ↑ See TT-DOJ-120-22.
  40. ↑ See id.
  41. ↑ In the Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific Networks Corp. (File No. ITC-214-20090105-00006)—Petition to Adopt Conditions to Authorizations and Licenses (Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial website); Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) LLC to Stephen Heifetz, Deputy Assistant Sec'y for Policy Dev., Dep't of Homeland Sec. & Matthew Olsen, Acting Assistant Att'y Gen., Nat'l Sec. Div., Dep't of Justice (Mar. 3, 2009).
  42. ↑ Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) LLC to Stephen Heifetz, Deputy Assistant Sec'y for Policy Dev., Dep't of Homeland Sec. & Matthew Olsen, Acting Assistant Att'y Gen., Nat'l Sec. Div., Dep't of Justice (Mar. 3, 2009). See also In the Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific Networks Corp. (File No. ITC-214-20090105-00006)—Petition to Adopt Conditions to Authorizations and Licenses (Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial website).
  43. ↑ See generally Letter from Norman Yuen, Chairman, Pacific Networks Corp., & Fan Wei, Dir., CM Tel (USA) LLC to Stephen Heifetz, Deputy Assistant Sec'y for Policy Dev., Dep't of Homeland Sec. & Matthew Olsen, Acting Assistant Att'y Gen., Nat'l Sec. Div., Dep't of Justice (Mar. 3, 2009).
  44. ↑ In the Matter of CM Tel (USA) (File No. ITC-T/C-20080913-00428), In the Matter of Pacific Networks Corp. (File No. ITC-214-20090105-00006)—Petition to Adopt Conditions to Authorizations and Licenses (Mar. 30, 2009), https://fcc.report/IBFS/ITC-T-C-20080913-00428/704912 (unofficial website).
  45. ↑ Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01357, DA 09-1030, 24 FCC Red 5376, 5379 (May 7, 2009) (listing the "date of action" authorizing the transfer as April 24, 2009); Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01353, DA 09-799, 24 FCC Red 4155, 4156 (Apr. 9, 2009) (listing the "date of action" authorizing the application as April 8, 2009) (corrected Fed. Commc'ns Comm'n, Public Notice—International Authorizations Granted, Rep. No. TEL-01355, DA 09-898, 24 FCC Red 6379, 6384 (Apr. 23, 2009)).
  46. ↑ In discussions with the Subcommittee and its response to the FCC's Show Cause Order, ComNet stressed that it has regularly updated Team Telecom on its operations, provided a substantial amount of information to the agencies, and always responded to promptly to requests for information. See Briefing with ComNet (Apr. 13, 2020); Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee); In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at 7-9, Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199.
  47. ↑ See, e.g., TT-DOJ-309-18; DHS00133PSI-44.
  48. ↑ TT-DOJ-309-17.
  49. ↑ TT-DOJ-318.
  50. ↑ DHS00159PSI-60; DHS00176PSI-77.
  51. ↑ Cf. DHS00178PSI-81 (referencing a July 23, 2012 email from Team Telecom requesting particular deliverables) (attachments omitted).
  52. ↑ Id.
  53. ↑ DHS00178PSI-311.
  54. ↑ Email from the Dep't of Homeland Sec. to the Subcommittee (June 4, 2020) (on file with the Subcommittee).
  55. ↑ See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199 (Letter from Bruce Olcott, Counsel to ComNet & Pacific Networks, to Hunter Deeley, Foreign Investment Review Staff, Nat'l Sec. Div., Dep't of Justice (Oct. 10, 2013)).
  56. ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020).
  57. ↑ DHS00460PSI-465. Although not a party to the 2009 security agreement, a representative from the Department of Defense's Chief Information Office also attended the site visit. See id. at DHS00460PSI.
  58. ↑ Id. at DHS00461PSI.
  59. ↑ Id.
  60. ↑ See generally DHS00460PSI-65.
  61. ↑ Id. at DHS00460PSI-61.
  62. ↑ Id. at DHS00462PSI. ComNet informed the Subcommittee that it has "consistently" informed Team Telecom and the FCC that the Chinese government has indirect ownership in the companies, has not been involved in operational decision-making, and has not been involved "passive or otherwise" in ComNet's or Pacific Networks' day-to-day operations. Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  63. ↑ DHS00460PSI-465, at DHS00464PSI.
  64. ↑ DHS00460PSI-465.
  65. ↑ Id. at DHS00460PSI.
  66. ↑ Briefing with the Dep't of Homeland Sec. (Feb. 7, 2020).
  67. ↑ DHS00321PSI-22. In its recent response to the FCC's Show Cause Order, ComNet included a September 2014 email in which it provided Team Telecom with copies of the company's corporate charts. See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at Exhibit K (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199 (Email from Tammie Tam, Legal Consultant, CITIC Telecom Int'l Holdings Ltd. to Dep't of Homeland Sec. & Dep't of Justice (Sept. 3, 2014) (other senders and recipients redacted)).
  68. ↑ TT-DOJ-392-99, at TT-DOJ-398.
  69. ↑ Id. at TT-DOJ-397.
  70. ↑ Id. at TT-DOJ-396.
  71. ↑ See TT-DOJ-400-03; TT-DOJ-521-23.
  72. ↑ TT-DOJ-521-23, at TT-DOJ-521.
  73. ↑ Id. See also DHS00466PSI-71.
  74. ↑ TT-DOJ-521-23, at TT-DOJ-522; DHS00466PSI-71, at DHS00467PSI. ComNet reported that the revenue associated with the recently introduced services was "insignificant." At the time of the meeting, ComNet reported having only one VoIP customer. See TT-DOJ-521-23, at TT-DOJ-522; DHS00466PSI-71, at DHS00467PSI.
  75. ↑ TT-DOJ-521-23, at TT-DOJ-522.
  76. ↑ Id.
  77. ↑ Id. at TT-DOJ-522-23.
  78. ↑ TT-DOJ-481-83.
  79. ↑ See Email from the Dep't of Homeland Sec. to the Subcommittee (Feb. 14, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  80. ↑ In discussions with the Subcommittee and in its response to the FCC's Order to Show Cause, ComNet distinguished its operations from China Mobile USA and CTA. According to ComNet, the companies differ in terms of company size, scope of business operations, corporate ownership structure, history of operations in the United States, and employment of U.S. citizens. See Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee); In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at 19-26 (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199.
  81. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  82. ↑ CITIC Telecom International, Annual Report 248 (2019), https://www.citictel.com/wp-content/uploads/2020/03/EW01883_AR_20200327.pdf.
  83. ↑ Major Shareholder—About CITIC Group, CITIC Telecom International, https://www.citictel.com/about-us/major-shareholder/.
  84. ↑ The diagram is derived from information ComNet provided to the Subcommittee, as well as publicly available information. See Major Shareholder—About CITIC Group, CITIC Telecom International, https://www.citictel.com/about-us/major-shareholder/; CITIC Telecom International, Annual Report 99, 250 (2019), https://www.citictel.com/wp-content/uploads/2020/03/EW01883_AR_20200327.pdf; ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111, at Exhibit A (June 1, 2020), http://licensing.fcc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199.
  85. ↑ DHS00460PSI-65, at DHS00462PSI.
  86. ↑ Briefing with ComNet (Apr. 13, 2020).
  87. ↑ Id.
  88. ↑ Id.
  89. ↑ Id.
  90. ↑ Id.
  91. ↑ DHS00460PSI-65, at DHS00462PSI.
  92. ↑ Id.
  93. ↑ Briefing with ComNet (Apr. 13, 2020).
  94. ↑ DHS00460PSI-65, at DHS00463PSI; DHS00466-71, at DHS00468PSI.
  95. ↑ DHS00466-71, at DHS00470PSI.
  96. ↑ See Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  97. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); DHS00462PSI, DHS00467PSI.
  98. ↑ DHS00462PSI.
  99. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  100. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  101. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  102. ↑ Multiprotocol Label Switching, Tech Target, https://searchnetworking.techtarget.com/definition/Multiprotocol-Label-Switching-MPLS.
  103. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  104. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020); DHS00466-71, at DHS00468PSI. The TDM connection is a physical fiber line that connects two points. Briefing with ComNet (Apr. 13, 2020).
  105. ↑ Briefing with ComNet (Apr. 13, 2020).
  106. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  107. ↑ Cf. Briefing with ComNet (Apr. 13, 2020).
  108. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  109. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  110. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020); Letter from Lerman Senter PLLC, counsel to ComNet, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  111. ↑ DHS00466-71, at DHS00468PSI; TT-DOJ-521-23, at TT-DOJ-522.
  112. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); DHS00466-71, at DHS00468PSI.
  113. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); DHS00466-71, at DHS00468PSI.
  114. ↑ DHS00466-71, at DHS00468PSI. 7G Network is a U.S.-based telecommunications company. About—7G Network, Inc., LinkedIn, https://www.linkedin.com/company/7g-network-inc-/about/.
  115. ↑ DHS00466-71, at DHS00467PSI; TT-DOJ-521-23, at TT-DOJ-522.
  116. ↑ TT-DOJ-521-23, at TT-DOJ-522.
  117. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee).
  118. ↑ DHS00460PSI-65, at DHS00463PSI; DHS00466-71, at DHS00468PSI.
  119. ↑ ComNet Presentation to the Subcommittee (Apr. 13, 2020) (on file with the Subcommittee); Briefing with ComNet (Apr. 13, 2020).
  120. ↑ See generally DHS00460PSI–65; TT-DOJ-521–23.
  121. ↑ Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019). As noted above, in addition to voice and data termination services, ComNet obtains local access numbers needed for its retail calling card services from local carriers. Briefing with ComNet (Apr. 13, 2020); Letter from Lerman Senter PLLC, counsel to Com Net, to the Subcommittee (June 2, 2020) (on file with the Subcommittee). Unlike its relationships with CTA and CUA, AT&T's relationship with ComNet is limited to providing ComNet retail telephone and TV services for its own consumption. See Email from Gibson, Dunn & Crutcher LLP, counsel to AT&T, to the Subcommittee (June 2, 2020) (on file with the Subcommittee).
  122. ↑ Briefing with Verizon (Sept. 4, 2019).
  123. ↑ Briefing with CenturyLink (Sept. 10, 2019)
  124. ↑ See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019). According to Verizon, its agreements are consistent with those it has with other carriers. Teleconference with Verizon (June 2, 2020).
  125. ↑ See Briefing with Verizon (Sept. 4, 2019); Briefing with CenturyLink (Sept. 10, 2019); Teleconference with Verizon (June 2, 2020); Email from CenturyLink to the Subcommittee (June 2, 2020) (on file with the Subcommittee)
  126. ↑ See In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Order to Show Cause, DA 20-450 (Apr. 24, 2020), https://docs.fcc.gov/public/attachments/DA-20-450A1.pdf
  127. ↑ In the Matter of Pacific Networks Corp. and ComNet (USA) LLC, Response to Order to Show Cause, GN Docket No. 20-111 (June 1, 2020), http://licensing.ffc.gov/cgi-bin/ws.exe/prod/ib/forms/reports/related_filing.hts?f_key=710677&f_number=ITC2142009042400199.
  128. ↑ Id. at i, 2, 20.
  129. ↑ Id. at i-ii, 2, 19.
  130. ↑ Id. at 2.
  131. ↑ Id. at 22-23.
  132. ↑ Id. at 31-32.
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