According to press release from the Department of Justice (DoJ) on Wednesday June 17th, Team Telecom recommended to the Federal Communications Commission (FCC), based on national security concerns, that the FCC partially deny the Pacific Light Cable Network (PLCN) subsea cable system application, to the extent it seeks a direct connection between the United States and Hong Kong, and partially grant the license application for PLCN’s U.S. owners and for PLCN’s connections between the United States, Taiwan, and the Philippines.

Team Telecom, which is formally known as the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (or the Committee), further recommended that the FCC grant the portions of PLCN’s application seeking to connect the United States, Taiwan, and the Philippines, which do not have any People’s Republic of China (PRC) based ownership and are separately owned and controlled by subsidiaries of Google LLC and Facebook, Inc., on the condition that the companies’ subsidiaries enter into mitigation agreements for those respective connections. 

On April 8, 2020, the FCC granted Google’s request for Special Temporary Authority (STA) to commercially operate the segment of PLCN connecting the United States and Taiwan for six months, based on obligations set forth in a Provisional National Security Agreement between Google and the U.S. Departments of Justice, Homeland Security, and Defense. 

As submitted to the FCC, the PLCN application would have allowed for the highest capacity subsea cable connection between the United States and Asia and been the first direct connection between the United States and Hong Kong.  This raised national security concerns, because a significant investor in the PLCN is Pacific Light Data Co. Ltd., a Hong Kong company and subsidiary of Dr. Peng Telecom & Media Group Co. Ltd. (Dr. Peng Group), the fourth largest provider of telecommunications services in the PRC.

According to the DoJ, Team Team made its recommendation on the basis that:

  • The current national security environment, including the PRC government’s sustained efforts to acquire the sensitive personal data of millions of U.S. persons, the PRC government’s access to other countries’ data through both digital infrastructure investments and recent PRC intelligence and cybersecurity laws, and changes in the market that have transformed subsea cable infrastructure into increasingly data-rich environments that are vulnerable to exploitation;
  • Concerns about PLCN’s PRC-based owners, Dr. Peng Group and Pacific Light Data, including Dr. Peng Group’s relationship with PRC intelligence and security services and its obligations under PRC intelligence and cybersecurity laws, questions about Dr. Peng Group’s compliance with U.S. laws and regulations stemming from separate acquisitions involving U.S. telecommunications assets, and Pacific Light Data’s connections to PRC state-owned carrier China Unicom; and
  • Concerns about the PRC government’s recent actions eroding Hong Kong’s autonomy through the proposed expansion and applicability of the PRC’s national security laws to Hong Kong while at the same time allowing PLCN to further strengthen Hong Kong’s status as a hub for international communications critical infrastructure, where a growing share of U.S. communications traffic to the Asia Pacific must first land on Chinese territory and traverse Chinese-owned or -controlled infrastructure before ultimately reaching final destinations in other parts of Asia.

PLCN’s high capacity and low latency would encourage U.S. communications traffic crossing the Pacific to detour through Hong Kong before reaching intended destinations in other parts of the Asia Pacific region.  The recommendation specified that it was not in U.S. national security or law enforcement interests to approve subsea cables landing in PRC territory when the PRC government has previously demonstrated the intent to acquire U.S. persons’ data.  The recommendation also explained that PLCN’s proposed Hong Kong landing station would expose U.S. communications traffic to collection by the PRC.  Such concerns have been heightened by the PRC government’s recent actions to remove Hong Kong’s autonomy and allow for the possibility that PRC intelligence and security services will operate openly in Hong Kong. 

In its recommendation to the FCC, Team Telecom also mentioned several pending applications seeking direct connections between the United States and Hong Kong, including HK-G, HKA and BtoBE, which would raise similar concerns.