The unanimous decision by the Federal Communications Commission on Thursday blocks a years-long effort by China Mobile to gain access to U.S. customers. The company had sought to sell a service connecting Americans to phone users in foreign countries. But FCC Chairman Ajit Pai said granting permission to China Mobile could allow the Chinese government to spy on sensitive U.S. communications.
"There is a significant risk that the Chinese government would use China Mobile to conduct activities that would seriously jeopardize the national security, law enforcement and economic interests of the United States," Pai said at the FCC's monthly open meeting on Thursday.
The National Telecommunications and Information Administration, a branch of the Commerce Department, had previously recommended that the FCC deny China Mobile's request.
"Because China Mobile is subject to exploitation, influence, and control by the Chinese government, the Executive Branch believes that granting China Mobile's application ... would produce substantial and unacceptable national security and law enforcement risks," the telecommunications agency said in a filing to the FCC.
Giving China Mobile access to the US telecommunications market could lead to a spike in Chinese spying, it said. Phone calls or other communications from US government agencies to international destinations could pass through China Mobile's network, even if the agencies are not customers of the operator, according to the filing. The company wasn't seeking to offer mobile services directly to US customers, the filing said.
The rejection is expected to have little impact on the company's income. The international calling business accounts for only a tiny portion of China Mobile's revenue, according to Ramakrishna Maruvada, an analyst with Daiwa Capital Markets.
-- CNN Business' Sherisse Pham contributed reporting.
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