China's telecom challenge to US national security - Telecom Forum

Telecom Asia, Oct, 2003 by Robert C. Fonow

Chinese authorities have been quick to act upon a series of unexpected opportunities for acquiring international telecommunications assets. Since the telecommunications collapse of 2001, Chinese buyers have purchased several large networks in Asia, worth up to $20 billion of previously owned US investments. PSINet's Hong Kong assets were purchased by CITIC, a company with close relations with the People's Liberation Army. Level 3's Asian assets have been sold to Reach, 50%-owned by PCCW, a company run by Richard Li, the son of tycoon Li Ka Shing--both of whom maintain close contacts with Beijing. Asia Global Crossing assets were purchased by north China incumbent China Netcom. So by serendipity more than planning, Chinese authorities have been presented with a once-in-a-generation opportunity they would be foolish to pass by. On any scale of national and international telecommunications investments, Chinese companies and their proxies got these assets for free.

This has raised a red flag in the US defense community, which is concerned that these assets provide the basis of a sophisticated information warfare capability that extends beyond the Chinese mainland. As a result, US war planning will assume that China has information and telecom warfare capability equal to that of the US and will be the most capable military competitor the US has faced since World War II and therefore is not to be underestimated in any way.

Hollowing-out

In such an environment, issues of outsourcing, equal market access, and maintaining a balance of capabilities becomes a foreign policy objective. Sure to become an increasing problem for US service providers is the disparity of market access between China and the United States. No US-based carrier or value-added service provider can offer services in China without constraint. The conditions under the World Trade Organization (WTO) telecom services agreements are preferential to Chinese interests.

The Shanghai Symphony (UNISITI) joint venture is often touted as an example of a successful undertaking between AT&T and Shanghai Telecom. However, after seven years of negotiation, this was limited to Pudong, an under utilized location across the Huangpu River from the main Shanghai commercial areas.

This disparity furthers the hollowing out of the American telecom services industry. China Telecom is permitted unfettered market access in the US, with a license from the FCC to provide domestic and international services. As more and more American companies move operations to China, American telecom services providers are at a disadvantage as American companies are likely to choose the Chinese carrier for traffic to China. As China becomes the dominant telecommunications producer, with the largest markets, a stronger diplomatic and negotiating effort is needed to assure the United States is positioned to maintain at least parity with Chinese telecommunications resources and personnel trained in global network management and development.

Then there is the direct military impact of China's acquisition of cutting edge telecom networks, which are the delivery systems for information and data communications-based weapons. Control of these assets enhances China's capability to monitor and interdict communications that travel across its network. Up to 95% of Department of Defense telecom traffic uses the international telecommunications system. Most diplomatic or military traffic destined for North, East, and South Asia will traverse networks now owned by Chinese interests, Indeed, some of this traffic passes through facilities on the Chinese mainland.

Netwar capabilities

Because of its purchase of American assets, China will have a sophisticated international network capable of projecting information or netwar capabilities beyond its border.

A sophisticated information warfare program might involve political coercion via networked public diplomacy, quarantine of resupply, or prevention of use of satellite positioning systems, by hacking into information control systems or interfering with the international telecom switching architecture. Without an uninterrupted supply line, troops would be vulnerable very quickly. Without global positioning systems and other battlefield information resources, US forces would find themselves facing formidable enemies with dose-in supply capabilities. For this reason, telecommunications and the information systems controlling them become important elements in coercive diplomacy, and possible use of force. Such an aggressive posture towards US interests may seem unlikely, but planners tend to think of the worst-case scenarios.

Telecommunications and data communications are the heart of the revolution in military affairs. Based on China's prodigious engineering education capability--almost equal that of the United States at undergraduate level China will become equal to the US in certain aspects of information warfare. China will not compete against the US in the projection of traditional forces, but it will use its capability to exploit asymmetric differences in force structure, assessing and attacking the maximum point of vulnerability. Rather like attacking the Star Wars "Death Star", this will open the way to finding the one soft spot in an otherwise invulnerable foe.