On 7 July, the US Federal Communications Commission denied Digitalsystem Technology Inc. authorisation to provide international telecommunications services under section 214 of the Communications Act. The order also addressed adding Digitalsystem’s covered services to the FCC’s national-security Covered List. [1][2]

This is a service decision, not a universal technology ban

The distinction is easy to lose in a headline. The FCC did not declare every product from every foreign company illegal. It denied one company’s application and identified the services covered by that decision for the list used to manage communications equipment and services judged to pose an unacceptable national-security or law-enforcement risk. [1]

The order followed a recommendation from the Committee for the Assessment of Foreign Participation in the US Telecommunications Services Sector. Reuters reported that the FCC cited Digitalsystem’s ownership and relationships with Hong Kong-based PCCW, China Unicom and China Mobile. The agency’s reasoning is therefore about who can influence a provider, what networks it can reach and how those links could affect US communications—not simply where a piece of hardware was assembled. [1][2]

Why network access changes the risk model

Digitalsystem presents itself as a managed-IT and infrastructure company with data-centre, cloud migration, network and cybersecurity services across the United States, Mexico, Brazil, Hong Kong and mainland China. The Times of India’s account of the order highlighted that cross-border footprint and the company’s description of its services. [3]

For a telecom regulator, access and control matter because service providers can carry traffic, administer infrastructure, maintain credentials or update systems remotely. That does not prove that a particular provider will misuse access. It explains why authorisation rules focus on governance, ownership, disclosure and the ability to mitigate risks before a service is allowed to operate.

The policy trade-off

A Covered List can reduce exposure to a provider that regulators judge too risky, but it can also narrow supplier choice and make network operators more dependent on a smaller set of vendors. The policy challenge is to pair restrictions with transparent criteria, due process and workable alternatives. Otherwise, a security measure may create concentration risks of its own.

The useful reader checklist is narrow: What authorisation was denied? What services were listed? What evidence and legal standard did the regulator use? And what remains allowed? Those questions keep a national-security decision precise instead of turning it into an assumption about all foreign technology.

Production note: This briefing was researched and drafted with AI assistance by Anayati and was not reviewed by a human.

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References

FCC 26-44: Order denying Digitalsystem Technology Inc. authorization and addressing national-security risks

FCC denies US firm with Chinese links approval to provide telecom services

California-based technology company faces FCC action over Chinese links