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FCC set to fine Truphone over alleged Russian ties

US comms regulator, the FCC, has taken enforcement action against UK eSim firm Truphone for failing to accurately disclose foreign ownership stake by dual Russian/Cypriot nationals.

The Federal Communications Commission has proposed a fine of $660,639 against Truphone (through Montana-based subsidiary iSmart Mobile) for ‘exceeding statutory limits for ownership by foreign individuals or entities holding equity or voting interests in FCC-issued licenses without Commission approval.’

The FCC claims that the ownership of Truphone and control of its FCC licenses were transferred repeatedly to foreign individuals without disclosure to authorities. Or as a quote by Commissioner Geoffrey Starks more plainly puts it: Truphone “has been indirectly owned by a group of Russian oligarchs since at least 2011.”

The rules are to have a carrier license in the US you need to have approval from the authorities before letting a foreign entity own 25% or more of the firm.

Network security is national security,” said Commissioner Geoffrey Starks. “Even before Russia’s invasion of Ukraine, the United States and other democracies around the world were reassessing their policies towards entities affiliated or otherwise subject to the jurisdiction of adversary states.  The FCC has done so in several recent proceedings, including our effort to “rip and replace” Huawei and ZTE equipment from U.S. networks, as well as our revocation of the section 214 authorizations for certain Chinese telecom carriers.  Today’s enforcement action provides yet another example of how the Commission’s actions must work to ensure that our networks are as secure as possible.

“This case involves a small Montana wireless carrier that has been indirectly owned by a group of Russian oligarchs since at least 2011.  While it does not appear that these individuals are currently subject to any U.S. sanctions, they have been targeted with sanctions overseas. The licenses at issue have undergone a bewildering number of changes in ownership over the years but at all times have ultimately been controlled by these oligarchs and their representatives.”

From the rather bullish statements associated with the announcement, it seems this is part of a broader review of the telecoms space with regards to Russian involvement:

“We now have a clear process for revoking a foreign carrier’s existing authorization when our national security colleagues recommend that we do so,” said Chairwoman Jessica Rosenworcel. “You can see this in the actions we took with China Telecom Americas, China Unicom Americas, Pacific Networks, and ComNet. We are also working with our federal partners to establish a broader review of foreign carrier authorizations to provide service in the United States.  As part of this effort, I directed the International Bureau to review all past grants of international Section 214 applications and in the wake of the Russia-Ukraine conflict, we launched an internal assessment of Russian ownership of telecommunications interests in the United States.”

$660,639 doesn’t feel like a huge amount of money, but the FCC targeting Truphone’s US subsidiary in this way does however sets a grim precedent for the firm in general across the rest of the world, as indeed it does for any other firm with any Russian ties. This swoop by US authorities may prove to be of particular relevance to telecoms firms since there is already a high degree of politization around the sector, which is on clear display in the quotes from the FCC above.

 

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