UPDATE 1-FCC votes to deny China Mobile bid to operate in U.S.

David Shepardson

(Adds vote, background, more quotes)

WASHINGTON, May 9 (Reuters) - The Federal Communications Commission voted unanimously on Thursday to deny China Mobile Ltd's bid to provide U.S. telecommunications services, citing risks that the Chinese government could use the approval to conduct espionage against the U.S. government.

China Mobile, which is owned by the Chinese government, sought approval in 2011 to provide interconnection services for phone calls between the United States and other countries. The approval would have given it enhanced access to U.S. telephone lines, fiber-optic cable, cellular networks and communications satellites.

FCC Commissioner Brendan Carr said on Thursday the United States should also take "additional action" and investigate whether to revoke similar prior approvals for other Chinese-owned carriers, including China Unicom and China Telecom Corp, to operate in the United States. The carriers could not immediately be reached for comment.

The FCC cited reports that "China Telecom has been hijacking U.S. traffic and redirecting it through China," Carr noted.

FCC Chairman Ajit Pai said "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 added "the Chinese government could use China Mobile to exploit our telephone network to increase intelligence collection against U.S. government agencies and other sensitive targets that depend on this network."

FCC Commissioner Geoffrey Starks said Thursday "the national security environment has changed since those applications were granted" to other Chinese carriers. He said it was a "top priority" to address national security concerns regarding other carriers.

Starks noted that if China Mobile had won approval, it "could even end up carrying the communications of U.S. government agencies" if it offered the least costly path to carry traffic on a particular route. (Reporting by David Shepardson Editing by Chizu Nomiyama and Jonathan Oatis)