On 4 April 2020 President Trump issued Executive Order (EO) 13913 (Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector). The EO formalises Team Telecom, a previously ad hoc committee composed of multiple US government agencies, which for many years has reviewed applications for Federal Communications Commission (FCC) authorisations involving non-US parties, typically for US-international telecoms service or submarine cable landings.
Like its ad hoc predecessor, the committee, has the primary responsibility of reviewing applications for FCC authorisations, including licence transfers, which involve foreign ownership to identify national security or law enforcement risks. In addition, the committee may review existing licences to identify national security or law enforcement risks, theoretically even if they have already been looked at by Team Telecom during the application stage. The EO tasks the FCC with referring any existing authorisations and applications to the committee, as was the practice with Team Telecom.
The EO also imposes time limits for the application review process. This is a major shift away from Team Telecom's legacy process, which had no defined timeframes for review and lasted years in some cases. As discussed below, there are additional differences between Team Telecom's practices and the process described in the EO.
FCC implementing rules coming soon
On 27 April 2020 the FCC issued a public notice seeking to refresh the record in a proceeding that began in 2016, entitled "Process Reform for Executive Branch Review of Certain FCC Applications and Petitions Involving Foreign Ownership". In that proceeding, the FCC requested comments in connection with formalising the practice of referring certain applications to Team Telecom. In the public notice, the FCC announced that interested parties may comment on the effect of the EO and any rules that the FCC implements in connection therewith. Comments will be due 30 days after the public notice is published in the Federal Register, and reply comments will be due 14 days after that.
Commenters will likely focus on, among other things, one or more of the following:
- issues generally relating to the new committee's activities;
- issues concerning the timing and transparency of the new committee's activities, particularly those relating to:
- the nature of any certifications that applicants will need to make and the timing of those certifications; and
- which applications should fall under this review process.
With respect to the last topic above, it has been the FCC's practice to refer an application with foreign ownership to Team Telecom if it involves one of the following:
- international Section 214 authority, which relates to US-international telecoms service;
- the assignment or transfer of control of domestic or international Section 214 authority involving 10% or greater direct or indirect foreign ownership;
- a submarine cable landing licence; or
- the assignment or transfer of control of a submarine cable landing licence.
In addition, the FCC currently "refers petitions seeking authority to exceed the section 310(b) foreign ownership limits for broadcast and common carrier wireless licensees, including common carrier satellite earth stations". Notably, in the FCC's 2016 notice of proposed rulemaking, there was no plan to expand the scope of applications potentially subject to Team Telecom review.
While these were the types of licence that were of concern in 2016, with the advent of new technology, new regulations may include additional subject matter that the FCC will choose to refer to the committee. For example, the commission may decide that other types of communications infrastructure, such as Voice over Internet Protocol and various wireless spectrum authorisations (eg, radio frequency identification), should be referred. In addition, the government has escalated its interest in Chinese-origin telecoms technologies and services, including the administration's EO relating to securing the telecoms supply chain from foreign adversaries, the Department of Commerce's proposed rules regarding the same and amendments to the Federal Acquisition Regulations.(1) Against this backdrop, the scope of the proceeding may expand to reflect these changes.
Summary of EO: formalising Team Telecom
As discussed, the purpose of the EO is to implement a formal process for reviewing FCC applications and certain existing licences that involve non-US parties.
As with the legacy Team Telecom, the new committee's membership is comprised of representatives from several US government departments and agencies:
- the Secretary of Defence;
- the Attorney General;
- the Secretary of Homeland Security; and
- the head of any other executive department or agency, or any assistant to the president, as the president determines appropriate.
In addition, the committee has several officials that will act as advisers, including:
- the secretary of state;
- the secretary of the Treasury;
- the secretary of commerce;
- the director of the Office of Management and Budget;
- the US trade representative;
- the director of national intelligence;
- the administrator of general services;
- the president's national security adviser;
- the assistant to the president for economic policy;
- the director of the Office of Science and Technology Policy;
- the chair of the Council of Economic Advisers; and
- any other assistant to the president as the president determines appropriate.
The responsibility of all roles can be delegated within each agency or department.
The committee's duties are outlined in some detail. As noted above, the committee's ultimate purpose is to identify risks to national security or law enforcement in relation to FCC licence applications and existing licences that involve non-US parties. As appropriate, the committee can request additional information about the application or licence from the applicant or licensee. Discussed in more detail below, the committee can also require the adoption of mitigation measures as conditions to the FCC granting a licence, along with ongoing compliance monitoring relating to such conditions.
As with the committee's duties, the process for reviewing applications and existing licences is clearly spelled out in the EO. Importantly, the EO ostensibly implements firm deadlines for the review periods, a significant new development given that applications sometimes languished for years in Team Telecom purgatory. However, the deadlines to complete a review are triggered by the committee chair determining that "the applicant's responses to any questions and information requests from the Committee are complete". It thus remains to be seen how quickly the committee chair will determine that responses are complete in practice.
After completing its review, the committee has three options in the case of an application:
- advise the FCC that it has no objection to the licence;
- recommend that the FCC deny the application; or
- recommend that the FCC implement mitigation measures.
For existing licences, the committee can:
- recommend that the FCC modify the licence to include mitigation measures;
- recommend that the FCC revoke the licence; or
- take no action with respect to the licence.
If the committee identifies a national security or law enforcement concern, it can require standard mitigation measures, which have yet to be formally established. The committee can also require non-standard mitigation conditions with the approval of any authorisation. Further, the committee is now required to monitor any mitigation measures that get imposed. It can also determine that a licensee has not complied with a mitigation measure and thus revoke the licence or potentially impose additional conditions.
FCC signals more intense scrutiny of Chinese telecoms companies
On 24 April 2020 the FCC issued show cause orders against four Chinese telecoms companies, expressing concern over their relationships with the Chinese government and affording them an opportunity to submit arguments against the revocation of their existing authorisations. One of those companies, China Telecom Americas, was the subject of a highly publicised 9 April 2020 Team Telecom recommendation to revoke more than one international Section 214 authorisation.
On 9 May 2019 the FCC denied China Mobile's application for authorisation to provide international telecoms services. That decision came on the heels of a Team Telecom review that lasted seven years, which frustrated some at the FCC and provided added impetus for the recent EO.
Each of these developments is evidence of the government's intensifying crackdown on Chinese telecoms, including Huawei and ZTE, which it views as significant national security threats.
Endnotes
(1) Further information is available here.
Brian J Stevens, associate, participated in the preparation of this article.
