This week, the Federal Communications Commission adopted new rules that should improve the transparency and timeliness of foreign ownership reviews.
The new process should speed up the cross-agency review process for applications from companies with foreign ownership that seek to participate in the U.S. telecom market.
The rules establish timeframes for the Executive Branch agencies to complete the review of applications, and followup up on the Executive Order that Foreign Investment Watch covered back in April.
FCC Commissioner Jessica Rosenworcel, who worked for the former Chairman of the Senate Intelligence Committee, noted that the Team Telecom process has always been opaque. “I now serve as a Commissioner at the Federal Communications Commission and I still find this process less than fully transparent,” she said. “For years it has had no statutory basis and no governing rules.”
Among the key provisions of the new process:
1. QUESTIONS — It requires parties to provide answers to a standardized set of national security and law enforcement questions directly to the Committee at the same time as the parties file their applications with the Commission.
2. TIMING — It provides for a 120-day initial review period followed by a discretionary 90-day additional assessment.
3. CERTIFICATION — It requires applicants to make particular certifications to help protect national security and law enforcement interests.
It is worth noting that the FCC’s application process is independent from CFIUS. In other words, even if a particular transaction has undergone CFIUS review, it still needs to be submitted to Team Telecom. The rule notes that “we will continue to refer an application irrespective of whether the applicant certifies that the underlying transaction has undergone CFIUS review.”
Several parties, including the law firm of Hogan Lovells, had commented that the FCC should deem it in the public interest to withhold referral to Team Telecom any transaction that undergoes CFIUS review. But the FCC disagreed, noting that the Team Telecom review process is broader. “[W]e refer an application for feedback on any national security, law enforcement, foreign policy, and trade policy issues, while CFIUS review focuses on national security risks.”
At the same, time the rule did note that “in most instances” CFIUS review and Executive Branch review will occur simultaneously.
According to Commissioner Rosenworcel, the new process will get enhanced over time, and will be ongoing. “National security risks are constantly evolving,” she said. “It is not enough to formalize a process for reviewing new foreign ownership at a single point in time.”
As a result, the the FCC will continue to monitor and engage with foreign carriers once they are authorized to operate in the United States. That may include revoking a foreign carrier’s existing authorizations; she specifically stated that China Telecom Americas, China Unicom Americas, Pacific Networks, and ComNet are all undergoing national security reviews.
“Our efforts today represent progress,” Rosenworcel said, “but it is clear we have more work to do.”
The full order can be downloaded here.
A short fact sheet on the new FCC foreign ownership review process is also available.
If you have questions, FCC Commissioner Jessica Rosenworcel can be reached at [email protected].