TR Daily Trump Establishes Telecom Foreign Ownership Review Committee
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Monday, April 6, 2020

Trump Establishes Telecom Foreign Ownership Review Committee

President Trump has issued an executive order establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector, which will be composed of the secretaries of Defense and Homeland Security and the attorney general, and which will review applications for licenses and license transfers before the FCC, as well as existing licenses, for national security and law enforcement concerns raised by foreign participation in the U.S. telecom service sector.

The Defense, Homeland Security, and Justice departments previously conducted reviews of applications through a less formal “Team Telecom” process that has been criticized by industry and others for its lack of deadlines which has sometimes led to lengthy waits.

The FCC started a proceeding (IB docket 16-155) with a notice of proposed rulemaking in 2016 that proposed a 90-day timeframe for executive branch review of applications and petitions for declaratory ruling with reportable foreign ownership, with an additional 90-day extension proposed for “rare circumstances” — compared to what was then an average approval timeframe of about 250 days (TR Daily, June 24, 2016). Responding to the president’s executive order today, FCC Chairman Ajit Pai said the Commission would now move forward with the long-pending proceeding.

In addition to the heads of the Defense, Homeland Security, and Justice departments, the executive order allows for the heads of other departments or assistant to the president to be added to the committee, “as the president deems appropriate.” It also sets up a group of advisers to the committee, consisting of the secretaries of State, Treasury, and Commerce; the directors of the Office of Management and Budget, of National Intelligence, and of the Office of Science and Technology Policy; the U.S. Trade Representative; the head of the General Service Administration; the assistants to the president for national security affairs and for economic policy; the chair of the Council of Economic Advisors; and any other assistant to the president, “as the president deems appropriate.”

The executive order provides for an initial 120-day review period after the attorney general “determines that the applicant’s responses to any questions and information requests from the Committee are complete.”

The initial review could reach one of three conclusions: (1) that granting the application “raises no current risk to national security or law enforcement interests”; (2) “that any identified risk to national security or law enforcement interests raised by an application may be addressed through standard mitigation measures recommended by the Committee”; or (3) “that a secondary assessment of an application is warranted because risk to national security or law enforcement interests cannot be mitigated by standard mitigation measures.”

“Any secondary assessment of an application shall be completed no more than 90 days after the Committee's determination that a secondary assessment is warranted. The Chair shall notify the FCC of a determination that a secondary assessment is warranted,” the executive order says.

Decisions to review existing licenses will be made by a majority of the committee.

“For each license or application reviewed by the Committee, the Director of National Intelligence shall produce a written assessment of any threat to national security interests of the United States posed by granting the application or maintaining the license. The Director of National Intelligence shall solicit and incorporate the views of the Intelligence Community, as appropriate,” the executive order says.

The committee ultimately may inform the FCC that it has no objection to the grant of an application or that the FCC take no action with respect to an existing license; that the FCC deny the application or revoke the existing license; or that the FCC impose mitigation measures as a condition of granting an application or that it alter an existing license to include mitigation measures.

The committee will inform its advisers of any recommendation it plans to make to the FCC and “[i]f one or more of the Committee Advisors opposes the recommendation, the senior executives designated by the Committee Members and Committee Advisors shall promptly confer in an effort to reach consensus on a recommendation,” the executive order says. If no consensus can be reached, the committee will vote on the recommendation, with the attorney general, as chair of the committee, breaking any tie.

In a statement released today, Chairman Pai said, “I applaud the President for formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner. Now that this Executive Order has been issued, the FCC will move forward to conclude our own pending rulemaking on reform of the foreign ownership review process. As we demonstrated last year in rejecting the China Mobile application [TR Daily, May 9, 2019], this FCC will not hesitate to act to protect our networks from foreign threats. At the same time, we welcome beneficial investment in our networks and believe that this Executive Order will allow us to process such applications more quickly.”

Commissioner Mike O’Rielly, who has long expressed concern about the time-consuming, opaque nature of the Team Telecom review process, said in a statement today, “I am exceptionally pleased by President Trump’s release of an Executive Order setting forth official procedures for administrative agencies to review and comment on FCC applications involving foreign ownership of communications companies, previously referred to as ‘Team Telecom.’ While all of our hearts and minds are properly focused on the COVID-19 pandemic, this EO will facilitate acceptable investment of foreign capital in the communications sector to help jump start the industry and our economy, when that time comes.

“Having been at the forefront of this multiyear reform effort, my priority has always been about fixing the incoherent and indefensibly unpredictable review process — one that reached new levels of disfunction during the Obama Administration — without jeopardizing national security in any manner. The new EO accomplishes this necessary balance by, among other things, establishing a formal structure to be known as the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector and by including deadlines for the relevant agencies to render decisions while still affording ample time for appropriate and thorough reviews,” he continued.

“I will request that Chairman Pai move expeditiously to integrate the new Executive Order into our review process,” Commissioner O’Rielly said.

Commissioner Brendan Carr said, “President Trump’s decision sends a clear message that the U.S. will do what it takes to secure our communications networks from any threats posed by foreign actors. By issuing this Executive Order, the President acted to ensure the security of our telecom networks against foreign actors who may seek to do us harm — and the timing could not have been better. The threats of attacks on our critical telecom infrastructure and illegal spying rise as our reliance on those networks rises. Leveraging America’s national security agencies and their expertise will enhance the Commission’s long-standing duty to help safeguard our networks.”

He added, “The President’s committee will have a full docket, and near the top of it, I recommend that the committee examine every carrier owned by the Chinese government that now connects to networks here in the U.S. — including China Unicom and China Telecom. The committee’s focus on whether their existing ‘Section 214’ authorizations should be revoked would aid the Commission’s ongoing work on national security matters.” —Lynn Stanton, [email protected]

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