FCC Releases Draft Order Formalizing “Team Telecom” Process

The FCC will formalize coordination with “Team Telecom” which reviews the process for foreign investments in U.S. telecoms companies.By Covington & Burling LLP, Lexology
September 17, 2020

Last week, the Federal Communications Commission circulated a draft order that will formalize its coordination with what has been known as “Team Telecom”—the national security review process for foreign investments in U.S. telecommunications companies. The draft order, which the FCC will consider for adoption at its September 30 Open Meeting, includes rules and procedures governing what has long been an informal process.

The FCC’s draft order adopts rules consistent with an April 4, 2020 Executive Order that rebranded the group of executive branch authorities long referred to as “Team Telecom” as the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. Despite the name change, Team Telecom will largely follow the existing review process; however, the new FCC rules do make a few key changes. We highlight some of the basic changes below.

Functionally, the Team Telecom process will remain the same: certain applications for FCC authorizations will trigger Team Telecom review, which may result in a recommendation that the FCC deny an application or condition its grant on the applicant’s compliance with specified mitigation measures.

Per the draft rules, applications for submarine cable licenses or international 214 authorizations—the license needed to provide international telecommunications service—reporting any foreign direct or indirect owner of 10% or more of the applicant’s ownership will still automatically trigger Team Telecom review, as will applications to assign, transfer control, or modify these licenses. Petitions for Declaratory Ruling to exceed certain aggregate foreign ownership thresholds in Section 310(b)(4) of the Communications Act also will automatically trigger Team Telecom review.

However, under the new regime the FCC will no longer automatically refer applications for transfer or assignment of domestic 214 licenses, even if they would result in a foreign entity directly or indirectly holding 10% or more of the ownership. The FCC will, however, retain discretion to refer these applications to Team Telecom, and the new rules do not prevent Team Telecom from seeking review on its own.

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