The FCC Releases International Section 214 Order and NPRM, Proposing Major Changes to the Regulation of International Telecommunications Service

The FCC Order and NPRM on international Section 214 authorizations propose new regulations impacting global telecom services.By JD Supra
April 28, 2023

On April 25, 2023, the Federal Communications Commission (FCC or Commission) released an Order and Notice of Proposed Rulemaking on international Section 214 authorizations (the Order and NPRM), which authorize the provision of international telecommunications service. The item was unanimously adopted at the Commission’s April 20 Open Meeting. Although the Commission’s released Order and NPRM is substantially the same as the circulated draft item, which we previously analyzed, the Commission made several changes.

The Order and NPRM present yet another step in the Commission’s ongoing efforts to evolve—and significantly expand—its role in addressing national security issues. Because the Commission’s proposals would affect any company offering international telecommunications services originating or terminating in the United States, a large swath of entities will be impacted, including telecommunications providers, such as satellite and wireless providers, as well as private equity firms and others investing capital in such entities.

Adoption of the NPRM’s proposals would subject companies and their owners to significantly expanded disclosure obligations, ongoing reporting requirements, and increased scrutiny by the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (commonly referred to as “Team Telecom”). Comments and reply comments will be due 30 and 60 days, respectively, from date of publication in the Federal Register.

Our more detailed summary is below, and we note differences between the final item and the draft item.

The Order adopts a one-time collection of foreign ownership information from international Section 214 authorization holders. International Section 214 authorization holders will be required to identify their 10% or greater direct or indirect foreign interest holders and will also be required to submit information based on the extent of their foreign ownership, including that held by foreign adversaries. The FCC proposes to cancel the authorizations of any holders that do not respond to the information collection obligation and may also take enforcement action against them.

The NPRM is extremely comprehensive and proposes new rules that would lead to sweeping changes to the FCC’s decades-old international Section 214 framework. Among other things, the Draft NPRM would do the following:

  • Mandate International Section 214 Renewals – require carriers to renew their international Section 214 authority every 10 years or, alternatively, require all international Section 214 authorization holders to periodically update information to allow the FCC to reassess the public interest and national security implications of those authorizations, and the Commission would refer all applications for renewal involving reportable foreign ownership to Team Telecom for review;
  • Establish a Reduced 5% Threshold for Reportable Ownership Interests – establish a new, lower ownership reporting threshold that would require disclosure of 5% or greater direct and indirect equity and/or voting interests, a move that many argue could chill investment in the U.S. telecommunications sector;
  • Mandate Disclosure of Information on Services and Geographic Markets – require international Section 214 applicants to provide information about their current and/or expected future services and geographic markets;
  • Mandate Disclosure of Foreign-Owned Managed Network Service Providers (MNSPs) – require all international Section 214 applicants, even those without reportable foreign ownership, to provide information on foreign-owned MNSPs, and make a referral to Team Telecom if an international Section 214 applicant reports use of foreign-owned MNSPs;
  • Establish a Facilities Cybersecurity Certification – require international Section 214 applicants to certify that they will take action to implement and adhere to baseline cybersecurity standards based on universally recognized standards, such as those provided by the Department of Homeland Security’s Cybersecurity & Infrastructure Security Agency (CISA) or the Department of Commerce’s National Institute of Standards and Technology (NIST);
  • Establish a Facilities “Covered List” Certification – require applicants to certify whether or not they use equipment or services identified on the FCC’s “Covered List” of equipment and services; and
  • Establish Ongoing Reporting Requirements, Including Data Storage Information – require authorization holders to provide updated ownership information and other information –including data storage information – every three years following a renewal application grant.

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