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.

The new Team Telecom process also will exclude from referral certain applications deemed of low or minimal risk to national security, law enforcement, foreign policy, and trade policy concerns.  Specifically, the following applications will be excluded from automatic referral:

  • Applications or notifications of pro forma changes (e., events that do not result in a change in the actual controlling party);
  • Applications and petitions where the only reportable foreign ownership is held through intermediate holding companies and ultimate ownership and control is held by U.S. citizens and entities;
  • International 214 applications where the applicant has an existing mitigation agreement, there are no new foreign owners, and the applicant agrees to continue to comply with existing mitigation agreement terms; and
  • International 214 applications where the applicant was cleared by Team Telecom within the past 18 months without mitigation, and there are no new reportable foreign owners since that review.

The new rules will also establish a 120-day initial review period for the Team Telecom process, with a possible additional 90-day period for secondary assessment.  However, the 120-day review period begins when Team Telecom determines that an applicant’s responses are complete, so as a practical matter it is possible that the review period will always exceed 120 or, in the case of secondary assessment, 210 days in total.

The draft order also will enact rules concerning the information and certifications necessary for FCC applications, as well as additional rules concerning Team Telecom’s review authority.

Specifically, the draft order instructs the FCC’s International Bureau to develop new questions for applicants that will require them to provide certain information in their applications.  These new questions will pertain to the applicant’s (1) corporate structure and shareholder information; (2) relationships with foreign entities; (3) financial condition and circumstances; (4) compliance with applicable laws and regulations; and (5) business and operational information, including services to be provided by network infrastructure.

Applicants also will be required to certify up front that they will (1) comply with CALEA; (2) make communications to, from, or within the U.S., as well as records thereof, available to U.S. law enforcement officials; (3) designate a U.S. citizen or permanent U.S. resident as a point of contact for the execution of lawful requests and designate an agent for service of process; (4) affirm the accuracy of all information submitted and agree to keep it current; and (5) affirm their understanding that a failure to fulfil any conditions of the grant of their application can result in license revocation or termination and criminal and civil penalties.  (Broadcast licensees will be exempt from providing the first two of these certifications.)

Additionally, the draft order requires applicants to provide information about the voting interests of reportable 10% or greater shareholders, and subsea cable licensees affiliated with a carrier with market power in the cable’s destination market will be subject to certain reporting requirements regardless of whether the destination country is a WTO member.

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Photo of Matthew DelNero Matthew DelNero

Matt DelNero provides expert regulatory counsel to companies of all sizes in the telecommunications, technology and media sectors. As a former senior official with the FCC and longtime private practitioner, Matt helps clients achieve their goals and navigate complex regulatory and public policy…

Matt DelNero provides expert regulatory counsel to companies of all sizes in the telecommunications, technology and media sectors. As a former senior official with the FCC and longtime private practitioner, Matt helps clients achieve their goals and navigate complex regulatory and public policy challenges.

Matt serves as co-chair of Covington’s Technology & Communications Regulation (“TechComm”) Practice Group and co-chair of the firm’s Diversity & Inclusion initiative.

Matt advises clients on the full range of issues impacting telecommunications, technology and media providers today, including:

  • Structuring and securing FCC and other regulatory approvals for media and telecommunications transactions.
  • Conducting regulatory due diligence for transactions in the telecommunications, media, and technology sectors.
  • Obtaining approval for foreign investment in broadcasters and telecommunications providers.
  • Universal Service Fund (USF) programs, including the FCC’s Rural Digital Opportunities Fund (RDOF).
  • FCC enforcement actions and inquiries.
  • Online video accessibility, including under the Communications and Video Accessibility Act (CVAA) and Americans with Disabilities Act (ADA).
  • Equipment authorizations for IoT and other devices.
  • Spectrum policy and auctions, including for 5G.
  • Privacy and data protection, with a focus on telecommunications and broadband providers.

Matt also maintains an active pro bono practice representing LGBTQ+ asylum seekers, as well as veterans petitioning for discharge upgrades—including discharges under ‘Don’t Ask, Don’t Tell’ and predecessor policies that targeted LGBTQ+ servicemembers.

Prior to rejoining Covington in January 2017, Matt served as Chief of the FCC’s Wireline Competition Bureau. He played a leading role in development of policies around net neutrality, broadband privacy, and broadband deployment and affordability under the federal Universal Service Fund (USF).

Chambers USA has recognized Matt as a “go-to attorney for complex matters before the FCC and other federal agencies, drawing on impressive former government experience.”

Photo of Yaron Dori Yaron Dori

Yaron Dori has over 25 years of experience advising technology, telecommunications, media, life sciences, and other types of companies on their most pressing business challenges. He is a former chair of the firm’s technology, communications and media practices and currently serves on the…

Yaron Dori has over 25 years of experience advising technology, telecommunications, media, life sciences, and other types of companies on their most pressing business challenges. He is a former chair of the firm’s technology, communications and media practices and currently serves on the firm’s eight-person Management Committee.

Yaron’s practice advises clients on strategic planning, policy development, transactions, investigations and enforcement, and regulatory compliance.

Early in his career, Yaron advised telecommunications companies and investors on regulatory policy and frameworks that led to the development of broadband networks. When those networks became bidirectional and enabled companies to collect consumer data, he advised those companies on their data privacy and consumer protection obligations. Today, as new technologies such as Artificial Intelligence (AI) are being used to enhance the applications and services offered by such companies, he advises them on associated legal and regulatory obligations and risks. It is this varied background – which tracks the evolution of the technology industry – that enables Yaron to provide clients with a holistic, 360-degree view of technology policy, regulation, compliance, and enforcement.

Yaron represents clients before federal regulatory agencies—including the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and the Department of Commerce (DOC)—and the U.S. Congress in connection with a range of issues under the Communications Act, the Federal Trade Commission Act, and similar statutes. He also represents clients on state regulatory and enforcement matters, including those that pertain to telecommunications, data privacy, and consumer protection regulation. His deep experience in each of these areas enables him to advise clients on a wide range of technology regulations and key business issues in which these areas intersect.

With respect to technology and telecommunications matters, Yaron advises clients on a broad range of business, policy and consumer-facing issues, including:

  • Artificial Intelligence and the Internet of Things;
  • Broadband deployment and regulation;
  • IP-enabled applications, services and content;
  • Section 230 and digital safety considerations;
  • Equipment and device authorization procedures;
  • The Communications Assistance for Law Enforcement Act (CALEA);
  • Customer Proprietary Network Information (CPNI) requirements;
  • The Cable Privacy Act
  • Net Neutrality; and
  • Local competition, universal service, and intercarrier compensation.

Yaron also has extensive experience in structuring transactions and securing regulatory approvals at both the federal and state levels for mergers, asset acquisitions and similar transactions involving large and small FCC and state communication licensees.

With respect to privacy and consumer protection matters, Yaron advises clients on a range of business, strategic, policy and compliance issues, including those that pertain to:

  • The FTC Act and related agency guidance and regulations;
  • State privacy laws, such as the California Consumer Privacy Act (CCPA) and California Privacy Rights Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Virginia Consumer Data Protection Act, and the Utah Consumer Privacy Act;
  • The Electronic Communications Privacy Act (ECPA);
  • Location-based services that use WiFi, beacons or similar technologies;
  • Digital advertising practices, including native advertising and endorsements and testimonials; and
  • The application of federal and state telemarketing, commercial fax, and other consumer protection laws, such as the Telephone Consumer Protection Act (TCPA), to voice, text, and video transmissions.

Yaron also has experience advising companies on congressional, FCC, FTC and state attorney general investigations into various consumer protection and communications matters, including those pertaining to social media influencers, digital disclosures, product discontinuance, and advertising claims.

Photo of Corey Walker Corey Walker

Corey Walker advises clients on a broad range of regulatory, compliance, and enforcement matters in the media, technology, satellite and space, and telecommunications sectors. Corey also provides strategic counsel to leading media, sports, and technology companies on gaming matters, with a focus on…

Corey Walker advises clients on a broad range of regulatory, compliance, and enforcement matters in the media, technology, satellite and space, and telecommunications sectors. Corey also provides strategic counsel to leading media, sports, and technology companies on gaming matters, with a focus on sports betting, fantasy sports, and online gaming.

Corey represents clients before the Federal Communications Commission in connection with a range of policy and compliance issues, including satellite and earth station operations, radiofrequency (RF) spectrum use and availability, and experimental licensing for new and innovative technologies. He also advises clients on structuring transactions and securing regulatory approvals at the federal, state, and local levels for mergers, asset acquisitions, and similar transactions involving FCC and state telecommunications licensees and companies holding private remote sensing space system licenses issued by the National Oceanic and Atmospheric Administration.

Corey also maintains an active gaming and sports betting practice, and routinely counsels companies on state licensing and compliance matters, including those that pertain to fantasy sports and online gaming.