FCC Takes Additional Action to Protect US Telecom Infrastructure from National Security Threats

At its April 22, 2023, Open Meeting, the Federal Communications Commission (“FCC” or “Commission”) unanimously approved an Order and accompanying Notice of Proposed Rulemaking (“Notice”), which respectively adopt new and propose additional rules and policies applicable to “International Section 214” authorization holders. Citing “evolving national security” concerns, the Commission seeks to have a more formal role, along with other relevant US Executive Branch agencies, in improving efforts to protect international telecommunications services and the associated infrastructure located in the United States.

Further demonstrating its commitment to the issue, the Commission took the rare action of issuing an Enforcement Advisory immediately after voting to approve the Order. The advisory reminds current International Section 214 authorization holders about the longstanding requirement to seek Commission approval prior to assigning or transferring control of an international telecommunications authorization. The FCC Advisory cites the significant security risks associated with undisclosed transfers of control involving foreign investments in concert with the concerns discussed in the Order and Notice.

As discussed below, the Order paves the way for the FCC to begin to collect more granular data pertaining to entities that currently offer international telecommunications services originating or terminating in the United States as well as from those entities that apply to offer these services. The Notice proposes rules that would require service providers to renew, every 10 years, their International Section 214 authority.

Background

The Commission’s rules have long required entities seeking to offer international telecommunications services that originate or terminate in the United States to apply for and obtain an International Section 214 authorization. See 47 U.S. Code Section 214. The application provides the Commission with information on the applicant’s ownership structure, among other data points, which may raise national security concerns. The Commission’s current practice does not impose routine information collection requirements on International Section 214 authorization holders after initial authorization is granted. Rather, the Commission receives new information on an International Section 214 authorization holder only when the holder applies to modify, assign, discontinue operations, or transfer control of the authorization.

As a result, the Commission does not typically have up-to-date information regarding the vast majority of International Section 214 authorization holders, including on whether the authorization holder remains in business. For instance, the agency estimates that, of the 7,400 International Section 214 authorizations held by 7,000 unique companies, only 1,500 of the authorizations are in active use.

Meanwhile, this lack of information has become a growing concern for the national security community. For example, the US Senate Homeland Security Committee’s Permanent Subcommittee on Investigations recommended in a 2020 report that the FCC periodically review and renew International Section 214 authorizations because of evolving national security concerns. The FCC prepared the Order and Notice of Proposed Rulemaking in response to this report.

The Order

Consistent with the Order, the FCC will begin to contact each International Section 214 authorization holder to identify its 10 percent or greater direct or indirect foreign interest holder or holder(s) and to certify the accuracy of the verification. In addition, authorization holders must identify foreign ownership within an array of categories, including:

• Whether the authorization holder has reportable foreign ownership:
  • by a foreign adversary, defined as China (including Hong Kong), Cuba, Iran, North Korea, or the Maduro regime; or
  • from countries other than the previously described list of foreign adversaries; or
• Whether the authorization holder has no reportable foreign ownership.

The Notice

Finally, the Notice seeks comment on many proposals for improving its information gathering, including whether to cancel the authorizations held by entities that do not respond to the Commission’s inquiry, impose a 10-year renewal obligation on authorization holders, and/or gather greater detail about applicants for new applications as well as for those entities seeking modification and/or renewal.

Analysis and Next Steps

The Commission’s actions reflect the ongoing and ever-growing prioritization of national security. FCC Chair Jessica Rosenworcel acknowledged the critical importance of modernizing the Section 214 rules and criticized the current circumstances, remarking that “once a Commission license is granted, little is done to revisit the authority and safeguard our networks against evolving threats over time.”

For his part, Commissioner Geoffrey Starks expressed his appreciation for the “strong support” from the US Departments of Justice, Defense and Homeland Security, adding, “I will continue to work with our government partners to mitigate risks from International 214 authorizations.”

We expect the Commission to adopt each of the Notice’s proposals, with perhaps some minor changes, within the next eight to 10 months.