A recent Executive Order (“EO”) gives new, official structure to “Team Telecom,” the informal interagency group tasked with advising the Federal Communications Commission (“FCC”) on the national security risks associated with foreign-owned licenses in the United States telecommunications sector. Both its role and name were formalized by the President’s April 4 EO, trading in the catchy “Team Telecom” nickname for a lengthier formal title, the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (“Committee”). The EO largely codifies the current Team Telecom review process, with one important change: the review will now be required to be completed within 120 days, with the option to extend the time period by an additional 90 days to conduct a “secondary assessment.” The timing provision is a most-welcome one. While the informal timeline for Team Telecom review was previously 180 days, the program was notorious for delay, with some reviews spanning multiple years.
The goal of the new Committee will remain the same, to help keep the telecommunications sector secure from foreign threats to national security by assisting the FCC with review of applications and licenses that may present such risks. Recognizing its limited expertise on national security issues, the FCC has long referred applications to Team Telecom for review if an applicant has 10 percent or more foreign ownership or is seeking a waiver of Section 310(b) of the Communications Act to exceed foreign ownership limits for broadcast and common carrier wireless licensees and satellite earth stations. At the end of the review period, the Committee (which will now replace Team Telecom) will recommend whether the FCC should approve an application as-is, deny the application, or grant it conditionally upon compliance with mitigation measures. The Committee will also have the power to recommend modifications and revocations of existing licenses if necessary. An existing FCC licensee can come under review through a majority vote of the Committee’s members. Importantly, the EO does not explicitly limit the scope of the Committee’s authority to section 310(b) or international section 214 licenses, and appears to give the Committee wide latitude to review any existing Commission license to determine whether it poses a possible national security risk. Thus, although the review process is similar to that employed by Team Telecom in the past, it is possible the Committee’s scope and authority may be exercised more broadly.
The new Committee will be an inter-agency body chaired by the Attorney General and funded by the Department of Justice (“DOJ”). In addition to the Attorney General, the Committee will be composed of the Secretary of Defense, Secretary of Homeland Security, and any other heads of executive departments the President deems appropriate. Numerous other agency heads will serve as advisors to the Committee, including the Secretary of State, the Secretary of the Treasury, the Secretary of Commerce, the United States Trade Representative, Director of the Office of Science and Technology Policy, and others. Within 90 days of this EO (by July 3) the members of the Committee will be required to enter into a Memorandum of Understanding among themselves and with the Director of National Intelligence outlining the information requests and questions necessary for Committee review that it will pose to applicants, as well as standard mitigation measures.
The formalization of the Team Telecom process is in line with similar changes made that are relevant to the Committee on Foreign Investment in the United States (“CFIUS”). Those changes and subsequent regulations allowed for the creation of certain mandatory CFIUS notifications, and also mandated an initial 45-day review period, an optional 45-day investigation period, and one additional review period of 15 days. The regulations also expanded the Committee’s formal jurisdiction to include non-controlling foreign investments in U.S. businesses involved in certain critical technologies, critical infrastructure, sensitive personal data, and certain real estate transactions. Previous concern that both CFIUS and Team Telecom reviews could be duplicative do not appear to be addressed, however, and certain transactions may be subject to review by both committees.
Background on Team Telecom
Team Telecom has been an important behind-the-scenes part of the FCC’s public interest review of foreign mergers and asset acquisitions for some time now. Its review process, however, which is aimed at advising the FCC on the law enforcement and national security implications of foreign telecom companies seeking FCC licenses to operate in the U.S., has faced criticism for its lack of urgency and transparency. For example, when China Mobile applied for a license to operate in the U.S. in 2011, it waited eight years before the FCC denied the application based on national security and law enforcement concerns in 2019. The newly instituted 120-day shot clock—beginning on the date the Committee Chair determines that an applicant’s responses to all questions and information requests from the Committee are complete—will improve wait times for foreign companies going through review, but the commands in the EO will do nothing to increase transparency.
The EO aligns with other actions taken by the administration, such as adding Huawei to the Department of Commerce’s Entity List, which makes it nearly impossible for the company to obtain component parts and equipment from the U.S. The FCC is also working on a parallel proceeding to safeguard the security and integrity of U.S. telecommunications infrastructure by barring the use of Universal Service Funds to purchase equipment and services from companies that pose a national security threat. So far, that proceeding has targeted equipment and services from Chinese companies Huawei and ZTE.
Reception by the FCC
All three Republican FCC Commissioners released statements commending President Trump on the EO. Chairman Pai supported the action and stated that “[n]ow 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.” Commissioner O’Rielly, a longtime critic of the Team Telecom review process, praised the shot clock provision and said he will request that “Chairman Pai move expeditiously to integrate the new Executive Order into [the FCC’s] review process.” Commissioner Carr said that the EO “sends a clear message that the US will do what it takes to secure our communications networks from any threats posed by foreign actors,” and recommended that the committee examine every carrier owned by the Chinese government that now connects to U.S. networks—including China Unicom and China Telecom. The FCC’s Democratic Commissioners did not issue statements.
The Attorney General at the Helm
Attorney General William Barr will serve as the Chair of the Committee, and in a statement noted that “[t]his is a national security and public safety issue. That’s why the federal government must be vigilant and ensure that a foreign adversary cannot undermine the networks our country depends on.” Attorney General Barr will be represented through the DOJ’s National Security Division’s Foreign Investment Review Section.
The formalization of Team Telecom, along with the bolstering of CFIUS powers, highlights the White House’s posture for critical review of foreign investment. Moreover, the government’s particular concern with Chinese investment in the United States cannot be ignored, and will continue to be an area of focus in the coming years.