FCC Adopts International Section 214 Authorization Order and Notice of Proposed Rulemaking to Address National Security Concerns Posed by Foreign Ownership

Order
The Order requires that all current international Section 214 authorization holders participate in a one-time data collection to update the Commission’s ownership records. The Commission believes its database is outdated, reflecting approximately 5,500 inactive authorization holders with little visibility into foreign ownership. Until now, there had not been a requirement, after an authorization was granted, for authorization holders to report their ownership, including any foreign ownership interests, unless there was an assignment or transfer of control of the authorization. The Order directs authorization holders to identify their 10% or greater direct or indirect foreign interest holders as of 30 days prior to the filing deadline and certify that the information they have provided is accurate. The submission will be based on whether: (1) the authorization holder has reportable foreign ownership by a foreign adversary (including China and Hong Kong, Cuba, Iran, North Korea, Russia and Venezuela’s Maduro Regime); (2) the authorization holder has reportable foreign ownership that does not include a foreign adversary; or (3) the authorization holder has no reportable foreign ownership. The Notice of Proposed Rulemaking adopted with the Order seeks comment on whether a failure to participate in the data collection should result in a canceled authorization. The effective date of the Order and filing deadlines will be published in the Federal Register and announced by public notice after the Office of Management and Budget completes a Paperwork Reduction Act review.

Notice of Proposed Rulemaking
The NPRM seeks comment on proposed rules that would significantly change how the Commission handles international Section 214 telecommunications services authorizations. Under the proposed rules, international Section 214 authorization holders would be required, for the first time, to file license renewal applications every 10 years. The renewal process is intended to allow the Commission and other federal entities to review current and future Section 214 authorizations and applications for national security and law enforcement considerations.

Currently, international Section 214 applications are reviewed at the time of filing by the Committee for Foreign Participation in the U.S. Telecommunications Services for national security and law enforcement concerns. Once that review is completed and an authorization is granted by the FCC, there is no process for periodic review of the authorizations and the Commission generally only receives updated information when an authorization holder applies for modification, assignment or transfer of control of the authorization. The NPRM proposes that, absent a requirement for holders to renew an authorization, the Commission could require holders to periodically update certain information that would enable the Commission to review the authorization for public interest and national security concerns. The Commission proposes that renewal applications that include reportable foreign ownership with a likelihood of national security, law enforcement, foreign policy and/or trade policy concerns will receive additional scrutiny; renewal applications that do not include reportable foreign ownership will be processed under streamlined and simplified guidelines.

The NPRM also proposes or seeks comment on changes to the processing of original and renewal applications and modification, assignment and transfer of control applications. Among the proposals are:

• A new ownership reporting threshold that would require disclosure of 5% or greater direct and indirect equity and/or voting interests;
• Rules requiring applicants to provide information about their current and/or expected future services and geographic markets;
• A requirement for all applicants to provide information on foreign-owned managed network service providers;
• A requirement for applicants to identify the facilities that they use and/or will use to provide services from the United States into Canada and/or Mexico and to provide updated information on a periodic basis;
• A requirement for applicants to certify that they will implement and adhere to baseline cybersecurity standards based on universally recognized standards;
• A requirement for applicants to certify whether they use equipment or services identified in the Commission’s “Covered List” of equipment and services deemed under federal law to pose an unacceptable risk to national security or the security and safety of Americans;
• Adoption of a rule that would allow an authorization holder to hold only one international Section 214 authorization except in certain limited circumstances;
• Adoption of a rule requiring an authorization holder to commence service within one year following grant;
• An amendment to Section 63.19 of the Commission’s rules to require all authorization holders that permanently discontinue service, to file a notification of the discontinuance and surrender the authorization;
• A requirement that authorization holders provide updated ownership information, cross border facilities information and other information every three years; and
• Adoption of a rule requiring applicants seeking to assign or transfer control of their authorization to identify in their applications any International Signaling Point Codes (ISPC) that they hold and whether the ISPC will be subject to the assignment or transfer of control.

Interested parties must submit their comments and reply comments on the NPRM within 30 days and 60 days, respectively, after publication of the NPRM in the Federal Register.