In April, the Federal Communications Commission (FCC or Commission) adopted a Notice of Proposed Rulemaking (NPRM) proposing to require telecommunications carriers to renew, every 10 years, their international section 214 authority and periodically update their information to enable FCC review of public interest and national security implications of those authorizations. The Commission also adopted an Order to begin a one-time collection of information from international section 214 authorization holders.¹ Although the deadline for this information collection has not yet been established, subject carriers should begin updating their ownership information in preparation. Background on the Order, NPRM, and information collection requirement is set forth below.

Background

In 1999, the FCC granted all telecommunications carriers blanket authority under section 214 to provide domestic interstate services and construct or operate any domestic transmission. But this blanket authority was not extended to international services due to national security considerations. Under the current rules, any entity that seeks to provide U.S.-international common carrier telecommunications service must obtain prior FCC approval by filing an application for international section 214 authority. Such application is provided to the Secretary of Defense and Secretary of State. 

Entities holding an international section 214 authorization must obtain prior FCC approval before consummating a substantial assignment or transfer of control of its international section 214 authorization and must file a notification of a non-substantial or pro forma assignment or transfer of control of its international section 214 authorization. But outside of these filings, the FCC does not receive any updated information from international authorization holders, particularly on ownership changes that do not constitute a transfer of control that may include foreign ownership.

The regulatory framework for international section 214 authorization holders is designed to assess whether foreign participation in the U.S. telecommunications market would raise national security, law enforcement, foreign policy, and other concerns. Currently, the FCC continues to reassess on an ad hoc basis whether a telecommunication carrier’s retention of international section 214 authority presents national security concerns that warrant revocation or termination of such authority.

Notice of Proposed Rulemaking

Renewal of International Section 214 Authority

The FCC tentatively concluded that it has the authority to conduct such periodic reviews of international section 214 authorizations. In leveraging that authority, the FCC proposes a 10-year renewal requirement for all international section 214 authorization holders, with or without foreign ownership.² As part of the renewal process, each international authorization holder would need to demonstrate that its authorization serves the public interest.³ The review process would include an assessment from Executive Branch agencies consistent with current practice for international section 214 applications. 

In conducting its renewal review of international authorizations, the FCC proposes to prioritize review of the following authorization holders: (1) those with reportable foreign ownership, (2) those with the longest duration of time since the most recent FCC review of their authorization; and (3) those that have an authorization conditioned on a mitigation agreement granted over ten years ago. The Commission sought comment on the due process and retroactivity concerns that may arise from this proposal.

Periodic Review Alternative

As an alternative to the 10-year renewal process, the FCC sought comment on whether it should adopt a three-year formalized system of periodic review where the FCC would continually review all international authorization holders at regular intervals to reassess whether their authorization continues to serve the public interest. The key difference being that, in contrast to the renewal framework, if the FCC found that the authorization did not serve the public interest the authorization would not be cancelled upon such finding. The holder of the authorization would be considered in default, subject to a revocation proceeding.

Proposals Applicable to Both the Renewal and Periodic Review Process

The FCC sought comment on whether it should adopt a bifurcated process for international authorization holders such that future international authorization holders would be subject to the 10-year renewal process and existing international authorization holders would be subject to the three-year periodic review. The FCC’s Office of International Affairs (OIA) would establish filing deadlines for the prioritized groups under the renewal framework, or alternatively for the three-year periodic review, that would require first submissions within six months of Office Management and Budget (OMB) approval.

New Application Requirements for International Authorization Holders

The Commission proposed the following additional application requirements for international section 214 authorization authority, assignments, transfer of controls, and renewals. Under these requirements, applications must: (1) provide information about current and/or expected future services and geographic markets; (2) provide information on foreign-owned managed network service providers (MNSPs);⁴ (3) identify facilities that are in use or will be used to provide services under the international authorization from the U.S. into Canada and/or Mexico; and (4) certify facility adherence with baseline cybersecurity standards and the FCC’s Covered List.

Services and Geographic Markets

The FCC proposes to require applicants for international section 214 authority, and for authority to assign, transfer control, and renew such authorizations to provide information about current and/or future services and geographic areas where the authorization holder will or is offering service in the U.S. under its international section 214 authority. Specifically, this would include information concerning: (1) specific services the authorization holder provides or will provide using its international authorization; (2) types of customers that are and/or will be served; (3) ownership of the facilities being used; and (4) the market it intends to serve or is currently providing service to with its international authorization.

Foreign-Owned Managed Network Service Providers

The FCC proposed to require international section 214 applicants to identify in the application whether they use a foreign-owned MNSP. If they do, they will need to answer a set of standardized national security and law enforcement questions.

Cross Border Facilities Information

The Commission proposed to collect information from international authorization holders on the use of critical infrastructure to provide services from the U.S. into Canada and/or Mexico. This would include information regarding the location, ownership, and type of facilities.

Facility Certification

The FCC proposed to require that applicants for international section 214 authority certify to implementing and adhering to baseline cybersecurity standards such as those provided by the Cybersecurity and Infrastructure Security Agency (CISA) or the Department of Commerce’s National Institute of Standards and Technology (NIST). The FCC also proposed that such applicants certify whether they use equipment or services on the FCC’s Covered List.

Ownership Reporting Threshold

The FCC sought comment on whether it should decrease its ownership reporting disclosure threshold to 5 percent or greater for applications for international section 214 authority, assignment, transfer of control, and renewal.⁵ Under this proposal, authorization holders would be required to provide information concerning those who hold a 5 percent or greater direct, or indirect, equity, voting interest, or controlling interest in the authorization holder.

Other Changes to Parts 1 and 63 of the Commission’s Rules

The Commission proposed the following additional changes to its rules as related to international section 214 authorizations: (1) bar authorization holders from holding more than one international section 214 authorization, except in limited circumstances;⁶ (2) require international authorization holders to commence service within one year following grant; (3) require all international authorization holders that permanently discontinue service to file a notification of such discontinuance and surrender their authorization; (4) require authorization holders to provide updated ownership information and cross border facilities information every three years; (5) require applicants seeking to assign or transfer control of their international authorization to identify in their application any international signaling point codes (ISPCs) that they hold and whether the ISPC will be subject to the assignment or transfer of control; and (6) other administrative corrections to its rules.

Filed Comments

Comments on the NPRM were due August 31 and reply comments were due October 2. The majority of parties that filed comment urged the Commission not to adopt rules that would require international section 214 authorization holders to renew their authorizations. For example, the Competitive Carriers Association argued that the FCC did not have clear authority to establish a new international section 214 renewal requirement. Other parties, such as CTIA, Fusion Connect, Inc, and several international section 214 licensees, expressed concerns of the significant burdens that the proposed rules would place upon industry stakeholders. Conversely, the Department of Justice, Department of Homeland Security, and Department of Defense submitted joint comments supporting the FCC’s proposal to adopt a renewal system for international section 214 authorizations.

In reply comments, several commenters, such as CTIA, Incompas, T-Mobile, and NCTA, pointed to the myriad of practical and legal obstacles that the FCC’s proposal invites in restructuring the existing section 214 regulatory framework. The FCC received support for its proposal to require cybersecurity audits from the Electronic Privacy Information Center.

Order 

In order to update the FCC’s records, the Order requires that all international section 214 authority holders respond to a one-time information collection. This information collection will assist the Commission in determining the number of active international authorization holders and whether they have reportable foreign ownership.

Each authorization holder will be required to identify its 10 percent or greater direct or indirect foreign interest holders that hold such equity and/or voting interests, as of 30 days prior to the filing deadline. If the foreign interest holder is an entity or individual that is a government organization or citizen of a foreign adversary country⁷ then such authorization holder must identify each interest holder, including foreign interest holders of countries that are not foreign adversary countries. All filers must also disclose whether any interest holder has dual or more citizenships and identify those citizenships and certify to the truth and accuracy of the information they submit.

The filing deadline will be set following OMB review and publication of the notice of the information collection requirement in the Federal Register, which has not yet occurred. OIA will also issue a Public Notice announcing the filing deadline and filing instructions.

In the NPRM, the FCC proposes that telecommunications carriers that fail to file under this information collection will have their authorization cancelled and be subject to the imposition of forfeitures. Those that surrender their international authorization before the filing deadline do not need to respond to the information collection.

If you are required to respond to the one-time information collection and have questions, please let us know.  

¹ The FCC does not propose to adopt a periodic review process for domestic section 214 authorization holders at this time.
² The FCC made clear that this would not supplant its existing authority to conduct ad hoc review of international section 214 authorizations.
³ The proposed public interest standard is the same standard applied to initial applications for international section 214 authority.
⁴ MNSPs are third parties with access to a telecommunications network, systems, or records to provide managed services that support core domestic and international telecommunications services or operations.
⁵ The current ownership reporting threshold is at least 10 percent.
⁶ The Commission described the limited circumstances as instances where “a carrier may need more than one authorization, such as authority for overseas cable construction for a common carrier submarine cable or if the carrier is affiliated with a foreign carrier with market power on a U.S.-international route.”
⁷ The foreign adversary countries are China (including Hong Kong), Cuba, Iran, North Korea, Russia, and the Maduro Regime.