Technolgy Rules: The U.S. is formalizing Team Telecom rules to restrict foreign ownership of internet and telecom assets

Monday, April 6, 2020

The U.S. is formalizing Team Telecom rules to restrict foreign ownership of internet and telecom assets

It has the simplest name but the sort of shadowy overtones that national security writers lust after.

Team Telecom, a mostly informal working committee of the Departments of Defense, Homeland Security, and Justice (along with affiliated agencies) has for years been quietly tasked with evaluating and maintaining the security of America telecom infrastructure in concert with the FCC. Its primary objective as far as we have been able to ascertain is to monitor the ownership of key telecom assets to ensure they don’t fall into the hands of suspect nations (think China, Russia, etc).

Last year, Mark Harris over on Extra Crunch here took an in-depth look at the extreme delays companies can experience going through a Team Telecom review, which in the case of China Mobile’s expansion into the U.S., extended up to seven years before the Team rejected the Chinese bid for market entry.

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That informal arrangement is disappearing, as the administration over the weekend published a new executive order formally instantiating Team Telecom as a legal process for reviewing applications for telecom licenses, deals, and other requests made to the FCC.

Under a newly-christened “Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” (CAFPUSTSS?), the Committee will be charged with assisting “the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the United States telecommunications services sector.”

Like its Team Telecom forerunner, the Committee will be made up of the heads of Justice, Defense, and Homeland Security, with the Attorney General playing the role of chair. Applications to the Committee will be referred to the U.S. government’s highest-ranking intelligence officer, the Director of National Intelligence, for analysis.

Unlike in the past where the timeline for reviews was anything but standardized, the executive order provides for a 120-day adjudication process, with a 90-day extension if the Committee has additional concerns and goes through a secondary review.

In a brief press statement, FCC Chairman Ajit Pai said, “I applaud the President for formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner.” The FCC intends to finish its own rulemaking around Team Telecom, a process which was first proposed at the tail end of the Obama administration and has been on-going ever since.

These reforms to Team Telecom are in line with similar reforms made to CFIUS, the Committee for Foreign Investment in the United States, which were finalized at the beginning of this year after Congress passed a reform bill in 2018.

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While the new rules will provide some certainty to areas of telecom like fiber optic cable expansion and wireless services, expect the new rules to be used to put even more restrictions of countries like China hoping to get a slice of the U.S. infrastructure market. Indeed, in the FCC’s statement today, the agency said “As we demonstrated last year in rejecting the China Mobile application, this FCC will not hesitate to act to protect our networks from foreign threats.”