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Drew Svor is a partner in the firm’s Washington, D.C. office and a member of the firm’s TelecomTeam.

Earlier this month, the FCC adopted a Report & Order (“R&O”) streamlining the application review process for transactions involving foreign investment or participation in U.S. telecommunications companies (commonly known as “Team Telecom” but also referred to as “the Committee” in the R&O).  Team Telecom is comprised of a committee of Executive Branch agencies (including the Department of Defense, the Department of Homeland Security, and the Department of Justice) tasked with assessing the national security, law enforcement, foreign policy, and trade policy concerns in these cross-border M&A transactions involving U.S. telecom companies.  The FCC issued the R&O to formalize a decades-long practice and update its rules governing Team Telecom review consistent with the President’s April 4, 2020 Executive Order No. 13913 (the “EO”).  The FCC builds upon the initial procedural requirements set by the EO to add certainty and transparency to the Team Telecom review process in a manner that protects national security interests without discouraging foreign investment.
Continue Reading Formalizing Team Telecom

On April 4th, 2020, President Trump issued an Executive Order on Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector.  The Executive Order essentially formalizes the Federal Communications Commission’s (“FCC” or “Commission”) existing “Team Telecom” review process by establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (“Committee”), with one notable exception:  for the first time, Team Telecom reviews will occur subject to a defined and limited timeframe of 120 days (with the possibility of 90 additional days), as further explained below.  These timeframes are slightly lengthier than the review periods recently established by the Department of Treasury for reviews conducted by the Committee on Foreign Investment in the United States (“CFIUS”).[1]
Continue Reading Too Much Time on Their Hands – New Executive Order Limits Time Period for Team Telecom Reviews

  • On October 10, 2018, the Committee on Foreign Investment in the United States put into effect the first mandatory filing requirement ever imposed by CFIUS. The Department of Treasury’s summary of the Pilot Program is available here.
  • Effective November 10, 2018, CFIUS will require reviews of critical technology investments – including certain non-controlling investments – from any country.
  • A failure to file notice or a new short form declaration to CFIUS may result in a civil monetary penalty up to the value of the transaction.
  • The requirements will not apply to any transaction that is completed prior to November 10, 2018 or any transaction for which the material terms were established prior to October 11, 2018.

Background

On August 13, 2018, President Trump signed FIRRMA into law. FIRRMA is a transformational expansion of the authority of the Committee on Foreign Investment in the United States (CFIUS) to review certain transactions that previously eluded the Committee’s jurisdiction (discussed in our blog, here). Congress left many critical aspects of the FIRRMA framework to be addressed through regulations promulgated by the Department of Treasury. Although we do not expect final rules to be forthcoming until late 2019 or early 2020, Congress empowered the Department of Treasury to “test-drive” parts of FIRRMA through Pilot Programs. Those programs can be implemented simply, taking effect 30 days after publication of the program requirements in the Federal Register. The adoption and implementation of the Pilot Program for critical technologies represents the Department of Treasury’s first attempt to implement substantive parts of FIRRMA prior to issuing formal regulations.
Continue Reading FIRRMA Takes Form as CFIUS Enacts a New Pilot Program Targeting “Critical Technologies”

On September 4, 2018, the Federal Communications Commission issued a new rule requiring foreign media outlets to submit reports to the FCC disclosing their relationships with foreign principals. The notice was issued pursuant to the 2019 National Defense Authorization Act.[1]
Continue Reading FCC’s Foreign Media Reporting Requirements: Extension of FARA or New Domain?

On June 25, 2018, the Department of Commerce (“Commerce”) released an advance notice of rulemaking through the National Oceanic and Atmospheric Administration (“NOAA”). As an initial step before Commerce drafts proposed regulations and issues a Notice of Proposed Rulemaking, the notice seeks input from stakeholders on key issues relating to potential revisions to the regulations currently governing how NOAA[1] administers licensing for commercial remote sensing space systems. The last update to the relevant regulations was in 2006 and significant technological developments, new business models, and increased foreign competition require regulatory updates in order to facilitate continued growth and U.S. leadership in this industry.
Continue Reading Commerce Prioritizes Earth Selfies as It Seeks to Improve Remote Sensing Licensing

As yet another example of the U.S. government’s ongoing concerns about the potential vulnerability of U.S. telecommunications networks and supply chains, the FCC recently released a Notice of Proposed Rulemaking (NPRM) proposing to prohibit the use of funds disbursed from the Universal Services Fund (USF) to purchase equipment or services from any providers posing a national security threat to the U.S. The USF distributes funds and subsidies to companies who provide service to unserved and underserved locations and low-income consumers. The NPRM dovetails with recent governmental actions targeting perceived Chinese threats to U.S. telecommunications infrastructure, including the passage of the National Defense Authorization Act (NDAA) for Fiscal Year 2018 (which prohibits the Department of Defense from using the equipment or services of certain Chinese telecommunications companies), the Committee on Foreign Investment in the United States’ (CFIUS) blocking of chipmaker Broadcom’s hostile takeover bid for Qualcomm, and the Department of Commerce’s denial of export privileges against a Chinese telecommunications manufacturer for seven years. It also precedes a recent report by the Wall Street Journal on May 2, 2018 detailing the possibility of executive action by the Trump administration to restrict Chinese companies’ ability to sell telecommunications equipment in the U.S. Chinese companies have already taken action as a result of this increased focus on Chinese telecommunications equipment, including one firm’s request for a stay of a U.S. order banning American companies from selling to the firm.
Continue Reading FCC Sets Sights on China

  • CFIUS takes an unprecedented step to fend off a potential foreign acquisition
  • The threat that China will eclipse the U.S. in telecommunications infrastructure and technology is central to U.S. national security
  • Five key takeaways from the most recent CFIUS action

Since late 2017, Singapore-based semiconductor company Broadcom has been pursuing a $117 billion hostile takeover bid for Qualcomm, its U.S.-based rival whose chips are omnipresent in U.S. telecommunications infrastructure, including consumer devices like smartphones and tablets. As part of its hostile bid, Broadcom nominated its own slate of six directors who were to be voted on at Qualcomm’s annual stockholders meeting, originally scheduled for March 6th. However, earlier this week the Committee on Foreign Investment in the United States (CFIUS) announced that it “issued an interim order to Qualcomm directing it to postpone its annual stockholders meeting and election of directors by 30 days. This measure will afford CFIUS the ability to investigate fully Broadcom’s proposed acquisition of Qualcomm.”
Continue Reading Chips on Their Shoulders: CFIUS Intervenes in Broadcom’s Hostile Takeover Bid for Qualcomm

“Once a new technology rolls over you, if you’re not part of the steamroller, you’re part of the road” – Stewart Brand

Last week, the FCC released a Notice of Proposed Rulemaking (NPRM) proposing guidelines and procedures designed to “breathe life” into Section 7 of the Communications Act. A somewhat obscure part – or, as Chairman Ajit Pai prefers, the “neglected stepchild” – of the Communications Act, Section 7 requires the FCC to make a public interest determination on proposals for new technologies or services within one year. Although a one-year timeframe may seem like quite a lengthy period for regulatory approval, it represents an increase to warp speed for an FCC that sometimes can take many years to approve challenging new technologies.


Continue Reading FCC Proposes Expedited Treatment For New Technologies

On April 13, 2017, the Texas Public Utilities Commission will hear oral arguments on the issue whether companies with certificates of public convenience and necessity from the Commission may place their facilities in local rights-of-way and provide wireline backhaul and Distributed Antenna Systems (DAS) service without additional local authority or the obligation to pay fees.   DAS providers say “yes” while local governments contend that such companies must negotiate separate license agreements and fees with individual cities to access their rights of way.  The Commission will be considering the recommendation of two Texas administrative law judges to side with the companies.
Continue Reading ExteNet v City of Houston: Who pays for access to Texas rights-of-way?

On September 30, 2016, the FCC adopted an order designed to liberalize and streamline the foreign ownership review process for broadcast licensees (the “Broadcast Liberalization Order”).  Section 310(b) of the Communications Act caps at 25 percent the amount of indirect foreign investment permissible in a U.S. broadcast, common carrier, or aeronautical fixed or en route radio licensee without obtaining FCC approval.  Prior to 2013, the long-standing presumption among FCC practitioners was that the FCC simply would not allow indirect foreign ownership of a U.S. broadcast licensee in excess of the 25% benchmark in the Communications Act, even though the Act expressly contemplated such investments so long as they were blessed by the FCC.  The Commission issued an Order in 2013 clarifying that the 25% foreign investment mark served only as a trigger requiring the FCC to review applications on a case-by-case basis, not an automatic bar to such investment.  Foreign investment in broadcast licensees above 25% required prior express consent, based on an evaluation of public interest and national security considerations.  Also in 2013, the FCC streamlined the process for reviewing foreign ownership amounts in excess of 25% for common carrier and aeronautical radio licensees.  The recent Broadcast Liberalization Order largely extended these same rules and procedures to broadcast licensees, with certain exceptions and modifications.
Continue Reading FCC Liberalizes Rules for Foreign Investment in U.S. Broadcast Licensees

In a move that will support the development of 5G networks, the FCC issued an Order last week in the “Spectrum Frontiers” proceeding that should open up large amounts of high-band spectrum for licensed and unlicensed use.  The Commission adopted a new framework for flexible-use licensing in several spectrum bands above 24 GHz, permitting mobile operations in those bands and instituting rules to ensure shared access with incumbent licensees. The Commission also noted that the new licensing framework may serve as a template for rulemaking in additional high-frequency bands in the future, and issued an NPRM seeking feedback on proposals that would open nearly 18 GHz more to mobile use.
Continue Reading Hailing on All Frequencies: The FCC Releases the Spectrum Frontiers Order