Telecom Committee

Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector

In April 2020, the President issued an executive order formalizing and expanding the ad hoc review process that has governed investments in the US telecommunications services sector for more than 20 years. This order specifically created the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the Telecom Committee, formerly referred to as Team Telecom) and charged it with assisting the US Federal Communications Commission (FCC) in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the US telecommunications services sector. The order designates the US Departments of Defense and Homeland Security as formal members and names the US Department of Justice as the chair. Certain other agencies and branches of the US government are designated as informal advisors to the Committee, including the Departments of State, Treasury and Commerce and the Director of National Intelligence. The FCC has since formalized and developed standards for this process through its own order.

Under various authorities, the Telecom Committee has the broad authority to review the national security, law enforcement, foreign policy and trade policy implications of the following:

  • New applications to provide international telecommunications service to or from the United States;

  • Applications to assign or transfer control of an existing license to provide telecommunications service to or from the United States;

  • New applications to land and operate an international undersea cable that touches US territory;

  • Applications to assign or transfer control of an existing submarine cable landing license; and,

  • Petitions to exceed the statutory foreign ownership limits for broadcast and common carrier wireless licensees, including common carrier satellite earth stations.

The process for these reviews has been formalized and firm deadlines have been set by which the Telecom Committee must act and complete its analysis. Once the Telecom Committee receives an application referral from the FCC, it must undertake an initial review of the application to assess whether granting the application will pose a risk to the US public interest, which includes national security, US law enforcement, foreign policy and trade policy interests. At the end of the initial review, which must be completed within 120 days, the Telecom Committee may determine and notify the FCC that the application does not raise any national security or law enforcement concerns, or that “standard mitigation measures” would resolve such concerns. The Telecom Committee may undertake a secondary assessment after determining that any risks identified during its initial review cannot be mitigated through standard measures. This secondary review must be completed within 90 days after the Committee determines that a secondary review is warranted. 

With respect to applications seeking FCC approval for corporate transfers of control or new licenses, the Telecom Committee can make one of three recommendations to the FCC: (1) that it has no objection to the FCC granting the license or transfer of the license; (2) that the FCC should deny the application due to risks to the national security or law enforcement interests of the United States; or (3) that the FCC should only grant the license or transfer of the license contingent on the applicant’s compliance with mitigation measures determined by the Telecom Committee. With respect to its authority to review existing licenses, the Telecom Committee can make one of three recommendations to the FCC: (1) modify the license to include a condition of compliance with negotiated mitigation measures; (2) revoke the license due to risks to national security or law enforcement interests of the United States; or (3) take no action with respect to the license. 

How the National Security Regimes Interact

It is clear the US government considers telecommunications networks and infrastructure to be among the country’s most strategic assets.  The member agencies of the Telecom Committee are also members of CFIUS, so there is a considerable overlap between the two review processes. Both regimes have the authority to condition approval of transactions on agreement by the parties to accept mitigation measures. 

What You Need To Know

  • Buyers and sellers engaging in telecommunication transactions need to be aware of the scope and limits of these overlapping review processes. Transaction parties must view the Telecom Committee process, where it applies, as mandatory, given that the FCC will not grant an application or request that has been referred to the Telecom Committee until it has received clearance from the Telecom Committee. This is different than CFIUS in which compulsory reviews apply only in very narrow circumstances. 

  • Transaction parties should also understand that the Telecom Committee review process is not implicated in every telecommunications transaction. Indeed, the FCC will only refer applications or transactions to the Telecom Committee if they result ultimately in the foreign ownership or control of an entity holding a common carrier or spectrum license. This stands in contrast to CFIUS, which has the authority to review acquisitions of, or investments in, US telecommunications entities regardless of the specific FCC licenses they may hold. 

  • Lastly, parties should note that the timelines for the Telecom Committee and CFIUS reviews do not track in all respects. It is thus important to factor the timing of each separate review into anticipated closing timelines of any transaction.