By Miracle Amo

 

Last week, the Federal Communications Commission (FCC) revoked authorization for China Telecom’s US subsidiary to operate in the US.[1] This decision means that the telecommunications company must now discontinue their US operations within 60 days, after holding authorization to operate in the US for nearly 20 years.[2] The decision also adds the company to a growing list of state-owned Chinese companies that have had their authorization revoked because of threats to national security and privacy concerns.[3] Given the seriousness of these concerns, some are wondering how these decisions are being made.

The Federal Communications Commission (FCC) is an independent regulatory government agency.[4] Established by the Communications Act of 1934, it is charged with regulating interstate and international communications by radio, television, wire, satellite, and cable.[5] The FCC regulates the US telecommunications market.[6] Telecommunication carriers that meet certain thresholds of foreign ownership or control, and want to provide services between the US and foreign points are required to apply for and obtain authorization from the FCC.[7] In assessing these applications, the FCC considers whether the proposed services are in the best interests of the US [8] In recognizing that additional subject-matter expertise was needed to ensure that national security, trade, and foreign policy implications were adequately explored, this assessment was done in collaboration with the Department of Justice (DOJ), Department of Homeland Security (DHS) and the Department of Defense (DOD). The informal interagency committee was referred to as “Team Telecom.”[9]

When assessing applications for authorization, Team Telecom attempted to mitigate potential national security and law enforcement risks through security agreements with foreign telecommunication carriers.[10] The agreements were crafted to provide Team Telecom with different oversight capabilities, including the right to visit the carrier’s US-based facilities.[11] However, if a security agreement was not produced and agreed upon, then the government had no insight into the carrier’s operations.[12] This was due to the fact that Team Telecom was an informal committee, lacking any formal statutory authority to monitor compliance.[13] As a result, these measures proved to be ineffective.[14] An additional consequence caused by the lack of formal authority included the absence of a formal written process for reviewing applications, which created drawn-out review periods that further complicated the authorization process.[15]

In response to these problems, Executive Order 13913 was issued. This formalized Team Telecom with the creation of the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services (“EO Telecom Committee”).[16] The Executive Order also addressed some of the shortcomings of Team Telecom.[17] It created a formal process to review applications referred by the FCC to the Committee within an established timeframe.[18] At the conclusion of its review, the Committee would then counsel the FCC as to whether it should dismiss or deny a license application, grant an application after compliance with a mitigation agreement, modify a license, revoke a license, or take no action. In addition, the Executive Order allowed the Committee to assess whether new national security or law enforcement concerns exist with respect to existing FCC licenses previously reviewed.[19]

The formalization of Team Telecom into the EO Telecom Committee has allowed the FCC to be more efficient in making decisions as to which telecommunication carriers should be allowed to operate in the US.[20] However, with concerns over data privacy and national security still looming, many still wonder, what will the relationship between the US and Chinese telecommunications companies look like in the future?

 

[1] FCC Revokes Authorization of China Telecom’s U.S. Unit, US News (Oct. 26, 2021, 10:48 AM), https://www.usnews.com/news/technology/articles/2021-10-26/fcc-votes-to-terminate-china-telecom-americans-authority-to-provide-us-services.

[2] FCC Bars China Telecom from Operating in U.S. over National Security Concerns, NBC News (Oct. 27, 4:27 AM), https://www.nbcnews.com/news/world/fcc-bars-china-telecom-operating-u-s-over-national-security-n1282471.

[3] Id.

[4]  What We Do, Federal Communications Commission, https://www.fcc.gov/about-fcc/what-we-do (last visited Nov. 1, 2021).

[5] 47 U.S.C.A. § 151 (West).

[6] Id.

[7] Process Reform for Executive Branch Review of Certain FCC Applications and Petitions Involving Foreign Ownership, Report and Order, FCC 20-133 (2020).

[8] See id.

[9] Id.

[10] Id.

[11] Staff of Permanent Subcomm. on Investigations, 116th Cong., Rep. on Threats to U.S. Networks: Oversight of Chinese Government-Owned Carriers 1, 3.

[12] Id.

[13] Id. at 4.

[14] Id. at 3.

[15] Id.

[16] Exec. Order No. 13,913, 85 Fed. Reg. 19643 (Apr. 4, 2020).

[17] See id.

[18] Brandon Curtin & Stephen Murphy, Executive Order Provides Structure to Team Telecom’s Review of FCC Applications and Licenses, JD Supra (Apr. 14, 2020), https://www.jdsupra.com/legalnews/executive-order-provides-structure-to-39485.

[19] Id.

[20]  See Exec. Order No. 13,913, 85 Fed. Reg. 19643 (Apr. 4, 2020).

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