Trump Formalizes 'Team Telecom' Foreign Investment Review Process

The EO formalizes Team Telecom as the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector. It will “assist the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation” in the industry. The attorney general will chair the committee, which will include secretaries of defense and homeland security and “the head of any other executive department or agency, or any” assistant to the president deemed “appropriate,” the EO said. Other administration officials will act as advisers, including the secretaries of state, treasury and commerce and directors of OMB and the Office of Science and Technology Policy.

Trump's decree sets a shot clock for the Team Telecom committee to complete its review process. The committee must complete any initial review within 120 days after the AG determines an applicant’s responses to questions and information requests are complete. Any secondary assessment must be completed within 90 days after the committee decides it’s needed. The committee can extend a review timeline if an applicant fails to respond to requests for additional information, or recommend the FCC “dismiss the application without prejudice.”

This formalizes the committee’s ability to request information from applicants. It requires the national intelligence director “produce a written assessment of any threat to national security interests of the United States posed by granting the application or maintaining the license.” The committee can recommend the FCC condition an application’s approval on “compliance with any mitigation measures in order to mitigate a risk to the national security or law enforcement interests.” The committee would monitor mitigation steps.

Pai said Trump’s order allows the FCC to “move forward to conclude” the NPRM. That rulemaking proposes a 90-day time frame for executive branch review, with a 90-day extension in “rare circumstances.” The order establishes “a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner,” Pai said. “As we demonstrated last year in rejecting the China Mobile application” (see 1905090039), the FCC “will not hesitate to act to protect our networks from foreign threats. At the same time, we welcome beneficial investment in our networks and believe that this Executive Order will allow us to process such applications more quickly.”

Commissioner Mike O’Rielly, who has pressed for a Team Telecom revamp, praised the order and wants Pai to “move expeditiously to integrate” it into the FCC's process. “My priority has always been about fixing the incoherent and indefensibly unpredictable review process … without jeopardizing national security,” O’Rielly said. “This EO will facilitate acceptable investment of foreign capital in the communications sector to help jump start the industry and our economy” after the pandemic.

Commissioner Brendan Carr believes Trump “acted to ensure the security of our telecom networks against foreign actors who may seek to do us harm -- and the timing could not have been better. The threats of attacks on our critical telecom infrastructure and illegal spying rise as our reliance on those networks rises.” The committee “will have a full docket, and near the top of it, I recommend that the committee examine every carrier owned by the Chinese government that now connects to networks here in the U.S. -- including China Unicom and China Telecom,” he said.

'Clarity' Coming

Wiley telecom and internet governance lawyer David Gross told us he believes Trump’s order will ensure “greater clarity” and a “better process” for Team Telecom reviews, which will give investors “more certainty going forward” about foreign investment in the U.S. telecom sector. Team Telecom traditionally had a more “ad hoc” approach to advising the FCC, generally with no time frame and a “fairly flexible process," Gross said. The order will “provide much clearer roles” for the executive branch to make FCC recommendations, he said.

There has “been discussion for a long time” about a Team Telecom revamp, including from FCC members, Gross said. That “finally ripened” into something that should draw bipartisan support. It’s unclear whether Congress must produce any legislation in response, with much depending on how the order is implemented, he said. O’Rielly urged lawmakers in 2018 (see 1805150068) to revamp the process in legislation to make changes to the Committee on Foreign Investment in the U.S.

Brookings Institution Senior Fellow Blair Levin told us he questions the extent to which the EO changes the process. “Team Telecom’s worked very well,” so it’s unclear an order was needed now, he said: “I don’t see an inherent problem with [the EO]. I just don’t know what problem it solves.” It’s “ironic” the administration is “dealing with a process that to me has not demonstrated problem,” but it hasn’t “dealt with” spectrum policy disarray within the Commerce Department, Levin said. It took the administration until 2018 to release an EO to start a comprehensive national spectrum strategy (see 1810250018), and that has taken so long “we’re not going to get” that plan during Trump’s current term. The strategy had been expected last year (see 1907310033).

Meanwhile, the Media Bureau will explore whether the FCC should start a proceeding on reviewing or modifying sponsorship identification rules as they apply to programming by foreign entities, said Pai in a letter to Rep. Anna Eshoo, D-Calif. Pai was responding to her repeated requests the agency investigate stations broadcasting programming from Russian state-owned media such as RT and Sputnik radio (see 1909170032). “The Enforcement Bureau conducted an extensive inquiry into the matter, including issuing several letters of inquiry to the licensees that broadcasted this programming, and determined that under the Communications Act, the Commission's rules, and judicial precedent, there is no enforcement action that could be taken against the licensees in question,” Pai said. He expects MB recommendations “in the coming months for possible consideration by the full Commission.”

Movement toward better enforcing sponsorship ID rules is “encouraging,” said Center for Responsive Politics researcher Anna Massoglia in an interview. Stations inadequately identifying funding behind content “leave listeners in the dark as to who is behind what they’re listening to,” she said. Massoglia said there lately has been more impetus among agencies to enforce rules against foreign actors, such as the Foreign Agents Registration Act (see 1905130035). Womble Bond attorney John Garziglia, who owns a translator station that retransmits one of the stations targeted by Eshoo (see 1712040054), would welcome a rule change that clarifies the FCC’s position.