Industry Opposes FCC's Proposed Changes to Section 214 Rules

The FCC should reconsider proposed changes in an April NPRM on rules for Section 214 international authorizations (see 2304200039), CTIA and others said in reply comments, posted Tuesday in docket 23-119. The order authorized a one-time collection of foreign-ownership information from authorization holders and sought comment on rules requiring carriers to renew the authorizations every 10 years, “or in the alternative,” periodic updates. The FCC got pushback in the initial comment round but general support from DOJ, DOD and Department of Homeland Security, sometimes called Team Telecom (see 2309010058).

“The fulsome record before the agency identifies myriad practical and legal obstacles to the Commission’s proposal to dramatically restructure its existing section 214 framework,” CTIA said: “Numerous commenters … identified many unintended consequences that would flow from the Commission’s proposed approaches, and have provided better alternatives that the Commission should instead consider.” CTIA noted the support of the proposed rules by federal agencies but said adoption “would have serious chilling effects on investments in the Communications Sector.”

The FCC heard objections from major trade associations, licensees and the financial community, Incompas said. “The arguments in these filings are robust and compelling,” it said: “The FCC should pause its consideration of the NPRM’s proposals until it has the benefit of reviewing the results of its one-time information collection and assessing the current state of play of authorization holders prior to implementing an entirely new burdensome regulatory framework that introduces significant new obligations and so much uncertainty and cost on licensees.”

T-Mobile said questions remain about whether the FCC has legal authority to impose a renewal requirement for international authorizations. “Even setting aside the statutory obstacles … the record demonstrates that the proposed renewal requirement and information collections are unduly burdensome and create the prospect of a daunting and extremely costly (both in terms of hours and money spent) compliance process for both international Section 214 holders and Commission staff,” T-Mobile said. The costs would “far outweigh the utility or benefit,” the carrier said.

“Nearly all commenters ... agree that the Commission should proceed cautiously in this proceeding,” said a filing by telecom investors. The investors questioned the need for a change in the reporting threshold: “Significantly expanding the scope of reportable owners to five percent indirect equityholders will … require significant additional expenditure of resources by carriers, their owners, Commission staff, and the Team Telecom agencies.” The filing was signed by Berkshire Partners, DigitalBridge Group, EQT Fund Management, GI Manager and Palisade Investment Partners.

Several of the proposals would “significantly expand the Commission’s role beyond what is contemplated for it in section 214, as well as increase the burdens on international section 214 authorization holders,” said NCTA. The group opposed a proposal to lower the threshold for reporting ownership from the current 10% to 5% proposed by the FCC. “In publicly traded companies, an investor’s purchase of five percent of an international section 214 authorization holder’s stock is very unlikely to give that investor meaningful influence over the company’s decision-making,” NCTA said. Cablers also raised concerns about a proposal to require all applicants, even those without reportable foreign ownership, to identify whether they use or will use foreign-owned managed network service providers.

The Satellite Industry Association urged the FCC to “narrowly tailor any newly-adopted rules to address specific risks to U.S. national security interests.” A renewal requirement for all licensees would “impose substantial administrative burdens and have a deleterious effect on facilities investment by undermining the reliability and sustainability of authorizations,” SIA said.

The FCC got support from the Electronic Privacy Information Center on a proposal for cybersecurity audits, which the group said must be conducted by “independent and thorough” auditors. “In the absence of comprehensive federal legislation, a regulatory approach is a necessary stopgap to safeguard consumer interests and restore trust in our communications infrastructure,” EPIC said.