The FCC is proposing wide-ranging changes to its international Section 214 authorization rules. Section 214 of the Communications Act provides the basic authorization for companies to provide regulated telecommunications services in the United States, and to and from the United States and foreign countries. In a Notice of Proposed Rulemaking adopted April 20, 2023, the FCC proposes to (1) require authorization holders to renew their international section 214 authority every 10 years, (2) reduce the threshold for reporting foreign equity ownership from the current 10% to 5%, and (3) require international Section 214 authorization holders to periodically update information to allow the FCC to review the public interest and national security implications of those authorizations. While these proposals are pending, the FCC will require international Section 214 authorization holders to file a one-time update to their foreign ownership information.

The current rules require companies seeking to offer international services originating or terminating in the United States to obtain international Section 214 authorizations, which have no expiration date. As part of the initial Section 214 application process, the FCC relies on the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (formerly known as Team Telecom) to assess the national security and law enforcement risks of proposed services. However, after an initial international Section 214 authorization has been issued, the FCC has no established procedures to review existing authorizations, and only receives updated foreign ownership information when an authorization holder files an application for a modification, assignment, or transfer of control of the authorization, or requests that it be allowed to discontinue services with existing customers. The FCC proposes to establish additional processes that will allow it to review the ownership of current authorization holders, so that it can better detect and prevent threats to national security.

Comments will be due 30 days after the FCC publishes the Notice in the Federal Register, and replies will be due 60 days after publication. Once published, Lerman Senter will provide an update to advise of comment and reply deadlines. A final order on the proposed changes is not expected until sometime in 2024.

In the meantime, the FCC will require current holders of international authorizations under Section 214 to update their foreign ownership information. Section 214 authorization holders must:

• Identify direct and indirect foreign equity holders of 10% or more, and categorize them as either (1) foreign interest holders who are from countries considered “foreign adversaries” (China [including Hong Kong], Cuba, Iran, North Korea, Russia, and the Maduro Regime), (2) foreign interest holders from countries that are not foreign adversaries, and (3) no reportable foreign ownership.
• For each foreign interest holder identified, the authorization holder must disclose whether that equity holder has dual or more citizenships and identify all countries where citizenship is held.

The deadline for filing this information will be no fewer than 30 days following the effective date as published in the Federal Register. The filing deadline may not be until late 2023 or early 2024.

The FCC plans to strictly enforce compliance with the requirement to update current ownership information. If an authorization holder fails to respond in a timely and complete manner, the FCC proposes to cancel the holder’s authorization and impose forfeitures or other measures. However, if a holder no longer needs its international Section 214 authorization and surrenders it before the reporting deadline, the holder will not need to provide the updated information.

This information is based on a pre-adoption draft of the item made available to the public by the FCC. If the final item is materially different from the draft, we will issue an update.