On April 25, 2023, the FCC released the Order and Notice of Proposed Rulemaking (“Order” & “NPRM” respectively) imposing a one-time reporting requirement for international section 214 holders and seeking comment on additional changes to the Commission’s international section 214 regulatory scheme. The item was adopted at the April Open Meeting.
Order
In the Order, the Commission requires all international section 214 authorization holders to respond to a one-time collection to update the Commission’s records regarding the foreign ownership of the authorization holder. International Section 214 authorization holders will be required to:
- Identify their 10% or greater direct or indirect foreign interest holders, as of thirty days prior to the filing deadline. The information must be based on the following categories:
- Reportable Foreign Ownership – Foreign Adversary – The authorization holder must identify any 10% or greater foreign interest holder from China (including Hong Kong), Cuba, Iran, North Korea, Russia, Maduro Regime, or any other country deemed a foreign adversary pursuant to the Department of Commerce’s rules.
- Reportable Foreign Ownership – No Foreign Adversary – The authorization holder must identify any 10% or greater foreign interest holder, the foreign country or countries, whether the interest holder has dual or more citizenships, and countries where citizenship is held.
- No Reportable Foreign Ownership – The authorization holder can state that and certify to the truth and accuracy of the statement.
- Certify as to the accuracy of the information provided, which will require appropriate diligence
The Office of International Affairs is directed to establish a deadline via Public Notice after OMB approves the collection, which shall be no fewer than thirty (30) days following the effective date of the Order by OMB. Authorization holders that surrender their international section 214 authorization prior to the deadline do not need to file updated ownership information.
Notice of Proposed Rulemaking
The NPRM seeks comment on proposed rules and alternative approaches to further the Commission’s goal of accounting for evolving public interest considerations with international section 214 authorizations following an initial grant of the authority. Specifically, the Draft NPRM seeks comment on the following:
- Cancelling the authorization of any international section 214 holder that fails to timely respond to the information collection in the Order.
- The Commission would publish a list of non-responsive authorization holders in the Federal Register and require a response within thirty days.
- If the Commission does not receive a response, the authorization would be automatically cancelled.
- Authorization holders who failed to respond could file a petition for reinstatement nunc pro tunc if: (1) it is filed within six months after publication of the Federal Register notice; (2) the petition demonstrates that the authorization holder is currently in operation and has customers; and (3) the petition demonstrates good cause for the failure to timely respond.
- Those who fail to respond and meet the petition for reinstatement requirements could subsequently file an application for a new international 214.
- Adopting a 10-year renewal framework or some alternative periodic review of international section 214 authorizations.
- All International section 214 authorization holders, including those without foreign ownership and those who were granted an authorization prior to the effective date of the new rules, would be subject to a renewal or period review process.
- The Commission proposes a renewal timeframe of 10 years. During the review, the Commission would apply the same standard as it does to initial applications for international section 214 authority or applications to assign or transfer such authority.
- Alternatively, the Commission proposes a three-year formalized system of periodic review under which the Commission would systematically and continually review all authorization holders at regular intervals to determine if the authorization still serves the public interest or raises concerns that warrant revocation of the international section 214 authority.
- Adopting a process that prioritizes renewal applications with foreign ownership to regulatory reassess evolving national security, law enforcement, or other concerns, as opposed to reviewing international section 214 authorizations only on an ad hoc basis.
- The Commission proposes to prioritize the filing and review of renewal applications based on whether the carrier currently has reportable foreign ownership, the length of time since the Commission’s most recent review of the authorization, and whether the authorization is subject to a mitigation agreement.
- These entities would be required to submit renewal applications first and the deadline would be set within 6 months of OMB approval of the collection sought in the Order.
- The Commission proposes to adopt streamlined renewal processing for authorization holders that have no reportable foreign ownership and would refer applications with reportable foreign ownership or other national security concerns to the executive branch agencies.
- Failing to timely file a renewal application will deem the authorization expired and cancelled by operation of law.
- The renewal application requirements.
- Renewal applicants would be required to submit the same information as required in an initial application, including the information required by 47 C.F.R. § 63.18 and the Commission’s Executive Branch Reform Order.
- The Commission proposes to adopt an $875 application fee for international section 214 renewals.
- New application rules to capture critical information from all applicants with and without reportable foreign ownership not currently collected and additional certifications.
- The Commission proposes adopting new ownership reporting threshold which would require disclosure of 5% or greater direct and indirect equity and/or voting interests with respect to all international section 214 applications.
- The Commission proposes requiring all international section 214 applicants to provide information about their current and/or expected future services and the geographic markets where the authorization holder offers service in the US under its international section 214 authority.
- The Commission proposes requiring all international section 214 applicants to disclose and identify whether or not they use or will use foreign-owned Managed Network Service Providers.
- The Commission proposes collecting information on critical infrastructure used by authorization holders to provide service crossing the US-Mexico and US-Canada borders, including location, ownership, and type of facilities.
- The Commission proposes to adopt certifications related to cybersecurity requirements, reselling, the covered-list, and regulatory compliance.
- Modifications to related Parts 1 and 63 rules to ensure carriers’ use of their international section 214 authority is in the public interest.
- The Commission proposes to modify its rules to clarify that an authorization holder may hold only one international section 214 authorization except in limited circumstances.
- The Commission proposes to require international section 214 authorization holders to commence service within one year of receiving their authorization.
- The Commission proposes to require that an international section 214 authorization holder that discontinues service file notice with the Commission, even if it does not have customers.
- The Commission proposes amending its rules to state that an authorization holder that permanently discontinues its international section 214 service must surrender its authorization.
- The Commission proposes adopting a three- year ownership report filing requirement based upon the date of the last grant.
- The Commission proposes requiring applicants to identify International Signaling Point Codes they hold.
- Costs and Benefits – The Commission presumes that on average total cost to authorization holders to comply with the new rules will be approximately $7,675 per authorization per renewal, which will decrease to $3,595 after the first renewal process. Authorization holders with infrastructure, network managers, or other requirements listed above will have higher costs.
Comments will be due 30 days after the date of publication in the Federal Register.
Reply comments will be due 60 days after the date of publication in the Federal Register.
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