On January 30, 2019, Geoffrey Starks was sworn in as the newest FCC Commissioner, restoring the agency to its full complement of five Commissioners for the first time since the summer. In announcing his swearing in, Commissioner Starks stated he intends to focus on strong FCC enforcement “protecting the most vulnerable and holding wrongdoers accountable.” He added that he will “serve the public interest by encouraging innovation, competition, and security, as well as advancing policies to increase the quality, availability, and affordability of our country’s communications services.” Commissioner Starks joins Commissioner Rosenworcel as one of the two Democratic Commissioners at the FCC. He fills the seat vacated by former Commissioner Mignon Clyburn, who left in June 2018 after nearly nine years at the FCC, including a stint as acting Chairwoman in 2013. Commissioner Starks will complete Ms. Clyburn’s five-year term, which expires at the end of June 2022. Although Commissioner Starks’ swearing in is not expected to result in any immediate FCC policy shifts, his addition provides a strong voice in favor of Open Internet regulation, Universal Service Fund reform, and enforcement.
In a move certain to inflame the ongoing trade dispute between the United States and China, Justice Department officials announced criminal charges against Chinese telecommunications equipment manufacturer Huawei, several of its affiliates, and its chief financial officer for alleged theft of trade secrets from U.S. telecommunications providers, bank fraud, obstruction of justice, and other violations. The two indictments issued on January 28, 2019, represent just the latest pushback against foreign telecommunications interests by U.S. officials, citing national security concerns and unfair trade practice claims. The FCC already proposed rule changes last year that would prohibit the use of Universal Service Fund support to purchase equipment or services from foreign companies deemed national security threats, primarily targeting companies from China and Russia. Congress also recently passed legislation prohibiting federal agencies and those working with them from using components provided by Huawei and other Chinese manufacturers. With the Trump Administration reportedly poised to issue an executive order effectively barring American companies from using Chinese-origin equipment in critical telecommunications networks, domestic service providers should keep a close eye on their supply chain security and potential liability when working with foreign entities. A criminal conviction on these charges could lead to broader restrictions on trade in U.S. export-controlled products with the company. Given the presence of encryption in telecom equipment, export controls on such products are relatively widespread
In this edition of Full Spectrum’s recurring series on FCC enforcement, Partner Steve Augustino and Associate Brad Currier address the legal dangers facing entities that may be unfamiliar with telecommunications regulation. Steve and Brad focus on a multi-million dollar DOJ fraud prosecution involving the E-rate fund and a settlement of inadvertent transfers of FCC licenses occurring as a result of a transaction between two entities that are not traditionally seen as communications entities (in this case, two hospitality companies). They also look ahead to two enforcement items on the agenda for the FCC’s September 26, 2018 Open Meeting. Click here to listen to this episode and click here to subscribe on iTunes.
The “Team Telecom” review process of applications involving foreign ownership has long endured a reputation for excessive length and opacity. It appears change may be on the horizon. The National Telecommunications & Information Administration (NTIA) filed a letter (NTIA Letter) on May 10, 2016 with the Federal Communications Commission (FCC or Commission) requesting the Commission require applicants for certain authorizations, including international 214 authorizations and transfers, section 310 license ownership rulings, submarine cable landing licenses and satellite earth station authorizations, submit additional information and certifications with their applications. NTIA asserts that submitting this information and certifications upfront will streamline the Executive Branch agency review process. Today, those reviews are undertaken by the Departments of Justice, Homeland Security, Defense, Commerce, State, Federal Bureau of Investigation, and United States Trade Representative (Team Telecom).
In response to the NTIA Letter, the Commission released a Public Notice late last week seeking comments on NTIA’s request. The Commission suggested that any comments received would inform the Commission’s planned formal rulemaking proceeding. The FCC seeks comments on or before Monday, May 23, 2016.
On October 1, Chairman Wheeler announced that he has circulated a Notice of Proposed Rulemaking among his fellow Commissioners that would seek comment on simplifying the FCC’s foreign ownership approval process for broadcast licensees “by extending the streamlining rules and procedures that currently apply to other classes of licensees to broadcast licensees.” Certainly, the broadcasting community would welcome an updating of the filing and approval process to allow FCC review of applications to proceed on a more streamlined basis. But, unfortunately, FCC review is only part of the story when there is foreign ownership, and it is quite often the smaller part for many FCC authorization holders, which frustrates, at the end of the day, the Chairman’s goal of better adapting the filing and review process to the current business environment.