FCC Seeks to Speed Review of Deals Involving Foreign Owners

By Lydia Beyoud

June 3 — The Federal Communications Commission is preparing to propose that a group of executive departments provide faster responses to the commission when reviewing mergers involving foreign ownership, according to a June 3 announcement.

The agency plans to consider a notice of proposed rulemaking (NPRM) (IB Docket No. 16-155) expected to include a specific timeline by which agencies including the Defense, Justice and State departments—known as “Team Telecom”—would have to give recommendations to the FCC based on national security and trade concerns about whether to approve a merger, a commission spokesman said. The agency plans to take up the notice at its June 24 meeting.

The current Team Telecom review process is a veritable black box for applicants left wondering about the status of their proposed transactions. Applications passing through the executive agency review can take an average of 250 days to complete, well beyond the FCC's informal 180-day merger review “shot clock.”

“This is an area that could benefit significantly from additional streamlining, clarity and transparency,” said Ari Q. Fitzgerald, a partner with Hogan Lovells LLP's Communications Group and former deputy bureau chief in the FCC's International Bureau.

Netherlands-based Altice NV's proposed acquisition of U.S.-based Cablevision Systems Corp. was among the most recent merger reviews to be subject to a Team Telecom review. Federal law mandates license ownership restrictions on companies with direct or indirect foreign ownership above certain thresholds.

The agency's forthcoming proposal “seeks to make the process more predictable and transparent” for applicants, FCC Chairman Tom Wheeler said in a June 3 blog post.

The National Telecommunications and Information Administration (NTIA), through the Department of Commerce, the Department of Homeland Security, the White House Office of Science and Technology Policy and the U.S. Trade Representative can also participate in Team Telecom reviews. The FCC typically follows the agencies' recommendations, though it doesn't have to do so.

Companies seeking authorizations and license transfers to offer international long distance calling, rulings to obtain or transfer wireless radio licenses, submarine cable landing licenses and satellite earth station authorizations may also be subject to Team Telecom reviews.

A 2014 FCC staff report on agency processes pointed to a need for firm review deadlines.

NTIA Suggestions

The FCC's upcoming proposal builds on NTIA's May 10 recommendations for streamlining the process. NTIA, which administers the government's spectrum and telecom holdings, asked the FCC to obtain additional information for applicants with reportable foreign ownership to disclose in their initial applications. NTIA supported having an internal response deadline but did not specify a timeline.

It also proposed additional detail on the information it would suggest the FCC seek in a June 2 filing.

It also asked for entities to make certifications to comply with applicable law enforcement assistance requirements.

O'Rielly's Advocacy

Republican FCC Commissioner Michael O'Rielly has been urging the FCC to overhaul the Team Telecom review process. In a 2015 blog post, O'Rielly called for greater speed and transparency in the process, but also to allow greater foreign ownership “in order to open the doors to new capital and opportunities for U.S. broadcasters while at the same time hopefully laying the groundwork for similar treatment of U.S. investors abroad.”

O'Rielly expressed concerns with the specifics of NTIA's May letter, however, saying May 12 the agency's recommendations “raise a host of issues unrelated to foreign ownership review.”

The FCC also plans to vote on final rules to require submarine cable licensees to report communications network outages to the FCC more quickly (GN Docket No. 15-206). The FCC approved an NPRM on the subject in 2015.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bna.com

To contact the editor responsible for this story: Keith Perine at kperine@bna.com

For More Information

The FCC's agenda announcement is at http://src.bna.com/fBd.

Wheeler's blog post is at http://src.bna.com/fBe.

Text of NTIA's May filing is at http://src.bna.com/fAv.

Text of NTIA's June filing is at http://src.bna.com/fAS.

O'Rielly's 2015 blog post is at http://src.bna.com/fA8.

O'Rielly's May 12 statement is at http://src.bna.com/fA6.