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.

As NTIA explains, under the current review process for applications involving reportable foreign ownership under the FCC’s rules, the FCC refers the application and seeks input from Team Telecom on national security and law enforcement issues. Typically, when Team Telecom initiates its review, it requests information from the applicant(s) beyond what is required in the FCC applications by issuing its so-called “triage questionnaire.” Team Telecom’s initial set of questions typically follows a set model, with some variations in particular circumstances, and responses are submitted under protection of confidentiality.

The NTIA proposal seeks to streamline the initial steps in this supplemental information gathering by requiring that certain information be submitted with the initial application rather than later as part of the Team Telecom triage questionnaire process. NTIA proposes the Commission require applicants to provide certain information about the corporate structure and shareholder information; relationships with foreign entities; financial condition and circumstances; compliance with applicable laws and regulations; and business and operational information, including services to be provided and network infrastructure. While the above categories are among those usually covered in the triage questionnaire, the list does not cover all of the usual triage questionnaire categories.

NTIA also requests that the Commission require applicants to agree to and certify compliance with what NTIA refers to as “routine national security and law enforcement mitigation measures.” NTIA anticipates and suggests this upfront certification could eliminate the need for mitigation - often takes the form of a national security agreement (NSA) or letter of assurance (LOA) - for a significant number of applications. The proposed certifications would address compliance with the Communications Assistance for Law Enforcement Act; would commit applicants to make certain categories of communications and records subject to lawful requests under U.S. law; and commit an applicant to establish a U.S. point of contact for the execution of such lawful requests.

Providers with international or submarine cable authorizations or who plan to seek such authorizations should consider participating in either or both the informal comment process and the future formal rulemaking proceeding. The Administration’s proposed requirements would place extra burdens on carriers’ initial application submissions and require more extensive certifications than currently required, placing the Team Telecom review burden on all qualifying applicants. However, some carriers may appreciate the chance, as a matter of standard procedure, to address sooner rather than later parts of the Team Telecom triage process.

Carriers will want to pay close attention to this proceeding and consider sharing in comments with the Commission exactly what such additional requirements will mean in terms of burden, implementation, and compliance.

Commissioner Michael O’Rielly recently put his finger on what many foreign investors and foreign corporations find most unnerving, the potentially long suspension of FCC action on applications that must go through the so-called “Team Telecom” review process which is all but automatically triggered by proposed direct and indirect foreign ownership in broadcasters, common carriers and aeronautical licensees as well as submarine cable operators. Applicants requesting approval of foreign ownership must undergo review by not only the Commission but national security and law enforcement review by the collection of federal government agencies commonly referred to as “Team Telecom:” the Department of Justice (including the Federal Bureau of Investigation), Department of Homeland Security and the Department of Defense. (Other agencies, such as the Department of Commerce and the Department of State may also be called upon to provide input to these primary reviewing agencies.) In contrast to the FCC review process, which generally has clearly defined procedures, timeframes, and a public record, the Team Telecom review process often lacks any transparency and has no deadline for completion.

Commissioner O’Rielly acknowledges the importance of Team Telecom review, which is not really open to debate. But he underscores, as has the Commission itself in liberalizing its standards applicable to foreign ownership in common carrier wireless licenses, that foreign investment “by benign private entities” provides important benefits, and should not be discouraged by how the Team Telecom review is conducted. What’s important about Commissioner O’Rielly’s criticisms is that, after identifying the problems that accompany the Team Telecom review process, he proposes improvements in an effort to limit delays to a final FCC action. But can a public rebuke by an FCC Commissioner instigate cognizable improvements to the currently unpredictably long Team Telecom reviews?

Commissioner O’Rielly identifies three areas ripe for reform:

“Inextricable Black Hole” –Team Telecom fails to provide any information or identify any areas of concern, either to Applicants, or the FCC, during the review, let alone venture a target for completion. As any business or investor that has undergone Team Telecom review knows, the uncertainty and delays may impact service rollouts and result in lost opportunities.

Lack of Precedent –Team Telecom reviews are not subject to any standard of consistency; there are no written “decisions” to guide future applicants in structuring transactions to speed the reviews. Instead, Commissioner O’Rielly asserts, applicants are essentially left to the “whims” of the Team Telecom agencies.

Political Concerns – Commissioner O’Rielly suggests that absent a “transparent and balanced process”, there are no guarantees that Team Telecom’s decisions do not unduly reflect political influences. He raises legitimate concerns that, absent the ability to show this is not the case, the FCC’s standing among its foreign peers is subject to being undermined, frustrating the agency’s long-time goal of an “independent international telecommunications regulatory structure.”

While the FCC certainly has no authority to dictate changes to Team Telecom, let alone one Commissioner, it is refreshing to see a senior public official calling for improvements of the sort which the business community would embrace. Perhaps the challenge will provoke a review by those agencies of their practices to reduce the key uncertainty of time faced by almost every common carrier, submarine cable, broadcasting, and aeronautical applicant with proposed new or additional foreign ownership.