FAQs on FCC’s Mandatory Information Collection Requirement for All International Section 214 Carriers

Kelley Drye Client Advisory

This advisory is an updated version of an April 23, 2023 advisory of the same name.

At its April 20, 2023 Open Meeting, the Federal Communications Commission (“FCC” or Commission”) adopted an Order imposing a one-time ownership-related data request to which all holders of Section 214 authority to provide international telecommunications services (i.e., common carrier services between U.S. and non-U.S. points) (“International 214 Holders”) must respond (“Data Request”).  The due date is not yet known because the Order must first be reviewed and approved by the Office of Management and Budget (“OMB”) because responses to the data request will involve data collection by the FCC.  Noncompliance will subject International 214 Holders to potential monetary and other penalties up to and including license revocation.

The following Frequently Asked Questions offers a practical guide to compliance with the principal aspects of the Order.  If you have a question that we did not anticipate, please do not hesitate to reach out to one of the attorneys of the Kelley Drye Communications Group.

The Order was accompanied by a Notice of Proposed Rulemaking (“NPRM”) by which the FCC is proposing to make a number of far-reaching changes to the rules governing Section 214 authorization holders.  These changes could result in considerable additional compliance burdens on carriers in the future.  We invite you to read our summary of the NPRM posted on the Comm Law Monitor for more information about the NPRM.

Must my company submit a response to the Data Request?

If your company holds an international Section 214 authorization issued by the Commission as of thirty (30) days prior to the response filing date for the Data Request (the Filing Deadline”), it must respond to the Data Request even if no foreign individual or entity has an interest in it.  (See below What is the scope of the information affected International 214 Holders must provide in response to the Data Request?”)  If your company provides international telecommunications only on a private carrier basis or even if your company is not providing any communications services at all, but you are an International 214 Holder, you must respond to the data request.  If your company held an International Section 214 authorization, but it has been surrendered (or revoked) prior to the Filing Deadline, you need not respond to the Data Request. (The FCC encourages International 214 Holders no longer needing their authorizations to surrender them in advance of the Filing Deadline via a surrender letter.)
Does the Data Request involve carriers that only hold domestic (interstate) Section 214 authority?

No.  The Data Request is being issued only to entities holding international Section 214 authority (although they may provide Section 214 domestic (i.e., interstate) services as well).
When are responses due to the one-time Data Request imposed by the Order?

The Filing Deadline is not yet known.  The FCC must obtain Paperwork Reduction Act (“PRA”) approval for the Data Request from OMB before the Order can become effective.  On May 3, 2023, the FCC submitted the Order to OMB and requested emergency processing,” specifically asking for OMB to grant PRA approval not later than June 9, 2023. 
When OMB review is completed, the FCC will publish notice of the effective date of the Data Request and the date of the filing deadline in the Federal Register.  The Filing Deadline will be at least thirty (30) days after completion of the OMB review.  The FCC will separately also issue a Public Notice, confirming the Filing Deadline and explaining the process for submissions.  Given the FCC’s request for emergency processing,” it will likely be mid-July or later in the third quarter of 2023 before the Data Request responses are due.  The revamping of the international Section 214 framework is being accorded a high priority throughout the FCC, and the collected information is integral to Staff’s task of considering the rules changes proposed in the NPRM.  So affected carriers should begin preparing for their responsive submissions now.  See below What should my company (if it is an International 214 Holder) do now to prepare for responding to the Data Request?”
If I want to file PRA comments with OMB on the FCC’s Order, what do I need to know?  
The deadline for the public to submit comments to OMB on the information collection requirements contained in the Order has been set for Friday, June 2, 2023.  Further information regarding the FCC filing and instructions for submission of comments to OMB, should your company be interested, are provided in the May 3, 2023 Federal Register
What are the consequences for International 214 Holders that fail to respond?

International 214 Holders that do not respond to the Data Request or that submit responses after the Filing Deadline may incur monetary penalties and other enforcement action, up to and potentially including revocation of their authorization.
What is the scope of the information affected International 214 Holders must provide in response to the Data Request?  

International 214 Holders must identify all foreign individuals or foreign-organized interest holders (“Foreign Interest Holders”) with a 10% or greater direct or indirect interest in the equity or voting stock of the International 214 Holder as of the date thirty (30) days prior to the Filing Deadline.  For each such Foreign Interest Holder, the reporting International 214 Holder must submit the information currently required by Section 63.18(h), namely the name, address, citizenship and principal businesses of the Foreign Interest Holder, and the percentage of equity owned or capital stock voted by each such individual or entity (to the nearest one percent).  (Under the application of this rule, the Commission has for some time requested both equity and voting interests.)  For these purposes, Foreign Interest Holders include individuals with dual (or more) citizenships and the associated details for each of these citizenships must be provided.  Each reporting International 214 Holder will need to certify, through an officer or other authorized representative, to the accuracy of its response.

To facilitate FCC review of the collected information, each response will be submitted in one of three categories by the Filing Deadline (absent a change in FCC instructions issued after OMB review):

  1. Reportable Foreign Ownership – Foreign Adversary – China (including Hong Kong), Cuba, Iran, North Korea, Russia, Maduro Regime. (International 214 Holders reporting in this category must also include any Foreign Interest Holder interests unrelated to the foreign adversary countries.)
  2.  Reportable Foreign Ownership – No Foreign Adversary
  3.  No Reportable Foreign Ownership 

What is an indirect equity or voting interest?

Each International 214 Holder has ownership interests in it, whether in the form of corporate stock, company member interests, partnership shares, or an equivalent.  The individual(s) and/or entities that  legally hold the ownership interests of the International 214 Holder hold a direct interest.  But the concern of the FCC regarding ownership of licensees does not stop with direct interests, instead encompassing indirect” ownership interests, which may be equally or more influential and significant than the direct interests.  These are the interests held in the International 214 Holder through one or more intervening entities.  Essentially, this resembles tracing a corporate ownership tree upwards from the International 214 Holder, starting with (i) the direct interest-holders; then (ii) the parties that legally hold ownership or voting interests in those direct interest-holders; followed by (iii) the next tier of parties (if there is one) holding ownership or voting interests in the parties identified in (ii); and so on.  Applying multiplication and the FCC’s attribution rules, the identification of reportable interests in the International 214 Holder continues until there is no higher tier” of individuals or entities that indirectly hold at least 10% interest in the International 214 Holder.  Depending on the ownership structure of an International 214 Holder, identifying all reportable 10% holders can be quite complex, and may involve accounting for share management agreements, general partners in limited partnerships, etc.  If you have questions about what entities that have indirect interests in your company may need to be reported, we recommend that you seek the advice of competent federal communications regulatory counsel.

 What will the FCC do with the collected information?

The foreign ownership information submitted in response to the Data Request will be used by the FCC to update its records for International 214 Holders.  (And the failure of entities listed as International 214 Holders in the FCC records to provide a response will allow the FCC to cull defunct or non-compliant companies from its international Section 214 authorization rosters.)  The collected information also will provide key information to FCC Staff as they consider the rule changes proposed in the NPRM, whether for 10-year license renewals or for more frequent review protocols, and to implement and enforce the new rules.  An example of this might be the prioritization of ownership reviews of a subset of International 214 Holders based upon the presence of reportable foreign ownership from certain countries.

Will the FCC share the responses of International 214 Holders that report foreign ownership in this information collection with the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector aka Team Telecom?

The Order does not propose such referrals, and, traditionally, such referrals by the FCC would not be triggered by mere responses to data requests.  But it cannot be ruled out.  The rule change proposals described in the NPRM, requiring periodic renewals or reviews of International 214 Holders, if adopted, are likely to expand the frequency of Team Telecom reviews for international Section 214 carriers with (or possibly even without) changes to their reportable foreign ownership, whether in connection with a mandated renewal or with a periodic review.  (Many current Letters of Assurances and National Security Agreements already require affected carriers to notify Team Telecom when certain types of less-than-controlling ownership changes occur.)

Finally, the FCC has continuing discretion to review a carrier’s qualifications for holding Section 214 authority.  It is not impossible, therefore, that in some situations, they would act upon information received through the Data Request if an urgent Team Telecom referral based on current ownership were deemed justified.

What should my company (if it is an International 214 Holder) do now to prepare for responding to the Data Request?

The scope of the Data Request is limited to submission of foreign ownership information reportable pursuant to the requirements of FCC Rule 63.18(h), as described above.  Therefore, International 214 Holders that have recently reported their 10% or greater ownership to the FCC, in connection with a license application, modification or transactional application, are more likely to be well-positioned to respond to the Data Request by reviewing whether any changes have occurred in their ownership since that recent report.  Those International 214 Holders that have not had reason to report their ownership to the FCC in recent years, particularly those with complex ownership (for example, multi-layered investment company or partnership shareholders in the International 214 Holder or a parent company), may find their Data Request responses more burdensome.  They would do well to review their ownership and control at all layers in advance of the Data Request effective date, ensuring the availability of additional time as needed to confirm details and conduct any necessary analysis.

 Why did the FCC adopt this Order? 

The driving motivation underlying this Order is to better equip the FCC, in collaboration with relevant Federal Executive Branch agencies, especially the Departments of Justice, Homeland Security, and Defense, with updated information to address the perceived risks that foreign ownership of International 214 Holders operating in the U.S. may pose for national security, law enforcement, foreign policy, and trade policy consideration.  Recent FCC proceedings resulting in the revocation of international Section 214 authorizations held by entities deemed to be agents of the Chinese government have caused such risks to come to the forefront of policy discussions  Moreover, the FCC’s current international Section 214 authorization protocol provides for ownership information to be provided only when an initial international authorization is sought or consent is requested either for a modification to the authorization or where there will be a de jure or de facto assignment or transfer of control.  Consequently, non-U.S. (and U.S.) persons or entities may obtain significant percentages of ownership in an International 214 Holder but not enough to trigger an application or notice obligation with the Commission.  The absence of a Section 214 license renewal obligation or a periodic review process allows potentially significant changes to carriers’ foreign ownership to occur out of sight from FCC or, depending on the terms of any mitigation arrangement with the Executive Branch as the result of a Committee review or CFIUS approval, Team Telecom review.  In 2020, the U.S. Senate Committee on Homeland Security and Government Affairs, Permanent Subcommittee on Investigations, underscored the importance of implementing some method to reliably monitor changes to International Section 214 carriers’ foreign ownership.  The Order is a first step in gaining current ownership information and only applies to covered carriers as of today.  The NPRM may lead to rule changes that, in some form, require International 214 Holders to disclose ownership information periodically.  Another motivation for the Order is to assist the Commission in determining the scale of active International 214 Holders, which the FCC estimates is less than a third of the number of currently issued Section 214 authorizations.  The data request will help the Commission to identify International 214 Holders listed in its database that are no longer active companies, allowing the FCC to cancel the associated authorizations. 

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If your company wishes to file comments in the OMB’s PRA process reviewing the FCC’s information collection Order, do not hesitate to reach out to one of the lawyers in the Kelley Drye Communications Group.

Determination of reportable ownership, pursuant to the FCC’s rules, through direct equity or voting interests in the carrier as well as indirect control up the chain to the ultimate owner can be challenging and packaging the information that must be provided can prove difficult, requiring correct application of the FCC’s attribution rules and appropriate characterization of the various forms of direct and indirect interests to be included.  The Kelley Drye Communications Group has extensive experience working with carriers to identify reportable ownership information for FCC filings.  Please reach out to us if you have any further questions or if we can be of any assistance if your company must respond to the Data Request.