President Trump has issued an Executive Order (“EO”) establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (the “Telecom Committee”). The Telecom Committee will advise the US Federal Communications Commission (“FCC”) concerning national security risks presented by non-US (foreign) investment in the US telecommunications services sector.
Although the Telecom Committee’s name is new, the EO is intended to formalize the long-standing national security review of FCC license applications by “Team Telecom,” an interagency group with representatives from the Departments of Defense, Homeland Security, and Justice. Consistent with Team Telecom’s role, the Telecom Committee is limited to an advisory function. The Telecom Committee will be able to, for example, recommend that the FCC deny a license application based on credible evidence of national security risks posed by an application. In contrast to the Committee on Foreign Investment in the United States (“CFIUS”), the US’s chief foreign investment regulator, the Telecom Committee cannot, however, unilaterally block transactions or impose mitigation conditions.
The procedures by which the Telecom Committee will review applications and licenses are outlined at a high level in the EO, and summarized below. The procedures generally mirror Team Telecom’s informal practices, but clarify the Committee’s decision making process and, notably, set some timelines on its review. A forthcoming Memorandum of Understanding should include additional information about the Telecom Committee’s formalized review process.
For now, the EO does not fundamentally change the review process for transactions that are also subject to review by CFIUS, which has much broader jurisdiction and power than the Telecom Committee to review investments in US businesses. As such, non-US parties should continue to assess direct or indirect investments in US businesses to determine whether they should, or must, be notified to CFIUS.
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