Yesterday, the Federal Communications Commission (“FCC”) announced a deadline of Monday, January 22, 2024 for all holders of international Section 214 authority to respond to a one-time information request concerning their foreign ownership. Most telecommunications carriers hold international Section 214 authority (i.e., authorization to provide telecommunications services from points in the United States to points abroad), so virtually all carriers should prepare to respond by next month’s deadline. Financial or strategic investors focused on the telecommunications space should prepare, as well – e.g., private equity funds with investments in telecommunications companies may be asked by these portfolio companies to provide ownership information necessary to comply with the FCC’s reporting requirement by the January 22, 2024 deadline.
Failure to respond by next month’s deadline could have significant consequences; pursuant to a Notice of Proposed Rulemaking (“NPRM”) adopted in April, the FCC currently is considering whether it should cancel the international Section 214 authority held by licensees that fail to comply with the reporting requirement. Any failure to respond also may subject the licensee to monetary penalties. A full summary of the rule changes the FCC proposed in the April NPRM can be found here.
All entities holding international Section 214 authority will need to submit a filing to the FCC identifying (by name, address, citizenship, and principal business) each foreign individual and foreign-organized entity with a 10%-or-greater economic or voting interest in the international Section 214 license holder. This requirement also will apply to any foreign individuals or foreign-organized entities controlling such a “reportable interest.” Each international Section 214 holder also will need an authorized representative to certify to the accuracy of the ownership information provided.
Responding to the information request will require the telecommunications carrier to make a submission through a new online filing system, which is available here. To access this filing system, all international Section 214 holders must have the FCC Registration Number (“FRN”) associated with their international Section 214 authority. This process, which requires accessing the FRN through the FCC’s general account database, may be particularly difficult in circumstances in which the international Section 214 authority is associated with multiple FRNs. In such cases, the FCC has clarified that the licensee must file a separate response for each FRN and all the international Section 214 file numbers associated with that FRN (i.e., the number identifying the international Section 214 authority in the FCC’s licensing database, ICFS).
There is an exemption to responding to the information collection fully, but this exemption applies narrowly to international Section 214 licensees that have made foreign ownership disclosures to the Executive Branch agencies known as “Team Telecom” within the last three years. Specifically, international Section 214 holders that meet the following conditions may claim a limited exemption from the one-time information request:
- The international Section 214 holder must have filed an international Section 214 application (i.e., an initial application, application for modification, or application for a substantial – not pro forma – assignment or transfer of control) that was reviewed by Team Telecom and granted by the FCC on or after January 22, 2021;
- There are no 10%-or-greater foreign interests in the international Section 214 holder other than those disclosed in the application that Team Telecom reviewed and the FCC granted; and
- There have not been any changes to the 10%-or-greater foreign interests disclosed in the relevant application as of December 23, 2023. Such changes include, but are not limited to, changes in the citizenship and/or place of organization of the disclosed foreign ownership interests, removal of any foreign ownership interests from the international Section 214 holder’s chain of ownership, and changes that reduced a previously disclosed foreign owner’s ownership to a less-than-10% equity and/or voting interest (or less than a controlling interest).
Please note that even if an international Section 214 holder qualifies for this exemption, it will still need to respond by January 22, 2024 with a list of all the citizenship(s) or place(s) of organization of the individuals and entities holding a 10%-or-greater economic or voting interest (or a controlling interest in each such “reportable interest”).
Alternatively, an international Section 214 holder can avoid responding entirely by surrendering its international Section 214 authority before the January 22, 2024 deadline. However, this is only an option for carriers that do not provide telecommunications services between the United States and points abroad.
If surrendering the authorization is an option, carriers may do so by filing a surrender letter in the relevant file(s) in the FCC’s licensing system (ICFS). Please note that affirmatively surrendering the license(s) before the January 22, 2024 deadline is the only way to avoid responding to the information request (assuming, of course, that this option is available). The FCC noted in yesterday’s announcement that all international Section 214 holders must respond to the information request, even if they no longer need or use their international Section 214 authority.
Because identifying all 10%-or-greater foreign ownership interests can be a complex exercise, it would be prudent for all international Section 214 holders – and any entities with cognizable ownership in, or control over, an international Section 214 holder – to start compiling the information needed for the response due January 22, 2024. Careful planning also may be necessary to work through the administrative burdens presented by the FCC’s filing requirements. For example, compiling all the FRNs associated with a company’s international Section 214 authority and filing a response for each such FRN may take significant time and internal coordination. Further guidance from the FCC on the filing requirements is available in detailed instructions released yesterday along with the deadline announcement.