White House sets up committee to assess foreign participation in US telco

President Donald Trump issued an executive order to establish a new committee to provide recommendations to FCC  regarding foreign applications for telecom licences in the US.

The formally titled “Executive Order on Establishing the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector” was issued by the president on Saturday, with a primary objective to ‘assist the FCC in its public interest review of national security and law enforcement concerns that may be raised by foreign participation in the United States telecommunications services sector’.

The committee will be chaired by the Attorney General (William Barr as the current job holder) and members will include the Secretary of Defense, the Secretary of Homeland Security, and heads of other executive departments or agencies, and Assistants to the President which the President sees appropriate. Advisors to the committee will include a dozen secretaries and heads of relevant departments and agencies, for example the State Department, Treasury, Commerce, National Intelligence, Office of Science and Technology Policy, as well as the President’s assistants for National Security Affairs and Economic Policy.

The committee’s working relation with the FCC will go two-ways. The FCC can refer applications for licences or transfers of licences to the committee for review. The committee will ‘review applications and licenses for risks to national security and law enforcement interests posed by such applications or licenses’, and will be authorised to collect information on applicants needed for the reviews. Based on such risk reviews, the committee shall recommend to the FCC whether it should dismiss or deny applications, set condition on or modify the granting of licences, or even revoke licenses already granted.

“I applaud the President for formalizing Team Telecom review and establishing a process that will allow the Executive Branch to provide its expert input to the FCC in a timely manner,” said FCC Commissioner Ajit Pai. “Now that this Executive Order has been issued, the FCC will move forward to conclude our own pending rulemaking on reform of the foreign ownership review process.”

Citing the FCC’s decision to reject an application from China Mobile to offer international telephony service last year, Pai said “this FCC will not hesitate to act to protect our networks from foreign threats. At the same time, we welcome beneficial investment in our networks and believe that this Executive Order will allow us to process such applications more quickly.”

Some of America’s biggest telecom companies are of foreign ownership. The newly formed New T-Mobile, the merger between T-Mobile and Sprint, is a subsidiary of Deutsche Telekom, with the German parent company being the biggest share-holder (43% of total share), and its second largest shareholder is Japan-based Softbank (23%). Vodafone used to own 45% of Verizon Wireless until 2014. But these naturally fall under the “beneficial investment” category. It will be applications like the one filed by China Mobile that will get most of the committee’s attention.

Ofcom still determined to rinse UK MNOs over license fees

UK telecoms regulator Ofcom has announced a fresh consultation on the license fees MNOs have to pay for some spectrum.

This marks the culmination of a process that began four years when Ofcom decided the UKs mobile operators should pay four times more for their 900 MHz and 1800 MHz spectrum than they currently did. That was eventually tweaked down a bit but still represented a 200% tax increase.

EE, which pays the most of this spectrum tax thanks to its 90 MHz of 1800, decided to take matters into its own hands, took the matter to court and, in 2017, won its appeal. A few months of pouting and regrouping occurred, which culminated in today’s announcement of some new proposed tax levels.

Imagine EE’s surprise then, when Ofcom suggested £908,000 per MHz of 1800, which amounts to £81.72 million – more than EE successfully appealed against! We gather that many people within EE are deeply frustrated by this development, not least because they have been paying the higher license fee level anyway, pending the conclusion of the appeal process.

It seems inevitable the this will go back to court now, but it’s hard to see what new evidence Ofcom can present to overturn the previous ruling. It has certainly laid out a pretty exhaustive case in the consultation document, but what new stuff could it have possibly dug up in the past few months?

The whole reason these license fees seem to exists is that those spectrum weren’t won in an auction so the state didn’t get its pound of flesh. The assumption seems to be that all spectrum should come with a tax burden and if that’s not achieved through auction then other means should be explored. Since Ofcom is always banging on about how operators don’t invest enough in their networks, another idea might be to let them keep the cash for that very purpose. Just saying.