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PTC’15 Submarine Cable Workshop:Regulatory Update Kent Bressie

18 January 2015

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Overview  

1.  CSRIC and cable protection

2.  FCC fees and charges

3.  Team Telecom developments

4.  U.S. licensing times

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CSRIC  and  cable  protec5on  

§  In 2013, the FCC’s Communications Security, Reliability, and Interoperability Council (“CSRIC”) established an undersea cable working group to promote resilience of U.S. undersea cable infrastructure, particularly in light of conflicts with:

§  Offshore energy development projects, including offshore wind, wave, and tidal energy and oil and gas projects, and

§  Sand dredging and beach replenishment activities.

§  Working group includes undersea cable industry representatives, capacity customers, and other government regulators.

§  In December 2014, the working group delivered its first report on spatial separation. Two further reports will address intergovernmental coordination and route and landing selection.

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CSRIC  report  on  spa5al  separa5on  

§  Report examines the economic and national-security importance of undersea cables, natural and man-made risks to undersea cable infrastructure, spatial requirements of undersea cable installation and repair, and existing protection methods.

§  Report highlights that the United States is a laggard in undersea cable protection, particularly when compared with countries like Australia and New Zealand.

§  Report makes 13 recommendations, including the adoption of additional protection measures, best practices, and policies by the FCC to mitigate those risks.

§  Report was adopted unanimously by the CSRIC, and the FCC is now working on implementation through rule changes and policy statements.

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CSRIC  report  recommenda5ons  

§  Exclusion zones around existing undersea cables (including exclusions within energy lease blocks).

§  Default separation distances of 500 meters in water depths of less than 75 meters and the greater of 500 meters or two times the depth of water in greater depths of water, absent agreement among affected parties or existence of more particularized standard.

§  Endorsement of existing ICPC, North American Submarine Cable Association (“NASCA”), and Subsea Cables UK standards and recommendations, and development of new standards to address emerging marine activities.

§  Adoption of greater legal penalties for cable damage.

§  Promotion of coordination and consultation at earliest stages of infrastructure and project planning.

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Further  decrease  in  FCC  annual  regulatory  fees  

§  In 2014, and following vigorous advocacy by NASCA, the FCC:

§  Decreased submarine cable system regulatory fees by 15 percent, and

§  Agreed with NASCA’s analysis that fees should drop further in future years.

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Team  Telecom  con5nues  to  create  delays  and  burdens  for  new  licenses  and  transac5ons  

§  For undersea cable systems, Team Telecom continues to conduct reviews and impose mitigation measures on systems with foreign landings or systems with foreign ownership, whether for new systems or acquisitions of existing systems.

§  In recent reviews, Team Telecom has shown particular concern about:

§  Chinese ownership,

§  Chinese-origin equipment and software, and

§  Direct or indirect ownership by foreign governments and militaries.

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Team  Telecom  reform  

§  The FCC, with support from the Department of State and the Office of the U.S. Trade Representative, have proposed reforms to the Team Telecom process, including:

§  Standardization of questionnaires (including vetting by the White House Office of Management and Budget),

§  Timeframes for review, and

§  On-the-record requests for extended reviews (and an opportunity to challenge such requests).

§  Timing of any reforms remains very uncertain.

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Team  Telecom  transparency  

§  In Ralls v. Committee on Foreign Investment in the United States, the U.S. Court of Appeals for the D.C. Circuit found that the CFIUS had failed to provide a Chinese purchaser of a U.S. wind farm near a Navy facility with notice of the factual basis for government concerns or an opportunity to address those concerns.

§  Going forward, CFIUS must provide parties in such a review with the unclassified information upon which it will base its decision, as well as an opportunity to rebut that evidence.

§  The court’s rationale could apply equally to Team Telecom reviews.

§  It remains to be seen whether the Ralls decision will increase transparency or result in CFIUS and Team Telecom reviews that are entirely classified (and therefore less transparent).

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Recent  U.S.  licensing  5mes  for  undersea  cables  

System  Date  FCC  

Applica1on  Filed    Date  of  Security  

Agreement  or  LOA  Date  FCC  

License  Granted    Total  

Licensing  Time  

Emerald   Feb.  5,  2014   Oct.  1,  2014   Oct.  21,  2014   258  days  

Pan  Caribbean  PCCS   Jan.  16,  2013   Jan.  14,  2014   Jan.  24,  2014   373  days  

viNGN   Dec.  21,  2012   none   Feb.  25,  2013   67  days  

AMX-­‐1   Mar.  30,  2012   Jan.  23,  2013   April  26,  2013   306  days  

AT&T  GOKI   Mar.  29,  2011   none*   April  14,  2011   16  days  

UUI  TERRA-­‐SW   Sept.  14,  2010   none   Oct.  28,  2010   44  days  

HANTRU1   Feb.  25,  2009   none*   June  10,  2009   105  days  

Honotua     Sept.  26,  2008   Dec.  3,  2010   Dec.  6,  2010   803  days  

Am.  Samoa-­‐Hawaii   Aug.  13,  2008   Jan.  9,  2009     Jan.  15,  2009     155  days  

CB-­‐1   June  3,  2008   Feb.  11,  2009   Feb.  13,  2009   250  days  

Unity     May  16,  2008     Sept.  21,  2009   Oct.  5,  2009   508  days  

*  Systems  likely  exempted  from  Team  Telecom  reviews  at  the  request  of  military  customers.    

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Recent  U.S.  approval  5mes  for    undersea  cable-­‐related  transac5ons  

Transac1on  Date  FCC  

Applica1on  Filed    Date  of  Security  

Agreement  or  LOA  Date  FCC  

Consent  Granted    Total  

Approval  Time  

CWC/Columbus   Nov.  21,  2014   pending   pending   pending  

Hibernia/KCK   Aug.  20,  2014   pending   pending   pending  

Level  3/tw  telecom   July  7,  2014   none   Oct.  24,  2014   108  days  

Global  Caribbean  Fibre/Digicel   Dec.  19,  2013   Sept.  8,  2014   Sept.  9,  2014   263  days  

GlobeNet-­‐Oi/BTG   Jan.  19,  2013   Dec.  11,  2013   Dec.  13,  2013   329  days  

Sprint/SoPBank   Nov.  16,  2012   May  28,  2013*   July  3,  2013   230  days  

C&W/Vodafone   June  13,  2012   Sept.  7,  2012   Oct.  3,  2012   113  days  

Wavecom/HT   July  17,  2012   none   Dec.  28,  2012   164  days  

Level  3/Global  Crossing   May  12,  2011   Sept.  26,  2011   Sept.  29,  2011   137  days  

*    Security  agreement  signed  with  Commi>ee  on  Foreign  Investment  in  the  United  States,  rather  than  Team  Telecom.    

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Recent  U.S.  licensing  5mes  for  214  carrier  licenses  

Carrier   Date  FCC  Applica1on  Filed    

Date  of  Security  Agreement  or  LOA  

Date  FCC  Authoriza1on  

Granted    

Total  Authoriza1on  

Time  

China  Mobile   Sept.  1,  2011   pending   pending   pending  

Telecom  Italia  Sparkle   Dec.  28,  2011   Apr.  23,  2013   Apr.  26,  2013   485  days  

CITIC  Telecom  (China)   June  29,  2012   pending   pending   pending  

US  Telephone  &  Telegraph  (Vietnam)   Mar.  27,  2013   pending   pending   pending  

VTA  Telecom  Corp.  (Vietnam)   July  18,  2013   pending   pending   pending  

Vodafone  US   Oct.  28,  2013   Sept.  22,  2014   Sept.  22,  2014   331  days  

Cable  Andino  (Ecuador)   Oct.  29,  2013   none   Apr.  14,  2014   168  days  

Telin  USA  (Indonesia)   Sept.  18,  2014   pending   pending   pending  

*  Applicant  was  otherwise  covered  by  security  agreement  and  technical  implementaEon  plan  for  LightSquared.    

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Kent  Bressie    HARRIS,  WILTSHIRE  &  GRANNIS  LLP  1919  M  Street,  N.W.,  Suite  800  Washington,  D.C.    20036-­‐2537  U.S.A.  +1  202  730  1337    office  +1  202  730  1301    fax  kbressie@hwglaw.com  www.hwglaw.com              ©  2015    Kent  Bressie