In advance of Thursday’s FCC open meeting, where the Commission will consider an order and notice of proposed rulemaking that would protect the nation’s telecommunications infrastructure from threats in a national security and law enforcement landscape, a former FCC Chairman and Commissioner have registered their concerns that one area is to stringent and could affect investments in their company.
Former FCC Chairman Ajit Pai, now a partner at Searchlight Capital Partners, and former Commissioner Jonathan Adelstein, Head of Global Policy and Public Investment for DigitalBridge Group, Inc., informed the FCC in a letter that the proposed rules miss the mark by failing to consider the negative impact on the ability of investment management firms to attract foreign capital to invest in and improve U.S. telecommunications infrastructure.
In the joint correspondence with EQT Fund Management SARL, Novacap Management Inc., and Palisade Investment Partners Limited, the telecommunications investors said they oppose the FCC’s proposal to reduce the ownership reporting threshold to 5% from 10%.
“A reduction in the longstanding threshold for reportable ownership interests from 10 percent to 5 percent is of particular concern for the Telecommunications Investors because a reduced reporting threshold is significantly more burdensome than current rules, is unnecessary to achieve the Commission’s national security goals, and would significantly inhibit the ability for the Telecommunications Investors to solicit capital from legitimate domestic and foreign sources to support investments in carriers holding international section 214 authorizations,” they stated in their April 13 letter to FCC Secretary Marlene Dortch.
They said that rather than upending the longstanding framework for investment in the U.S. telecommunications sector and pursuing minority investors that have a minimal set of rights in connection with their investments that could not possibly represent a threat to national security, the Commission should focus its energy on targeting the general partners or similar entities that control Commission licensees.
According to an FCC filing, on April 14, Adelstein spoke with Marco Peraza, Wireline Advisor to Commissioner Nathan Simington, regarding the draft proposal. He reiterated that requiring public disclosure of passive investors holding an equity interest of between 5 and 10 percent in the holders of an international section 214 authorization would impede the ability of DigitalBridge to raise capital.