FCC Proposes Expanded Subsea Cable Licensing Authority, Team Telecom Review Exemptions

The Federal Communications Commission (FCC) has circulated a draft Second Report and Order (Second R&O) and Second Further Notice of Proposed Rulemaking (Second FNPRM) that would significantly expand the agency's oversight of submarine cable infrastructure.

Released ahead of the FCC's June 25, 2026 Open Meeting and subject to change before adoption, the draft item proposes three principal actions: (1) establishing a licensing framework for submarine line terminal equipment (SLTE) owners and operators; (2) imposing additional national‑security‑focused requirements on submarine cable licensees; and (3) creating a process under which certain applications could be presumptively exempt from the often lengthy review conducted by the "Team Telecom" agencies—formally known as the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector. As explained further below, although the FCC presents these changes as reforms intended to facilitate faster and more efficient deployment of submarine cable infrastructure, the proposed exemption process would be narrowly tailored, with applicants for new subsea cable licenses needing to satisfy 10 national security conditions to qualify for a presumption that Team Telecom review is unnecessary.

The draft item also seeks comment on expanding the agency's regulations to adopt additional routine conditions for cable landing licensees—including SLTE owners and operators—to strengthen regulatory oversight and address evolving national security risks.

Key Takeaways

• SLTE owners and operators would generally need a cable landing license and would be deemed to hold such a license (with attendant regulatory duties) under a new blanket licensing framework.
• Applications meeting 10 national security standards—including restrictions on foreign ownership, enhanced cybersecurity controls, limits on certain capacity arrangements, and other governance requirements—would generally be exempt from Team Telecom review, although the FCC may still refer applications if, in the agency's opinion, credible national security concerns arise.
• Cable landing licensees would face new national‑security‑focused conditions, including restrictions on certain principal equipment, limits on foreign‑adversary‑related service providers, and expanded prohibitions and controls on certain indefeasible rights of use (IRU) and capacity arrangements.
• Certain principal equipment (i.e., the primary electronic components that support the cable systems end-to-end) produced by foreign‑adversary‑controlled entities could not be used or added to submarine cable systems.
• New vendor rules would bar commercial relationships with certain third‑party service providers—including foreign‑adversary‑controlled entities, Covered List entities, or providers able to access cables from foreign adversary countries—subject to limited exceptions for repair and maintenance.
• Expanded reporting and certification obligations would require licensees to report foreign adversary ownership changes, Covered List developments, operational updates, and other system changes.
• More rules may be coming, as the draft Second FNPRM seeks comment on additional routine conditions for submarine cable licensees, including SLTE owners and operators, to "further prevent evolving national security risks associated with SLTEs posed by foreign adversaries."

Draft Second R&O Would Expand Subsea Cable Oversight and Streamline Review for Certain Applications

If adopted, the draft Second R&O will significantly expand the FCC's oversight of submarine cable infrastructure, while simultaneously streamlining review of certain submarine cable applications, through three principal changes—each of which is discussed in greater detail below.

New Licensing Framework for SLTE Owners and Operators

The draft Second R&O would extend the FCC's submarine cable licensing framework to include SLTE owners and operators. The FCC's reasoning in support of this expansion of authority is based on its conclusion that entities who own or operate SLTE are "operat[ing]" a submarine cable within the meaning of the Cable Landing License Act and Executive Order 10530 (1954) because SLTE converts optical signals carried across submarine cables into electrical signals used by terrestrial networks. In the FCC's view, control over SLTE enables an entity to control traffic flowing over a submarine cable system and therefore constitutes operation of the cable itself.

The draft item explains that developments in submarine cable architecture—particularly the growth of open cable systems, spectrum sharing, and dark‑fiber IRU arrangements—have enabled entities other than submarine cable owners to deploy and control their own SLTE. In these arrangements, entities that hold IRUs or dark fiber rights may install their own terminal equipment to "light" fiber pairs and thus independently route and manage communications traffic over a submarine cable system. The FCC's construct of SLTE owners and operators would effectively capture any entity that holds submarine cable fiber capacity rights and installs its own terminal equipment, which generally includes information service providers, data center operators, and other non-carriers not otherwise subject to the FCC's jurisdiction.

According to the FCC, these developments create a regulatory gap because SLTE owners and operators may effectively operate communications infrastructure connecting the United States with foreign networks without holding a cable landing license or being subject to the agency's or the Team Telecom agencies' national security oversight framework.

To address this issue, the FCC would require entities that own or operate SLTE on submarine cables landing in the United States to hold a license under the Cable Landing License Act. Rather than requiring each SLTE operator to apply for an individual license, however, the Commission would grant a "blanket" cable landing license to most current and future SLTE owners and operators that are not already licensees under the submarine cable rules.

Issuance of these blanket licenses by operation of law is intended to minimize regulatory burdens while ensuring that the FCC gains oversight of entities that operate critical components of submarine cable systems. SLTE licensees would be subject to several routine conditions and reporting requirements, including obligations to comply with FCC rules and international communications treaties, file annual circuit capacity reports, and maintain cybersecurity and physical security risk management plans.

However, the blanket license would not apply to certain entities that meet the FCC's presumptive disqualifying conditions. These include entities: (1) owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary;[1] (2) equipment covered by the Secure Networks Act, as identified on the FCC's "Covered List;" and (3) whose prior FCC authorizations were denied or revoked on national security grounds. Such entities would instead be required to seek specific agency approval before owning or operating SLTE on submarine cables landing in the United States.

The draft Second R&O would also require certain SLTE owners and operators to file an annual "SLTE Foreign Adversary Report" if they meet specified criteria related to foreign adversary ownership, Covered List equipment, or other national security concerns.

Streamlined Processing Exempt from Team Telecom Review for Certain Submarine Cable Applications

The draft Second R&O also would establish a framework intended to streamline processing and eliminate the Team Telecom agencies' often lengthy and detailed review of certain submarine cable applications while maintaining what the FCC believes are necessary national security safeguards.

Under this framework, applications that meet ten national security standards would be presumptively exempt from referral to Team Telecom. The national security standards cover a range of issues related to ownership, governance, and operational safeguards.

Among other things, applicants seeking the exemption must certify and demonstrate that:

• They are a "recurring applicant" in good standing subject to one or more Team Telecom mitigation agreements that were entered into within the previous five years;
• They have no new 10% or greater foreign interest holders since their most recent Team Telecom review;
• No entity holding less than 5% in the cable system is owned or controlled by a foreign adversary;
• The cable system involves no foreign adversary debt or financing, strategic partnerships, or mergers;
• No senior officials of the applicant are subject to the jurisdiction or direction of a foreign adversary or operating from a foreign adversary country;
• They prohibit customers and downstream users from entering into IRUs and certain leasing capacity arrangements with foreign adversary entities, and the cable system does not interconnect with foreign adversary cables;
• They will adhere to enhanced cybersecurity and physical security standards; and
• They will implement incident reporting obligations and heightened security controls.

The framework is therefore designed primarily for repeat applicants that recently underwent a Team Telecom national security review and who remain subject to an existing, recently-adopted mitigation agreement with Team Telecom.

Importantly, though, even where an applicant meets these national security standards, the exemption from Team Telecom review is not automatic. Applicants will be required to provide a copy of their application to the Team Telecom agencies at the time of filing, and Team Telecom and its member agencies will then have 30 days (or, in "extraordinary extenuating circumstances," 60 days) from the FCC's release of a public notice announcing the application's filing to object and request the application's referral for national security review. Where Team Telecom or its member agencies make this objection, they must identify "credible and articulable national security, law enforcement, or policy concerns." Moreover, the FCC would also retain discretion to refer the application to the Team Telecom agencies if, in the agency's discretion, it determines that "the U.S. government's equities in national security, law enforcement, foreign policy, and/or trade policy" warrant such a referral.

While the FCC claims that referrals of applications that qualify for streamlined review will be "infrequent and limited to select circumstances," it identifies some of the circumstances that could potentially warrant Team Telecom referral, including where: (i) the applicant does not meet undefined "national security standards"; (ii) there is new reportable foreign ownership that has not previously been reviewed; (iii) the applicant reports foreign ownership from a country whose submarine cable regulatory environment lacks necessary protections; (iv) the cable poses undefined "threats to military communications or operations"; or (v) Team Telecom identifies false statements or misrepresentations in the application.

New National Security Certifications and Routine Conditions

Finally, the draft Second R&O would expand the national‑security‑focused certifications and routine conditions applicable to submarine cable licensees.

First, the draft item would prohibit the use or addition of certain "principal equipment" produced by entities owned by, controlled by, or subject to the jurisdiction or direction of a foreign adversary. The FCC defines "principal equipment" broadly to include core components of submarine cable systems such as routers, switches, repeaters, optical distribution equipment, network management systems, and SLTE, which is similar to the definition employed by the Team Telecom agencies in their mitigation agreements with existing cable licensees that exceed a certain ultimate foreign ownership threshold.

Second, the draft Second R&O would restrict the use of certain third‑party service providers involved in the operation or maintenance of submarine cable systems. In general, licensees would be prohibited from using service providers that are foreign‑adversary‑controlled entities, entities identified on the FCC's Covered List, or entities capable of accessing cable systems from foreign adversary countries. The rules would include a limited exception allowing such providers to perform emergency repair and maintenance services on the wet segment of a submarine cable system, subject to reporting requirements.

Third, the draft item would expand restrictions on IRU and capacity leasing arrangements. If adopted, these rules would prohibit licensees, their customers, and downstream customers from entering into arrangements with entities on the FCC's Covered List where those arrangements would allow the entity to install, own, or manage SLTE on a submarine cable landing in the United States.

The draft Second R&O would also impose additional reporting and notification obligations designed to enhance oversight of submarine cable operations. These include requirements to report foreign adversary ownership changes, certify compliance following updates to the Covered List, and notify the FCC of operational changes affecting submarine cable systems, such as geographic coordinate changes, cable retirement, or a decision not to renew a cable landing license.

In addition, through the draft Second R&O's new rules, the FCC would facilitate increased information sharing with other federal agencies involved in safeguarding submarine cable infrastructure, including members of the Team Telecom agencies. That, in turn, would likely increase the potential risks of facing more frequent enforcement actions in the event of non-compliance under either the new FCC rules or existing Team Telecom mitigation agreements.

FCC Seeks Comment on Additional Oversight Measures

In addition to the rules adopted in the draft item, the FCC's draft Second FNPRM seeks comment on whether the agency should impose additional routine conditions on submarine cable licensees to further strengthen regulatory oversight of submarine cable infrastructure. The draft item proposes to extend this inquiry to SLTE owners and operators, which the draft Second R&O would, if adopted, bring within the FCC's licensing framework.

The FCC explains that the purpose of the draft Second FNPRM is to assess whether additional oversight mechanisms may be necessary to address evolving national security risks associated with submarine cable systems and related infrastructure. In particular, the FCC seeks comment on whether further routine conditions or reporting requirements could improve the agency's visibility into the ownership, operation, and supply chains associated with submarine cable infrastructure.

The FCC also seeks comment on the potential costs and benefits of additional oversight measures and whether further rule changes may be warranted to ensure that the FCC and other federal agencies maintain adequate tools to monitor risks involving foreign adversaries, equipment suppliers, and other entities with access to submarine cable infrastructure.

Potential Impacts for Submarine Cable Operators and Investors

If adopted in its current form, the draft Second R&O will reshape not just compliance obligations, but also how submarine cable systems are structured, financed, and operated over time.

• Consortium projects may have a harder time using the contemplated streamlined pathway. The Team Telecom exemption framework the FCC is envisioning appears best suited to repeat applicants with relatively stable ownership structures, which could make it difficult for traditional consortium builds, private equity-financed entities, or other multiparty systems to qualify where ownership shifts during development, financing, or commercialization—even if those changes are modest in practical terms.
• Ownership stability may become more valuable than it has been historically. Because the streamlined pathway turns on not just formal control, but also on new significant foreign interests and other foreign-adversary-related ties, sponsors may have stronger incentives to simplify ownership structures, reduce late-stage ownership changes, and avoid structures that create uncertainty between initial review and filing of a cable landing license application.
• Commercial flexibility in open-cable systems could narrow. Open-cable, dark-fiber, and spectrum-sharing models depend on the ability of multiple parties to install equipment, control capacity, and resell rights downstream, but the new regulations will require cable landing and SLTE licensees to monitor counterparties, police downstream arrangements, and manage who can deploy or control SLTE.
• Increased regulatory burden may flow through to downstream rightsholders in private contracts. To preserve compliance and, where possible, position a future application for streamlined treatment, licensees are likely to push more detailed representations, notice covenants, audit rights, flow-down restrictions, suspension rights, and termination remedies into IRUs, capacity leases, vendor agreements, colocation arrangements, and other downstream contracts.
• Sub-5% interests and non-equity relationships may matter more than many investors expect. Even where a foreign-linked party lacks a reportable controlling stake under the FCC's rules, small financing arrangements, debt relationships, or strategic partnerships could still affect streamlined treatment eligibility and may therefore become a more prominent diligence issue in financings, acquisitions, and joint-build arrangements.
• Data center and colocation arrangements may fall closer to the regulatory center of gravity. Because the draft Second R&O recognizes that SLTE may sit inland at data centers and colocation facilities rather than just in traditional beachside landing stations, entities involved in hosting, operating, securing, or servicing those facilities may find themselves more directly implicated in submarine-cable compliance, vendor diligence, and physical-security planning than under legacy industry practices.
• Repair and maintenance planning may become a strategic issue rather than just an operational one. Although the draft Second R&O preserves a limited exception for certain repair and maintenance scenarios, it also underscores how dependent the industry remains on a constrained global repair ecosystem, which may push operators to consider redundancy, maintenance-zone coverage, spare equipment strategy, and trusted-provider availability earlier in the process.
• Applicants may start designing systems around future regulatory optionality. If the streamlined pathway proves meaningful in practice, sponsors may increasingly structure new systems from the outset to preserve eligibility later—favoring cleaner ownership chains, tighter downstream controls, more conservative vendor strategies, and security frameworks that resemble standing mitigation conditions.
• The FCC may be moving toward a more standardized, rule-based mitigation model. Taken together, the new routine conditions, expanded certifications, recurring reporting, and information-sharing mechanisms suggest a shift away from highly bespoke oversight of subsea cable systems and toward a more consistent compliance framework that applies across the market, even outside formal Team Telecom review.
• More rule changes may still be ahead. Because the draft Second FNPRM asks whether additional routine conditions should apply and the FCC continues to gather more information about the SLTE landscape, market participants may want to treat this item as an intermediate step rather than the endpoint of the agency's submarine cable reform effort.

Next Steps

The FCC is scheduled to consider the draft item at its June 25, 2026, Open Meeting, but the circulated draft remains subject to change before and after the agency votes. If adopted, most rule changes would be expected to take effect 30 days after publication in the Federal Register, while provisions requiring Paperwork Reduction Act approval would take effect later, after Office of Management and Budget review and a further FCC notice. The draft Second FNPRM, if adopted, would set comments due 30 days after Federal Register publication and reply comments due 60 days after publication.

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K.C. Halm is a partner, co-chair of DWT's technology, communications, privacy & security practice, and chair of the firm's communications practice, located in our Washington, D.C. office. John Nelson is counsel, also located in our Washington, D.C. office. For questions or more insights, please reach out to the authors or another member of our communications team and sign up for our alerts.