On September 25, 2026, parts of the FCC's Second Report and Order on submarine cable landing licenses took effect. That was also the day reply comments closed on the accompanying Second Further Notice of Proposed Rulemaking, according to the FCC's notice DA 26-784. The Order, adopted June 25, 2026, is the most consequential change to U.S. subsea cable licensing in years. It is also a mixed bag.
What the Order does
The Order finds that the Cable Landing License Act and Executive Order 10530 let the Commission regulate owners and operators of submarine line terminal equipment (SLTE), the powered gear at a cable's landing station that lights the fibre. It then grants a blanket license to current and future SLTE owners and operators who are not already licensed. Entities that would be disqualified from holding a cable landing license are excluded, per Greenberg Traurig's summary of the Order.
The disqualifying conditions cover entities controlled by a foreign adversary (China, Cuba, Iran, North Korea, Russia and the Maduro regime), entities on the FCC's Covered List, those with prior authorizations denied or revoked on national security grounds, and those with serious character violations. Licensees must file annual circuit-capacity reports and keep cybersecurity and physical-security risk management plans.
Separately, applications that certify ten national security standards are presumptively exempt from referral to the executive branch review committee known as Team Telecom. The standards include a 72-hour incident reporting commitment, limits on leasing capacity to foreign adversaries, and a screen on foreign-adversary ownership at 5%. Team Telecom keeps authority to override where it identifies credible and articulable national security concerns, as Davis Wright Tremaine notes.
Only some rules are live. Sections including 47 CFR 1.70001(i)-(p) took effect September 25. Compliance with the rest awaits Paperwork Reduction Act review, and the Office of International Affairs will announce further effective dates, per the FCC notice.
The strongest case for the Order
The security argument deserves a fair hearing. Subsea cables carry the overwhelming majority of intercontinental data traffic, and SLTE is where a hostile vendor or operator could sit with access to wavelengths, management systems and traffic metadata. Until now, SLTE owners who were not cable licensees largely sat outside the Commission's view. A regime that identifies them, bars adversary-controlled firms, and requires basic security planning closes a real gap. Pairing that with a predictable fast lane for low-risk applicants is also what industry has long requested.
Where the design is sound
The blanket license is the right instrument. Rather than forcing every SLTE operator through an individual application, the FCC licenses by operation of law and reserves case-by-case review for the risky cases. That is proportionate: the burden falls on entities with adversary ties, not on every carrier, cloud company or data-centre operator touching a cable.
The Team Telecom exemption is the most pro-growth element. Referral to executive-branch agencies has been a notorious bottleneck, and a presumptive exemption tied to objective, certifiable criteria lets applicants plan around known requirements instead of waiting on an opaque queue. Faster licensing means faster capacity, which serves the security goal itself: more diverse routes and more capacity from trusted builders make the network more resilient.
Where it risks overreach
The details are where proportionality can fray. Industry commentary flags three pressure points.
- Consortium cables. Multi-party cables must maintain exemption eligibility as ownership changes. One member's change in circumstances could pull the whole project out of the fast lane.
- Downstream policing. Operators must monitor counterparties and customer capacity arrangements, effectively making private carriers enforcement agents for national security policy.
- Data centres and repair. Facilities hosting SLTE face new scrutiny, and global repair ecosystems become a strategic planning issue, since repair vessels and suppliers sit in a market with few players.
These concerns come from the DWT analysis of the Order. None is fatal. But each raises compliance cost most for smaller and newer entrants, who are the very firms that diversify the market. A rule that locks in incumbents with existing mitigation agreements (the first standard is recent licensure with mitigation compliance) would entrench established players rather than broaden the field.
What to watch
The open Second Further Notice is the real test. It seeks comment on additional routine conditions and signals a one-time information collection on the SLTE landscape. Three questions matter.
- Will the FCC define "control" and ownership thresholds with enough clarity that consortium members can price risk?
- Will it allow cure periods and safe harbours for good-faith, inadvertent breaches, rather than treating every lapse as disqualifying?
- Will it limit data collection to what national security review needs, so that annual capacity reports do not become a general surveillance of commercial traffic arrangements?
The pending OMB review also matters. Paperwork estimates are one of the few formal places where the cost of compliance gets quantified, and the public record will help show whether the burden estimates hold up.
Bottom line
The FCC has built the right skeleton: license broadly, exclude adversaries by objective criteria, and exempt low-risk applicants from slow interagency referral. The remaining work is in the details, and the Further Notice is where regulators can keep this a targeted security measure rather than an expanding compliance regime that raises the cost of building the cables the internet depends on.