New Objectives for CFIUS: Foreign Ownership, Critical Infrastructure, and Communications Interception

I. NEW CHALLENGES II. THE CFIUS PROCESS III. RISKS OF FOREIGN OWNERSHIP IV. NEW GOALS FOR REGULATION Global economic integration creates new kinds of risks for national security. Foreign ownership of U.S. telecommunications service providers is one such risk. While foreign acquisitions of U.S. companies are almost always harmless, there has always been concern among federal officials that foreign ownership could multiply opportunities for espionage, make defenders' tasks more complex, and reduce law enforcement communications interception capabilities. A new concern is that foreign acquisitions are a new avenue for a potential opponent to disrupt critical infrastructure and the services. The issue for national security is how to preserve communications interception capabilities and defend against potential service disruptions or intelligence activities in a period where integrated, global telecommunications enterprises and foreign ownership of, or participation in, national networks is increasingly routine. I. NEW CHALLENGES Communications interception is an integral part of law enforcement and intelligence activities. Nations have engaged in the interception of electronic communications for more than a century. Most countries have agencies, policies, and legal structures that control and take advantage of interception techniques. These control mechanisms also secure the country's own communications networks and information from the interception efforts of others. (1) Communications interception techniques can be divided into two broad categories: bulk interception and targeted interception. Bulk interception is the collection of all signals or emanations regardless of who sends them. The mass of signals are then processed and filtered to discover meaningful information. This technique is primarily used by intelligence agencies and is derived from military signals intelligence efforts that began shortly before World War I when militaries began to monitor the radio spectrum for transmissions of interest. (2) The zenith for bulk collection efforts was in the 1980s and since then the effectiveness of these techniques has been degraded by advances in information technology. (3) The second category, targeted interception, involves collecting against an individual user or device. This includes the techniques that fall under the rubric of wiretapping, but also new techniques developed for targeted collection on the Internet (these techniques often resemble spyware). Targeted collection frequently requires intrusive measures (as opposed to the more passive bulk collection techniques) which involve direct physical access to the communications medium or to the physical space of the target to collect data. It is difficult and costly to do this covertly. Targeted collections, and their requirement for access, are more intrusive and can pose a greater risk to civil liberties. The Committee on Foreign Investment in the United States ("CFIUS") is part of a broader effort in the United States to maintain interception capabilities. The United States seeks to preserve its interception capabilities while limiting foreign interception opportunities. Since the end of the Cold War, implementation of this policy has required repeated responses to changes in technology that would have otherwise degraded U.S. capabilities. The technological improvements that made communications technologies better and cheaper can also make interception more difficult. These improvements included the use of fiber optics, packet switching, strong commercial encryption, and the spread of Voice over Internet Protocol ("VoIP"). (4) Many of the regulatory battles between the federal government and the telecommunications and information technology industry in the 1990s, such as the Communications Assistance to Law Enforcement Act ("CALEA"), encryption, Carnivore, Patriot Act modifications to the Foreign Intelligence Surveillance Act ("FISA")--involved federal efforts to constrain or respond to technological change. …