FCC Order Would Protect U.S. Telecommunications Supply Chain

December 3, 2020 | by Andrew Regitsky

FCC Order Would Protect U.S. Telecommunications Supply Chain

In 2019, the FCC took its first steps to protect America’s telecommunications infrastructure from foreign bad actors.  In Docket 18-89, the Commission prohibited prospective use of Universal Service Funds (USF) for the purchase of equipment or services from any company that posed a national security threat to the integrity of U.S. communications networks or the communications supply chain. Specifically, the Order targeted rural American telephone companies that obtain universal service support and are using or planning on purchasing relatively cheap equipment from the Chinese companies Huawei and ZTE for their 5G networks. The Order also established a process to add other companies to the banned list.

As part of that Order, the FCC released a Further Notice of Proposed Rulemaking (FNPRM) that would require LECs receiving USF funds, to remove all existing equipment and services from their networks that were purchased from banned companies.  It also sought industry comments on how to provide financial assistance to these carriers to help them transition to more trusted suppliers. 

As part of the FNPRM the Commission proposed an information collection to help assess the extent to which eligible telecommunications carriers have deployed Huawei and ZTE equipment in their networks as well as the costs to remove and replace it.

On a parallel path earlier this year, the President signed into law the “Secure and Trusted Communications Networks Act of 2019.”  Like the FCC Order, the Act prohibits the use of USF support to purchase banned communications equipment or services and directs the Commission to establish a reimbursement program for effected companies.  

In its upcoming December 10th meeting, the agency plans on melding its FNPRM and the new Act and is expected to take the next steps to protect the U.S. telecommunications market.  In a Second Report and Order, the Commission would:

Adopt rules to publish and modify a list of communications equipment and services that Congress or enumerated national security agencies or interagency bodies with appropriate national security expertise determine pose an unacceptable risk to the national security of the United States or the safety and security of its people.  The list will be published on the FCC’s website.

Prohibit the use of any Federal subsidy that is made available through a program administered by the Commission and that provides funds to be used for the capital expenditures necessary for the provision of advanced communications service to purchase, rent, or otherwise obtain any covered communications equipment or services.

Establish the Secure and Trusted Communications Network Reimbursement Program, which will provide funds for the removal, replacement, and disposal of covered communications equipment and services, and condition the start of the program on Congress appropriating the funds the Commission estimates that program will cost.

Require Eligible Telecommunications Carriers and participants in the Secure and Trusted Communications Network Reimbursement Program to remove, replace, and dispose of covered communications equipment and services in their networks.

Require all providers of advanced communications services to report whether their networks use covered communications equipment or services acquired after August 14, 2018.

Once the Second Report and Order becomes effective, the Commission will require companies receiving reimbursement funds under a newly created Reimbursement Program and Eligible Telephone Companies receiving USF support, to remove and replace from their network and operations environments, equipment and services included on the banned list required by the Secure Networks Act.  This requirement is conditioned on a congressional appropriation to fund the Reimbursement Program.

Once the Reimbursement Program is established, the agency will require companies to follow an equipment removal schedule.  Specifically, ETC recipients of USF support must certify that they have complied with the new rule requiring the removal of equipment and services on the equipment Covered List. The first certification will be required one year after the Wireline Competition Bureau issues a Public Notice announcing the acceptance of applications filed during the initial filing window to participate in the Reimbursement Program. Once the one-year period has expired, ETCs receiving USF support will then need to certify going forward that they are not using equipment or services identified on the Covered List before receiving USF support each funding year.

Foreign companies, especially Chinese ones, have been opposing these network security rules since they began last year.  At certain times, they might have found some sympathetic ears.  However, with Covid widely believed to have originated in China and spread due to the dishonesty of the Chinese government, it is hard to see any Chinese telecommunications equipment in U.S. networks in the near or even distant future.