Rural Telecom Stakeholders Seek Cheaper Alternatives to Ripping Out Huawei, ZTE

Huawei might pay for such checks for its equipment, as it has in other countries, suggested its lawyer Andrew Lipman of Morgan Lewis on the panel and speaking with us later. He said that's what the company proposed in earlier FCC comments on a national security NPRM including on what can be funded by USF. Like some other speakers, Lipman said he was commenting only for himself. Earlier Monday at NARUC, Huawei also came up as the FCC got some scrutiny (see 1907220023). The agency declined to comment.

The FCC faced scrutiny from panelists who think the agency should do more to first find what the dangers are and said vulnerabilities could spring from gear made elsewhere, not just China. The FCC hasn’t asked where Huawei and ZTE products are deployed in U.S. networks, said Rural Wireless Association General Counsel Carri Bennet. "That would be a good start so we can" understand "what the scope of the problem is," she said. Panelists noted RWA estimates a rip-it-up approach for Chinese equipment could cost that group's members up to about $1.2 billion (see 1902200047).

An equipment testing and network monitoring regime could cost her members "more in the millions of dollars than the hundreds of millions of dollars," Bennet said. "It's a way to go while we’re waiting" for more certainty from the government. She and Wireless ISP Association CEO Claude Aiken said their members are "patriots" and would remove all Chinese gear if needed. "We need monitoring, not just of ZTE or Huawei, but of any network in the country," Bennet said of cybersecurity concerns. "All kinds of devices are going to be connected to these broadband networks, and any one of them could be used to launch attacks." Third-party cybersecurity services providers would always be watching networks.

"The FCC is not the right agency" and "doesn’t have appropriate jurisdiction," Lipman said. Huawei wants "a holistic solution to cybersecurity rather than identifying and treating companies" specifically, he said. All vendors could have testing they pay for. "This administration ... has taken a generally harsh view on China" on Trade Act Section 301 actions and with telecom having "become a part of the trade negotiations," the lawyer said. "Huawei is collateral damage in these trade talks." He noted that "with one exception, all those comments to a certain extent found problems with the FCC’s proposal."

Trade War

RWA members, too, have "gotten caught up in the trade war with China," said Bennet. She and WISPA's Aiken said their members bought from the Chinese companies over Ericsson, Nokia and Samsung because Huawei and ZTE are cheaper. "The current regime really does inject a lot of uncertainty" into the rural telecom business, including Trump's executive order in this area, Aiken said.

This is a "political issue," but it's "not so much red or blue but purple and may affect all consumers," said Office of Ohio Consumers' Counsel Assistant Consumers' Counsel David Bergmann, speaking for himself and not for his new employer or the National Association of State Utility Consumer Advocates, which he had led. Expenses to replace Chinese equipment are "going to be passed onto consumers," he predicted: "A trade war is a war, using bucks, not necessarily bullets. So this is an issue for all consumers, not just those who are engaged in the business, not just those who have military experience."

NARUC board member Chris Nelson suggested "nobody’s going to believe that" Huawei is distinct from China's government, as the company and Lipman contend. "Don’t rely on what I have to say, I think all equipment including Huawei equipment should be robustly and constantly tested," Lipman responded. "There’s no U.S. telecom equipment manufacturers." To Nelson's question on whether monitoring may not detect a cyber breach until it's already begun, Bennet said RWA is working with a company that may be able to quickly raise a warning. Bergmann said it doesn't matter from where an attack originates, "it's going to come." He said that's why "preparing for the crisis is so vital" as shown by an emergency-event simulation here Sunday. The exercise facilitator had noted a cyberattack could have a major impact.

A few other state regulators questioned panelists, including moderator and Nebraska Public Service Commissioner Crystal Rhoades: "I’m wondering with how we as regulators can deal with the political ramifications of continuing to use this particular company’s equipment given what we know" about laws requiring Huawei and others based in China to turn over information. "Find out the facts, and then tell us," suggested Bergmann. "We do need to consider these things before taking action," he added. "Those investigations have to be, to the extent possible, open."

NARUC Notebook

NARUC telecom experts have combined two FCC Lifeline-related resolutions for consideration at their meeting this week in Indianapolis, while a draft opposing an overall FCC USF budget still has no takers. That's according to meeting attendees we spoke with Monday. Some expect the association's members to vote yes on the now-combined Lifeline national verifier (NV) resolution and the one on putting off changes to the program for government-subsidized low-income telecom services that would eventually exclude voice-only services in favor of only broadband. The earlier NV one would have stopped FCC and Universal Service Administrative Co. rollout of NV to more states and territories until year's end and let those that must use the NV rather than their own systems to check eligibility for Lifeline users revert to the local versions if they have had many incorrectly found ineligible (see 1907170033).

Now, the group would urge "the FCC to only continue to 'soft launch'" NV and suspend hard launches "until either December 31, 2019 or until service provider APIs [application programming interfaces] are established, and electronic access to federal/state SNAP and Medicaid databases is available to confirm subscriber eligibility, whichever is later." That's according to drafts we got that were apparently sent to members in recent days.

The group didn't appear to have made major changes to the minimum services recommended in the newest draft compared with the earlier one. NARUC now would urge "the FCC to maintain the full $9.25 [monthly] in Lifeline support for voice services at the December 1, 2018 service levels. Moreover, the FCC should not phase-down or eliminate support for voice services as it has proposed for 2019 to 2021." NARUC also would ask the federal regulator to "freeze the broadband minimum service standards for Lifeline at the December 2018 levels -- 2 GB per month/household at $9.25 -- until the FCC concludes its 2021 Lifeline Study and determines an appropriate standard based on then available data."

The commissioner sponsors of the previous two separate versions would now combine on the joint one, we were told. They are the U.S. Virgin Islands' Commissioner Johann Clendenin, who had sponsored the NV one that also recommended keeping the data minimums, and Vermont Commissioner Sarah Hofmann and Nebraska's Crystal Rhoades. The latter two had sponsored the voice-availability extension.