FCC Gets Pushback, Some Support on Enhanced Supply Chain Rules
The FCC got some industry support for new supply chain rules designed to protect U.S. networks. But groups representing rural carriers raised concerns, and Huawei said the proposals aren't legal. Commissioners approved rules 5-0 in November barring equipment from Chinese vendors Huawei and ZTE in networks funded by the USF, and sought comment on whether to expand the prohibition (see 1911220033). Commenters urged coordination, especially with the Department of Homeland Security, and regulatory humility. Comments were posted Monday and Tuesday in docket 18-89.
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The Rural Wireless Association, which raised concerns about the ban, said the FCC needs to move with care, citing "reduced USF support, decreasing roaming revenues, and a litany of significant market-specific economic barriers." The commission "is on a course to completely restrict all USF funding to those very same carriers operating these 3G and 4G/LTE wireless networks that cover sparsely-populated markets,” the group said: The Further NPRM “ignores the degree to which equipment components and sub-components need to be replaced in telecommunications networks, which will in turn increase the total amount needed in the reimbursement fund.”
The Competitive Carriers Association raised a red flag. Prohibitions must be backed by “sufficient and timely funding to ensure no loss of service for consumers and the viability of affected carriers,” CCA said: “Congress is best positioned to address and fund supply chain issues holistically and pending legislation addresses these same issues.” Replacing equipment “will require complex processes involving many entities, including carriers, vendors, and tower crews,” CCA said.
ZTE asked Monday to be exempted (see 2002030039). Huawei said what the FCC proposes is unlawful. “The Commission lacks authority to require the removal and replacement of covered equipment, and also lacks authority to extend the prohibition on use of covered equipment to all carriers,” the company said: Forced removal of equipment “would impose unreasonable retroactivity in violation of the Administrative Procedure Act,” Huawei said: That's “not and cannot be supported by a cost-benefit analysis. Furthermore, because the Commission failed to consider more reasonable alternatives, imposing the forced removal requirement would be arbitrary, capricious, and contrary to law.”
Maintain a “tight focus,” limiting the ban to eligible telecom carriers, CTIA said. DHS, not the FCC, should lead efforts, said CTIA: “A unified approach will help government and industry protect networks while leaving room for strong alternative global supply chains to grow.” The association said the FCC mustn’t overreach. “In making future designations the Commission should focus on companies that produce equipment and services that may create real security risks to networks, not ancillary equipment that is not critical to the network,” CTIA said. Reimbursement for removing gear should be for “equipment that supports a network, not ancillary equipment,” it said.
USTelecom said federal agencies must work together to protect the supply chain. “Curtailing the use of questionable suppliers is only the first step,” it said. “Over the long term, we must also ensure that a vibrant market of trusted suppliers continues to exist and grow. We encourage the U.S. government and allies to align on security requirements.” USTelecom noted the “present relative paucity of U.S.-based suppliers.”
NCTA sought U.S. coordination: “The prospect of state-sponsored actors exploiting supply chain vulnerabilities" is "a significant threat,” the group said. Companies need clear guidance, NCTA said. “Ensure that any new measures adopted in this proceeding are consistent -- and do not conflict -- with other existing efforts."
The FRNPM rightly recognizes “a funded reimbursement program” should come first, before requiring USF recipients to “remove and replace covered equipment,” said Nokia. It said many providers can't operate for long without USF support, and the FCC should recognize “the tension caused by its pronouncement that USF recipients may not maintain such equipment in any circumstance due to difficulties segregating USF and non-USF funds.”
Guard against rural service declines, WTA filed. “WTA is concerned that the steps taken by the Commission to prevent Universal Service and private funds from going towards the maintenance of covered equipment will lead to poor service for customers in rural America as carriers transition,” the group commented: “Since a transition may be a multi-year process, the Commission should revise its rule and allow for limited Universal Service support to go towards maintaining the equipment.”