FCC Chairman Ajit Pai has circulated a draft order to his fellow Commissioners that would bar recipients of Universal Service Fund support from purchasing equipment and services from vendors deemed to present a national security threat, that would create a mechanism for designating prohibited vendors, and that would make the Chinese companies Huawei Technologies Co. Ltd. and ZTE Corp. the first companies to receive such a designation, subject to a response and review period.
The draft order, which follows a notice of proposed rulemaking (NPRM) adopted last year (TR Daily, April 17, 2018), would be accompanied by a draft further notice of proposed rulemaking (FNPRM) that would seek input on a “remove and replace” proposal for equipment supplied by newly prohibited vendors that is already installed in the networks of eligible telecommunications carriers (ETCs) and a draft information collection that would seek data from carriers about the extent to which Huawei and ZTE equipment is already in their networks and how much it would cost to remove and replace it.
Huawei and ZTE would have 30 days after the adoption of the order to respond to their initial designation as prohibited vendors. If they did not respond, the designation would take effect on the 31st day, and if they did respond, the Public Safety and Homeland Security Bureau would have 120 days after the adoption of the order to review the response and make a final determination, according to a senior FCC official who briefed reporters on the item today.
The official said the process laid out in the draft order called for the bureau to make any future initial designations of other companies to be added to the list of prohibited vendors, and that the FCC would work with national security and intelligence agencies to obtain information relevant to making such designations and assessments. The official also said the FCC had worked with its federal partners, including national security and law enforcement agencies, in developing the item.
In a blog post today, Chairman Pai outlined six other items in addition to the supply chain item that he will ask his colleagues to vote on at the Nov. 19 meeting, dealing with vertical call-location for 911 calls from cellphones; disbarment for fraud in the Telecommunications Relay Service and National Deaf-Blind Equipment Distribution Program; changes to the agency’s local exchange service unbundling and resale rules; expanding the IP CTS (Internet protocol captioned telephone service); and two radio broadcast items.
In the blog post, Chairman Pai said, “U.S. officials have long expressed concern that certain foreign communications equipment providers pose a threat to the security of our communications supply chain. The concern is that hostile foreign actors could use hidden ‘backdoors’ to our networks to spy on us, steal from us, harm us with malware and viruses, or otherwise exploit our networks. As a brand-new report on 5G security [from the European Union (TR Daily, Oct. 9)] put it, ‘the most severe threats [are] posed by compromised confidentiality, availability, and integrity associated with a state or state-backed actor.’ And there are mounting reasons to believe that the Chinese firms Huawei and ZTE pose an unacceptable risk to U.S. national security.”
The Chairman added, “In the process of examining this issue, I also determined that the FCC needs to take a look back, so to speak. That’s because some rural wireless carriers that receive USF funds have already installed Chinese equipment. So, I’m proposing that the Commission initiate a process to remove and replace such equipment from USF-funded communications networks. My plan calls first for an assessment to find out exactly how much equipment from Huawei and another Chinese company, ZTE, is in these networks, followed by financial assistance to these carriers to help them transition to more trusted vendors. We’ll seek public input on how big this ‘rip and replace’ program needs to be and how best to finance it.”
In a statement he issued focusing on the supply chain issue, Chairman Pai said, “The Chinese government has shown repeatedly that it is willing to go to extraordinary lengths to do just that. And Chinese law requires all companies subject to its jurisdiction to secretly comply with demands from Chinese intelligence services. As the United States upgrades its networks to the next generation of wireless technologies—5G—we cannot ignore the risk that that the Chinese government will seek to exploit network vulnerabilities in order to engage in espionage, insert malware and viruses, and otherwise compromise our critical communications networks.”
The senior FCC official who briefed reporters said options for funding the removal and replacement of existing equipment included potential congressional appropriations and USF support. He said the draft FNPRM raised questions about avoiding waste, fraud, and abuse in the remove-and-replace process.
The official acknowledged that there were U.S. telecom carriers that did not receive USF funds and thus would not be affected by the proposed remove-and-replace mandate. However, the Commerce Department is working on rules to implement President Trump’s Executive Order on Securing the Information and Communications Technology and Services Supply Chain (TR Daily, May 15), which could address carriers unaffected by the FCC’s mandates for networks supported by the USF.
The official said the text of the draft order, which will be released tomorrow, would have 10 paragraphs explaining why Huawei would be designated as a prohibited vendor, citing, among other things, its ties to the Chinese government and military, the congressional prohibition on federal agencies’ using Huawei equipment and services, Huawei’s presence on the Commerce Department’s “entities” list, a warning last year from six U.S. intelligence agencies against purchasing equipment from Huawei, and determinations of the threat posed by Huawei equipment made by New Zealand and Japan last year and by Australia this year.
In response to a question about how the proposed item relates to the U.S.-China trade situation, the FCC official said it did not, as trade issues were outside the jurisdiction of the FCC.
In a statement, Commissioner Jessica Rosenworcel said, “The FCC is moving forward after more than a year-and-a-half with its proposal to ensure that our Universal Service Fund, which supports deployment in rural areas, will not be used to purchase insecure network equipment. But we need cybersecurity policies that target all our network providers—not just our universal service recipients. In addition, we need to be mindful that in a global economy, our networks will still connect to insecure equipment abroad. So we should start researching how we can build networks that can withstand connection to equipment vulnerabilities around the world, including virtualizing the radio access part of our networks.”
Mr. Pai also announced that he has circulated an order to adopt an A-axis, or vertical, 911 location-accuracy metric. He said that under the item, the FCC would adopt the metric it proposed earlier this year “of plus-or-minus three meters.”
“If you call 911 from your cell phone, today’s system does a good job of dispatching first responders to the caller’s street address. The problem is that it doesn’t provide the vertical location of where the call originated,” Mr. Pai noted. “That can be a big problem if you are calling 911 from a high-rise building like an office tower, and a delay of minutes in first responders finding you can be the difference between life and death. After years of study and testing, the Commission will vote in three weeks on adopting a vertical location accuracy metric of plus-or-minus three meters. This metric is supported by a broad-cross section of public safety organizations because it would more accurately identify a 911 caller’s floor level and is achievable. Helping first responders identify the vertical location of 911 callers will help them do their jobs even better and will ultimately save lives.”
In March, the FCC adopted a fourth further notice of proposed rulemaking on a Z-axis metric (TR Daily, March 15).
A number of public safety groups have expressed concern that the wireless industry is trying to weaken the proposed three-meter vertical metric. CTIA and its national carrier members say that the FCC should adopt “a phased-in approach” toward mandating a 911 vertical location accuracy metric, and they say third-party issues continue to challenge the deployment of dispatchable location solutions (TR Daily, Sept. 5).
But the Association of Public-Safety Communications Officials-International has put greater emphasis on the need for dispatchable location, saying that a three-meter Z-axis metric would not be accurate enough in many situations.
Last week, APCO said it wants the FCC to bolster its 911 indoor location-accuracy rules, including those related to dispatchable location (TR Daily, Oct. 25).
The International Association of Fire Chiefs noted today that it “has supported the 3-meter vertical location accuracy metric. We look forward to reading the FCC's order on Tuesday.”
The Chairman is also teeing up an item aimed at revising the agency’s rules that implemented the local exchange service unbundling and network element resale provisions of the 1996 Telecommunications Act, in line of changes in the market in the last 20 years.
“The voice and broadband marketplaces are filled with competition from a multitude of providers using a variety of technologies and offering capabilities and services unforeseen in 1996. So, I’ve shared with my colleagues a proposal to update our unbundling and resale rules to reflect these marketplace realities. This proposal would continue the FCC’s efforts to remove unnecessary regulatory burdens that can inhibit the deployment of next-generation networks and services. At the same time, recognizing that unbundling requirements may play a role where facilities-based competition is less likely to occur, my proposal would maintain rules regarding broadband-capable loops used to serve residential customers in rural areas,” Chairman Pai wrote in his blog.
Chairman Pai also said he plans to ask his colleagues to vote on updating the agency’s rules to allow for barring parties on grounds of abuse from participating in the Telecommunications Relay Service and National Deaf-Blind Equipment Distribution Program.
“The Commission already has rules in place to identify and bar from participation those who have abused or are likely to abuse USF. But these regulations don’t cover other programs, like those in the Telecommunications Relay Service (TRS), and appear to have other shortcomings. That’s why I’m proposing that we update our rules for government debarment and suspension to make them consistent with guidelines from the Office of Management (OMB), which are broader, give more flexibility, and would enable us to take action more quickly. If adopted, these measures could not only help the Commission to fulfill its responsibility of ensuring that our programs are well managed, efficient, and fiscally responsible, but may also assist us in bridging the digital divide by ensuring that expenditures, including support for expanded broadband deployment, are directed in the first instance to good actors who will use them only for their intended purpose. The new rules would also encompass TRS and the National Deaf Blind Equipment Distribution Program (NDBEDP),” Chairman Pai said.
Mr. Pai also announced that the FCC plans to vote on “an item to update the way we finance our Internet Protocol Captioned Telephone Service (IP CTS). … The service was launched a decade ago with an interim funding mechanism based only on the interstate telecommunications revenues of TRS contributors. As the program has grown, it’s clear that the current rules unfairly burden providers and users of interstate services, so I am circulating an Order that would expand the TRS Fund contribution base to include providers of intrastate voice communications services. Consumer groups have supported this expansion of the contribution base, and I believe this proposal would help to ensure the long-term sustainability of this vital service.”
Mr. Pai also said the FCC plans to vote on a “proposal to allow AM licensees to broadcast using an all-digital signal on a voluntary basis” and also plans to seek “comment on modifying or eliminating a rule that limits the amount of duplicative programming commonly-owned radio stations in a market can air.” —Lynn Stanton, [email protected], and Paul Kirby, [email protected]
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