TR Daily Parties See Need for Supply Chain ‘Remove and Replace’ Funding
Tuesday, February 4, 2020

Parties See Need for Supply Chain ‘Remove and Replace’ Funding

Any reimbursement program the FCC establishes to cover the costs eligible telecommunications carriers (ETCs) incur from being required to remove and replace equipment or services purchased from “covered companies” deemed to pose a national security threat to communications networks, including Huawei Technologies Co. and ZTE Corp., should be as expansive as possible and not come from existing Universal Service Fund (USF) programs, some groups and companies told the Commission.

Last fall in WC docket 18-89, the FCC adopted the prohibition on using USF support for purchases from companies deemed to pose a national security threat to communications networks in November, along with the initial designations of Huawei and ZTE as covered companies (TR Daily, Nov. 22, 2019). It also adopted a further notice of proposed rulemaking (FNPRM) seeking comment on how to fund the removal and replacement of equipment supplied by covered companies.

In comments filed on the FNPRM, the Rural Wireless Broadband Coalition told the FCC the first step in requiring the removal and replacement of prohibited equipment and services needs to be establishing an appropriate reimbursement mechanism.

“Small wireless carriers and other ETCs should not be required to absorb any of the reasonable costs they incur to comply with the Commission’s mandate,” the group said, adding: “The Commission should not place any cap on the amount any individual ETC may receive in reimbursement, nor should the Commission impose an overall cap on the reimbursement program.”

The RWBC also argued any reimbursement program should be “separate and independent” from existing USF programs.

“The Commission must turn back any suggestion that it should take actions that would harm consumers who depend on those programs by reducing their budgets to reimburse rip-and-replace costs,” it said.

Any removal and replacement timetable the FCC establishes should focus on “giving affected small wireless carriers and other ETCs an opportunity to take advantage of technological developments that are producing equipment and software options that will dramatically improve network protection against national security threats,” RWBC said.

For instance, it said, ETCs should receive enough reimbursement to enable them to upgrade their networks to 5G as part of the replacement process, which “would enable carriers to make their networks and users’ devices more secure, with enhanced safety features, more robust encryption, and more frequent security updates,” RWBC said.

In addition, the group said, the timetable should not penalize ETCs that have already begun the process of rebuilding their networks to “rid them of covered equipment and make them more secure.”

If the FCC decides on a single timetable, it should give ETCs five to seven years to complete the process, RWBC said.

The group also said it supports the Commission’s proposal for annual certifications, reimbursement applications, and compliance, but also asked the FCC to try to streamline those requirements, if possible, for small entities.

USTelecom suggested the FCC “take careful and sure-footed steps” as it considers supply chain security issues stemming from the covered company designations.

Those efforts should consist of a collaborative effort between the Commission and various industry groups, particularly the Communications Sector Coordinating Council (CSCC) and the Supply Chain Risk Management Task Force (SCRM Task Force), USTelecom said.

“USTelecom urges the Commission to leverage the expertise and institutional contributions of these partnerships,” USTelecom said. “Balancing the inseparably intertwined national security and commercial interests in the [information and communications technology] supply chain requires substantial and continual federal government coordination. It is critical for the Commission to closely coordinate all of its actions in this field across the federal government, including with the Department of Homeland Security (DHS), the Department of Commerce, and the agencies of the Intelligence Community (IC), to make its determinations about appropriate prospective restrictions and remedial measures where suspect equipment exists today.”

USTelecom also said use of USF funding should be “prospective, taking into account existing equipment and ensuring a level playing field in the market; and second, that the Commission should confine the scope of any rule to apply only to equipment and services funded through the USF in order to stay clearly within the bounds of its legal authority.”

The group argued against reimbursing carriers for removing covered equipment and instead said funding for doing so should come from a separate, “new stream of statutorily authorized funding.”

The FCC should also limit any reimbursements only to ETCs, USTelecom said.

The Commission should “prioritize the reimbursement fund to address national security threats to U.S. networks—that is, the removal of covered equipment in ETC networks,” USTelecom said. “If there is money left over, it can then consider whether to reimburse other USF participants for removal of covered equipment.”

JAB Wireless, Inc., said the FCC should “broadly compensate” ETCs that would be required to remove and replace ZTE equipment.

“Reimbursing for all ETC equipment would advance the overall Commission and Congressional objective of removing equipment that poses a national security threat,” JAB said.

ETCs should be allowed to start the removal process “as soon as possible” while the FCC is deciding what the reimbursement limits will be, JAB said.

In addition, it said, ETCs that have buildout milestones should get priority treatment to receive reimbursement funding and the FCC should seek separate funding from Congress to cover the reimbursement program.

“The Commission should acknowledge that some upgrading in functionality may be inherent in replacing older equipment,” JAB said. “Equipment identical to that which has been deployed may not be available at any price point, and suitable alternative solutions may be both more advanced and more expensive.”

AST Telecom, LLC, doing business in American Samoa as Bluesky, said in comments that if the FCC does adopt a prohibition against ESTs to remove and replace any Huawei equipment or services, the Commission should account for and accommodate “pre-existing commitments and timeframes” ETCs have already committed to with prohibited companies, such as those Bluesky has already made with Team Telecom to remove and replace Huawei equipment.

“In the event it adopts removal and replacement requirements, the Commission should permit ETCs (and other providers) subject to existing Team Telecom phase-out requirements for covered equipment and services provided by covered companies to use such covered equipment and services in their networks within the parameters and timeframes agreed to in any Team Telecom phase-out plans and subject to security mitigation measures agreed upon with the Team Telecom agencies,” Bluesky said.

The FCC should also ensure that ETCs are reimbursed for removal and replacement costs, Bluesky argued.

In addition, Bluesky said, any removal and replacement requirements should allow ETCs to have flexibility for ETCs and other service providers “so that they may meet their build-out and geographic coverage requirements for mobile broadband networks, serve existing and new customers, launch new service offerings, repair their existing networks, and maintain their competitive positions. Such flexibility is critical for ETCs (and other providers) to maintain continuity of service, particularly in underserved and remote markets such as American Samoa.”

In joint comments, NTCH, Inc., and Flat Wireless, LLC, said that while they both support the removal and replacement of any equipment that poses security risks, they expressed concern their equipment will be “rendered worthless if it cannot be kept in service or restored to service as soon as needed.”

Companies that “innocently bought such equipment, or were forced to buy such equipment because of unfunded federal mandates, with no knowledge that it could be used as a portal for foreign interception should not be forced to bear the financial burden of destroying that equipment without compensation,” NTCH and Flat Wireless said. “The steps only now being taken by the FCC, the administration and Congress to address this threat to our security should not lay the financial sacrifice of making the nation’s communications network more secure on parties who had no reason to know that the equipment presented a threat.”

The FCC’s reimbursement program should include several facets, the companies said, including: “It should be expeditious; the equipment for which reimbursement is available should be any covered equipment that is currently useable in a U.S. wireless network; and the provision of replacement equipment should not be artificially limited to the exact equipment or locations of the covered equipment but rather should be flexible enough to permit the substitution of currently available equipment or substitute services that best meet the current needs of the recipients without affording them any kind of windfall.”

The reimbursement program should also not be funded out of contributions to the CAF and should not be limited to ETCs, they said.

“This program is intended to better protect the privacy and security of the American public as a whole rather than to the 'advancement of universal service' as contemplated by Section 254(b) of the Act,” they said. “This necessarily means that the funding for the program should come from an express Congressional appropriation for this purpose under criteria established by Congress but administered by the Commission.”

In addition, they said, the FCC should not impose any limits on what technology is used to replace any removed equipment.

“To artificially limit the scope of ‘covered equipment’ to the latest generation of telecom network equipment would almost certainly leave earlier generations of equipment in service or potential service and thus leave a backdoor for foreign companies to gain access to the national network,” NTCH and Flat Wireless said. “It is critical that carriers be discouraged/barred from incorporating such equipment into their operations by guaranteeing its removal and destruction. —Jeff Williams

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