Declaratory Ruling on Federal Subsidies and Existing USF Bans
On July 16, 2020, the Federal Communications Commission adopted a Declaratory Ruling and Second Further Notice of Proposed Rulemaking (FCC 20-99) in WC Docket No. 18-89. The action integrates provisions of the Secure and Trusted Communications Networks Act of 2019, enacted in March 2020, into the Commission's existing communications supply chain proceeding.
In the Declaratory Ruling, the Commission determined that it had already substantially fulfilled its statutory obligation under the Secure Networks Act to prohibit the use of federal subsidies for covered equipment and services. This obligation was met through the Commission's November 2019 rule prohibiting the use of Universal Service Fund (USF) support to purchase, obtain, maintain, improve, modify, or otherwise support equipment or services produced or provided by companies deemed a national security threat. The determination follows the June 2020 formal designations by the Public Safety and Homeland Security Bureau of Huawei Technologies Company and ZTE Corporation, along with their parents, affiliates, and subsidiaries, as covered companies under the November 2019 ban.
- Proceeding: WC Docket No. 18-89
- Document Number: FCC 20-99
- Action Date: Adopted and released on July 16, 2020
- Statutory Authority: Secure and Trusted Communications Networks Act of 2019
Proposals in the Second Further Notice of Proposed Rulemaking
The Second Further Notice of Proposed Rulemaking solicits public comment on executing several remaining mandates established by the Secure Networks Act. The statutory framework directs the agency to establish operational guidelines for identifying insecure network hardware and managing statutory replacement requirements across U.S. networks.
The Commission's proposals focus on creating formalized lists, establishing reporting mandates across advanced communications service providers, and instituting regulatory oversight for the upcoming supply chain reimbursement mechanism.
- Establishing and maintaining a published list of covered communications equipment and services deemed to pose national security threats.
- Prohibiting the expenditure of federal subsidies, including the $8.3 billion annual Universal Service Fund, on any equipment or services placed on the covered list.
- Mandating that all providers of advanced communications services report whether they use covered communications equipment or services in their active networks.
- Developing rules and administrative controls to prevent waste, fraud, and abuse in the statutory reimbursement program established to fund the removal and replacement of insecure network infrastructure.
Commissioners' Positions and Implementation Priorities
Chairman Ajit Pai and Commissioners Michael O'Rielly, Brendan Carr, Jessica Rosenworcel, and Geoffrey Starks voted to approve the item, each issuing separate statements.
Chairman Pai highlighted the ongoing implementation of the November 2019 ban and reiterated that the removal-and-replacement program was estimated in fall 2019 to require up to $2 billion in congressional appropriations. Commissioner O'Rielly emphasized the need for interagency alignment on definitions of security threats before publishing names of carriers reporting covered equipment. Commissioner Carr cited national security concerns regarding Chinese legal frameworks compelling intelligence cooperation. Commissioner Rosenworcel and Commissioner Starks both advocated for broader federal strategies, including Open Radio Access Network (Open RAN) architectures, to foster trusted vendor diversity as carriers replace prohibited equipment.
- Chairman Ajit Pai: Noted the $2 billion estimated cost for the nationwide removal-and-replacement effort.
- Commissioner Michael O'Rielly: Urged coordination among federal agencies prior to releasing lists of providers operating covered equipment.
- Commissioner Brendan Carr: Pointed to foreign intelligence laws and supply chain vulnerabilities.
- Commissioner Jessica Rosenworcel: Supported Open RAN promotion, nationwide testbeds, and congressional funding via the Utilizing Strategic Allied Telecommunications Act.
- Commissioner Geoffrey Starks: Proposed an FCC National Security Task Force and recommended requiring carriers undergoing rip-and-replace to evaluate Open RAN options.