In their last meeting of the year Thursday, FCC Commissioners voted on a range of communication supply chain security measures. Those included the plan for subsidizing small carriers’ efforts to rip out and replace any gear in their networks from Huawei and ZTE, the two Chinese companies that the Commission and other federal government agencies deem national security threats.
The vote among the five Commissioners was unanimous. It requires the FCC to publish a list of communications equipment and services determined to be a risk to national security by the federal government. Once Congress appropriates funding, eligible telecommunications carriers that receive Universal Service Fund money to provide service in remote areas of the country must remove that equipment or services from their networks and properly dispose of it.
FCC Chairman Ajit Pai said estimates show at least $1.6 billion — and maybe more — is needed to reimburse small, rural carriers most impacted by the change. The Order establishes how the money would be distributed.
In his last meeting at the agency, FCC Commissioner Michael O’Rielly said: “I recognize the gravity of this undertaking. The FCC is effectively closing our markets to certain companies in the interest of protecting our national security.” He called it, “a sobering effort,” and the agency is “mindful of the global repercussions.”
However, O’Rielly, who worked for years on the effort, said the action, “is the right thing to do.” He emphasized that small, rural carriers “did not do anything wrong in getting this equipment.” He noted that rather “rip and replace,” the effort will look more like “duplicate and dismantle” when it’s done.
Calling the item “effectively a mandate equipment replacement process,” O’Rielly said some will want to see it happen “tomorrow,” but as a regulator, the Commission “will want this done in an orderly manner.”
Commissioner Jessica Rosenworcel said the decision, “demonstrates we are ready” to protect communications networks. “China is playing the long game,” by using state-sponsored means “to extend its economic reach” so “it can steal intellectual property” and “hurt our communications in times of crisis,” she said. Rosenworcel and FCC Chairman Ajit Pai listed other areas dominated by Chinese telecom equipment, notably Africa and southeast Asia. The nation, “needs a coordinated national approach to 5G security,” she stressed. That “should include incentives for carriers to bring communications to rural communities” so the digital divide is not “deepened.”
Commissioner Geoffrey Starks said the action “moves rip and replace forward so carriers can make informed decisions.” Small, rural carriers “have told me repeatedly they need funding,” he said, adding he’d work with Congress to get it.
Pai said there’d been “a sea change” on this issue since he became the leader of the agency in 2017. Thirty-two other countries, including Greece, the U.K., and Sweden, have joined the U.S. on this position, he noted.
Pai called on Congress again to fund the effort, saying: “The FCC stands ready to implement the reimbursement program once Congress provides funding.” Senate Commerce Committee Chairman Roger Wicker (R-MS) called on his colleagues this week to do just that before they leave Washington, D.C. for the holidays.
There’s one key change in the the language passed Thursday. The draft originally endorsed Open RAN equipment as opposed to legacy networks. That was changed to ensure the replacement program is technology neutral. Open Radio Access Networks, refers to a new paradigm where cellular radio networks are made up of hardware and software components from multiple vendors operating over network interfaces that are open and interoperable.
The equipment replacement funding issue is key for the Competitive Carriers Association, whose members include many small, rural carriers. “The FCC has been most responsive in seeking information and developing a better understanding of the unique impact of the Order on small and regional carriers that have covered equipment in their networks, and I thank the Commission for its decision today,” said CCA CEO Steve Berry. “The Commissioners should be commended for unanimously recognizing the need for rolling reimbursement and providing guidance that carriers now can begin without jeopardizing their eligibility for reimbursement. This challenging issue is of the utmost importance to affected carriers, and CCA continues to encourage Congress to fund the reimbursement program so that no American is left behind in the digital world.”
The Telecommunications Industry Association, which counts traditional equipment suppliers like Ericsson and Nokia as members, supports the order. “In the midst of a pandemic, we depend on our networks more than ever to keep us working and learning from home,” said TIA CEO David Stehlin. “We urge Congress to now appropriate the necessary funds and make this critical investment to ensure the security of our nation’s digital infrastructure.”
By Leslie Stimson, Inside Towers Washington Bureau Chief