On Monday, FCC Chairman Ajit Pai confirmed that he has begun circulating a draft Notice of Proposed Rulemaking (NPRM) among his fellow commissioners which proposes to ban the use of Universal Service Fund (USF) monies for purchases of telecommunications equipment and services from foreign companies that are deemed to “pose a national security threat to United States communications networks or the communications supply chain.”
A copy of the draft NPRM was released to the public on Tuesday and is scheduled tentatively for a vote at the FCC’s next monthly open meeting on April 17. Other items teed up for a vote at that meeting include (1) a public notice which would solicit comment on procedures to be used for future auctions of flexible use wireless service licenses in the 24 GHz and 28 GHz bands, (2) a rulemaking proposal to establish new, alternative authorization procedures and a streamlined process “for the licensing of commercial non-geostationary satellite orbit small satellites,” and (3) a Report and Order on new rules that would “better tackle the problem of call completion” in rural areas.
FCC sources indicate that the draft NPRM in the proceeding to be known as “Protecting National Security through FCC Programs” was spurred by concerns raised by members of Congress in a recent letter to the FCC on security threats posed by certain Chinese telecommunications companies operating in or providing equipment to customers in the United States. Based on a related intelligence briefing he had received on the matter, Pai pledged that the FCC would act “to ensure the integrity of the communications supply chain.”
Citing the FCC’s obligation “to ensure that the money in the USF is not used in a way that undermines our national security,” the draft NPRM seeks comment on proposed rules that would prohibit USF recipients from using USF funds to obtain “any equipment or services produced or provided by any company posing a national security threat to the integrity of communications networks or the communications supply chain.” The proposed rules would apply to all four USF programs—high-cost, E-Rate, Lifeline and rural healthcare—and to future purchases of equipment and services. Comment would be sought in regards to (1) the types of equipment and services that should be covered by the proposed rule; (2) how the FCC should identify, and how USF recipients can learn, which foreign suppliers are covered by the proposed rules, (3) the costs and benefits of the proposed rule, and (4) whether the USF beneficiary or the supplier should be held responsible for the recovery of dispersed funds when a violation of the proposed rule takes place. Although the draft NPRM would not require carriers to remove existing equipment supplied by companies deemed to pose a threat, input would be requested on the rules that should apply when carriers or other purchasers of telecom equipment decide to upgrade their equipment.
Asserting that telecom equipment supplied by certain foreign manufacturers may come with “hidden ‘back doors’ to our networks” that could “provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more,” Pai proclaimed: “that’s why I’m proposing to prohibit the FCC’s $8.5 billion Universal Service Fund from being used to purchase equipment or services from any company that proses a national security threat.” As a spokesman for US Telecom stressed that “consumers and businesses correctly expect their information is secure when travelling across networks,” Telecommunications Industry Association senior vice president Cinnamon Rogers agreed that “the FCC has a key role to play in these efforts, and we appreciate Chairman Pai’s recognition that addressing security concerns requires work across the federal government in partnership with the ICT industry.”