Highlighting recent network security and corporate espionage issues involving foreign-owned carriers, the FCC plans to take the unprecedented step of denying a Chinese telecommunications provider’s application to offer service in the United States based on law enforcement concerns at its next open meeting on May 9, 2019. The agency would conclude that China Mobile USA, a Delaware corporation ultimately owned by the Chinese government, is vulnerable to foreign exploitation that could undermine the security and reliability of U.S. networks. The proposed denial is in line with the 2018 recommendation of the federal agencies commonly known as “Team Telecom,” which represented the first time the group called for the rejection of a carrier’s application due to security risks. The FCC also anticipates freeing up additional spectrum for commercial wireless operations by allowing shared use of the 1675-1680 MHz band currently allocated for federal weather monitoring operations. Rounding out the major actions on the May agenda, the FCC expects to seek comment on the procedures governing its long-awaited auction of “833” toll free numbers, adopt rules aimed at improving the Video Relay Service (“VRS”) used by individuals with hearing or speech disabilities, and propose the regulatory fees for fiscal year 2019.

You will find more details on the significant May meeting items after the break:

China Mobile Authorization Denial: The draft Order would reject China Mobile USA’s application for authority to provide telecommunications services between the United States and foreign points. The FCC would find that, while foreign government control of a carrier is not (by itself) grounds for denial, the Chinese government’s ultimate control of China Mobile USA could result in covert monitoring and disruption of U.S. communications networks. The FCC also would note prior challenges with prosecuting Chinese-owned companies for violations, even when such entities are incorporated under U.S. law. Unlike prior grants of authority involving foreign-owned carriers, the FCC would conclude that the pervasiveness of Chinese government control over China Mobile USA undermines any potential mitigation measures the company could implement to address its national security concerns.

Shared Use of the 1675-1680 MHz Band: The draft Notice of Proposed Rulemaking (“NPRM”) would request input on permitting fixed/mobile wireless services (except aeronautical mobile services) to share the 1675-1680 MHz band on a co-primary basis with incumbent federal weather monitoring operations. The item appears to be a response to language in President Trump’s proposed 2020 budget that would effectively require the Commission to act on a petition filed by Ligado Networks by requiring the FCC to auction this spectrum for wireless broadband use subject to sharing arrangements with Federal weather satellites. Satellite and weather data stakeholders have previously opposed Ligado’s use of the 1675-1680 MHz band because of concerns that its use would result in harmful interference to meteorological satellites that provide real-time weather and related environmental information. Non-federal operators would be required to comply with power limits and other restrictions designed to protect federal users in the band from harmful interference. The FCC would propose licensing the spectrum in unpaired five-megahertz blocks on a partial economic area basis through competitive bidding. The spectrum auction likely would take place in 2020.

Toll Free Number Auction: The draft Public Notice would set the stage for the auction of over 17,000 numbers in the recently-opened 833 toll free code. While the FCC traditionally assigned toll free numbers on a first-come, first served basis, it adopted rules last year to allow for auctions to improve efficiency and fairness in the toll free number assignment process. The Public Notice would request comment on the application, bidding, assignment, and payment procedures for the auction. Under the FCC’s plan, government entities and non-profit health/safety organizations could petition the agency to set aside specific 833 toll free numbers for their use. The auction would consist of a single round overseen by Somos, Inc., the Toll Free Numbering Administrator. Winning bidders would be able to sell the rights to their toll free numbers through secondary market transactions following the auction. The FCC has not indicated when it expects the auction to occur.

VRS Reform: The draft Order and Further NPRM would facilitate direct video calling between VRS users and customer support call centers by allowing such centers to list their videophones in the VRS numbering directory. To address potential program fraud, the item would require per-call validation of VRS user registrations and force VRS providers to register enterprise and publicly-available videophones. In addition, the FCC would prohibit VRS providers from offering non-VRS-related inducements to encourage customers to sign up for their services. The draft item also would request input on whether the FCC should make permanent a pilot program allowing VRS calls to be handled by at-home interpreters. The item would further ask whether the FCC should allow VRS providers to offer service to new users pending identity verification and require users to “log-in” before using enterprise and publicly-available videophones.

2019 Regulatory Fee Assessment: The draft NPRM would seek comment on the FCC’s proposed collection of $339,000,000 in regulatory fees for fiscal year 2019. The fees would be due in September 2019 and generally would follow the methodology used in past collections. Nearly all service categories would see at least a slight increase to their regulatory fees in order to cover the $16 million projected increase to the agency’s budget and operators should review the NPRM’s proposed fee schedule for the expected impact to their services.