By: Andrew Regitsky
In December, the Consolidated Appropriations Act (CAA) became law. The Act appropriated $1.9 billion to the FCC to implement the Secure and Trusted Communications Networks Act of 2019 (Secure Networks Act). The Commission must use almost all the appropriated funds ($1.895 billion) to support telecommunications companies providing advanced services to help them remove and replace equipment that poses a national security risk and reimburse them for the cost of doing so.
In a Third Notice of Proposed Rulemaking (Notice) in Docket 18-89 that it plans on adopting at its February 17, 2021 meeting, the FCC will propose to modify its rules to make them consistent with the CAA and expedite removal of dangerous equipment from U.S communications networks.
Industry comments will be due 21 days after the Notice appears in the Federal Register. In the Notice, the Commission seeks comments on the following proposals:
Eligibility for Participation in the Reimbursement Program
The agency proposes to raise the cap for carriers to be eligible to participate in the Reimbursement Program to providers with 10 million or fewer customers and seeks comments on this proposal. Prior to the CAA, eligibility for the Program was restricted to providers with two million or fewer customers.
Equipment and Services Eligible for Reimbursement
In previous orders the FCC created a Covered List consisting of equipment eligible for replacement and reimbursement from the program. However, that List was not all inclusive. As a follow-up, in 2020 the Commission released its so-called Designation Orders which were more inclusive, requiring replacement and reimbursement for all telecommunications equipment produced or provided by Chinese companies Huawei and ZTE. That was affirmed in the CAA, in which Congress said the Designation Orders should be used to identify the harmful equipment. The Commission now proposes to clarify that all Huawei and ZTE equipment are eligible for replacement and reimbursement.
Timing Requirement for the Reimbursement Program
To be consistent with the CAA, the FCC proposes to amend its rules to allow Reimbursement Program recipients to use funds to remove, replace, or dispose of any equipment or services that were purchased, rented, leased, or otherwise obtained on or before the June 30, 2020 effective dates of the Designation Orders. It seeks comments on this proposal.
Allocation of Reimbursement Funds
The Commission proposes to adopt a prioritization for fund reimbursement which states that “the Commission shall allocate sufficient reimbursement funds first, to approved applications that have 2,000,000 or fewer customers . . ., [then] to approved applicants that are accredited public or private non-commercial educational institutions providing their own facilities-based educational broadband services . . ., [then] to any remaining applicants determined to be eligible for reimbursement under the Program.” The agency seeks comments on this proposal.
Definition of “Provider of Advanced Telecommunications Services”
The Commission seeks comments on its proposal to be consistent with the CAA and define a provider of advanced telecommunications carrier as “a person who provides advanced communications service to United States customers including accredited public or private noncommercial educational institutions providing their own facilities-based educational broadband service and health care providers and libraries providing advanced communications service.
Any company that believes it can seek an exemption of these rules to protect its own embedded equipment is wasting its time. It is clear from the series of orders from the FCC and the laws passed by Congress and the President that equipment from Chinese companies will not be permitted in US networks. All four FCC commissioners hold this view. Companies need to ensure that they become part of the Secure Act to ensure they are eligible to get reimbursed for their network changes.