Industry Wrestles With FCC Proposed USF Security Ban

There’s not a lot of love from telecoms for the FCC’s proposal to ban Universal Service Fund spending on products or technology from companies seen as posing a national security risk. NTCA, the Rural Broadband Association tells the agency in filed comments, the proposal is too broad and lacks clarity. The plan has limited value in actually addressing and mitigating risk to the nation’s communications supply chain, says NTCA, because it focuses on USF recipient telecoms, “rather than the much larger universe of telecom providers that may utilize the equipment alleged to present serious risk.”

If adopted as is, the plan would have unintended negative effects on small, rural telecoms, asserts NTCA, saying: “It would introduce significant unforeseen costs, and if these expenses could not be practically recovered from the carrier and/or its customers, the financial strain would thereby threaten the sustainability and vitality of the network operator.”

The Competitive Carriers Association agreed the proposal is too broad, won’t serve the intended purpose and will drive up costs by shrinking the market and creating uncertainty. “Many carriers have built and now maintain their networks with equipment and services provided by companies targeted by the proposed rule,” says CCA. “Much of that investment has been made recently to bring networks from 2G and 3G to 4G, and to prepare for the transition to 5G. These carriers simply cannot afford the hundreds of millions of dollars necessary to replace and rebuild their networks using only equipment and services from a new list of approved providers.”

While the proposal is intended to apply prospectively, the result will be the opposite, asserts CCA. “Many carriers cannot operate networks with an inefficient mix of equipment from various networks, or by depending on one vendor to maintain and upgrade equipment supplied by another. The only practicable solution for most carriers is to rip- and-replace equipment within their network,” says CCA. The actions would destroy the economic value of their investments, the association writes.

USTelecom — The Broadband Association, says the Commission “is not in the best position to determine the threats to and vulnerabilities of the communications supply chain” and suggests the FCC rely on other federal agencies for their expertise. AT&T says national security restrictions should apply to all telecoms, not only those receiving USF funds. It agrees the FCC should coordinate any efforts with other federal agencies.

Huawei, one of the Chinese telecom suppliers at the heart of the national security concern, says “blacklisting a handful of suppliers — is both improper and imprudent,” and adds the FCC is overstepping its authority if the proposal is enacted. “The proposed rule draws impermissible and irrational lines by targeting specific sellers, rather than equipment, apparently on the basis of their national origin. In doing so, the Commission ignores the realities of global telecommunications supply chains,” says Huawei.

Published June 7, 2018

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