The FCC now has two irons in the fire as it turns up the heat on Chinese suppliers of telecommunications equipment. Next month it plans to adopt the rules by which it will implement the Secure and Trusted Communications Networks Act of 2019 (STCNA19), more commonly known as “Rip and Replace.” At the same time the agency is seeking comment on new rules that would extend “Rip and Replace” much further.
Together, these two initiatives seem to have the potential to create a tsunami of administration, monitoring and enforcement requirements for the FCC.
STCNA19
STCNA19 requires wireless operators to replace network equipment funded by the government’s Universal Services Fund, if the equipment is on the agency’s “Covered List” of items that could pose a national security risk, Inside Towers reported. This was a tall order from the start, and regional operators initially opposed it. As time passes, the challenges are increasing.
Regional operators are learning that they may be last in line for network equipment, behind nationwide carriers building 5G networks. Carriers are telling the FCC that global shortages of semiconductors and other supplies are creating lead times of up to a year for some of the components they need to move forward with their network overhauls.
At the same time, the U.S. labor market is tighter than it has been in many years. The tower industry has traditionally struggled to find and train a reliable workforce, and a national labor shortage will not help. Furthermore, many of the USF carriers serve remote areas in which crews may not be readily available.
As Inside Towers’ John Celentano reported, companies will actually “replace and rip,” installing the new equipment before disconnecting the old. Celentano also reports that companies will be able to access funds progressively throughout the process. The FCC has hired consultants to tell the agency what reimbursement rates are reasonable for some of the labor and materials associated with the work.
Congress has allocated just under $1.9 billion to fund this program, because that was the total of the cost estimates submitted by 50 carriers in 2020. At that time, the FCC was careful to note that there are likely to be other eligible carriers who did not submit cost estimates but may still apply for reimbursement as they replace their equipment.
For USF-funded operators, there will be a lot of uncertainty. If a company’s network overhaul is delayed by unexpected equipment or labor shortages, could the funding run out while the company waits?
The list of 50 firms that initially helped the FCC build its cost estimates included many smaller carriers, but also big names like Verizon, Lumen and América Movil. Apparently these companies or their subsidiaries have some Chinese gear in their networks. When it comes to marshalling the resources they need to replace it, they will likely be able to move quickly and claim their government funding as needed. Hopefully the smaller players will be able to do the same.
Equipment Authorization
Since the FCC authorizes the radio equipment that carriers use in their networks, it can theoretically keep carriers from using certain radios if it doesn’t authorize them. This is the approach the agency is considering as it looks for a way to eliminate all items on the Covered List from the United States, even if those items were not paid for with government funding. This would include telecom and video surveillance equipment made by Huawei, ZTE, Hangzhou Hikvision, Hytera or Dahua.
The agency wants input on whether it should revoke existing authorizations, and if so, what procedures it should use, what enforcement mechanisms would be appropriate, and how much time entities should have to comply, Inside Towers reported. The agency also seeks comment on how it might learn about companies that are not complying, and whether it can or should rely on third-party reports. The answers to these questions will affect not only wireless carriers, but also hundreds of small organizations that use wireless video cameras that are now on the Covered List.
Then there’s the issue of who will foot the bill. The nearly $1.9 billion appropriated by Congress may not even be enough for the replacement of the USF-funded equipment; it is almost certainly insufficient to fund replacement of all equipment on the Covered List.
The comments submitted to the FCC on its equipment authorization proposal should give the agency some direction and data. But no matter what it learns from the industry, the agency may have to move forward with changes to the way it authorizes equipment. A bill introduced by Senator Marco Rubio (R-FL) and Senator Edward Markey (D-MA) would “ensure that the Federal Communications Commission does not approve radio frequency devices that pose a national security risk.” If such a bill were to become law, the FCC will have to find a way to try to enforce it, just as it is doing now with STCNA19.
Veteran telecom industry editor and journalist Martha DeGrasse is an Inside Towers Contributing Analyst with features appearing twice per month. DeGrasse owns Network Builder Reports and contributes regularly to several publications. She was formerly a writer and editor with RCR Wireless and a TV business news producer.
By Martha DeGrasse, Inside Towers Contributing Analyst
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