June 1, 2018 – NTCA-The Rural Broadband Association filed comments in response to the Federal Communications Commission’s National Security Notice of Proposed Rulemaking (NPRM). And you want believe what they said! Actually you will.

NTCA told the FCC the proposed rule prohibiting the use of universal service support to purchase equipment and services from blacklisted foreign companies is “overly broad and lacks clarity.”[1] In its comments, NTCA identified numerous other concerns with the rule, and likened the NPRM to a notice of inquiry because of the high-level questions asked by the FCC.

In the NPRM, the FCC sought comment on prohibiting the use of universal service fund (USF) money to purchase equipment or services from any communications equipment or service providers identified as posing a national security risk to U.S. communications networks or the U.S. communications supply chain.[2] The FCC’s proposed rule would apply prospectively – carriers would not be allowed to use USF support to buy any new equipment or services from blacklisted manufacturers or providers. This prohibition would extend to upgrades of existing equipment or services, but the proposed rule would not apply to equipment already in place.

The National Security NPRM is a huge issue for NTCA because many of its over 800 members have purchased and are using equipment from Chinese manufacturers – Huawei and ZTE – that are the target of the FCC’s rule. These same NTCA members rely on USF support to periodically upgrade their networks. While many aspects of the FCC’s proposed rule still need to be hammered out, it will negatively impact NTCA members in a major way. The FCC’s rule would remove low-cost equipment options for carriers buying new gear for network buildouts. Carriers that have already deployed blacklisted equipment would be forced to either replace the equipment or somehow make network upgrades without using any USF support. However, as NTCA explains in its comments, at this point it is very hard to know exactly how the rule would apply.

NTCA begins its comments by explaining that it “supports well-targeted proposals that comprehensively address verified threats to the communications supply chain,” something the NPRM lacks. NTCA says the NPRM is too broad, lacks clarity, and has no foundational definitions, all of which makes it impossible to determine how the FCC’s proposal “might both serve national security interests and affect services upon which rural Americans depend.” NTCA says what the FCC thought is a bright line rule is actually very murky, as shown by the following problems NTCA was able to single out:

• The FCC fails to provide any information as to why threats posed by foreign communications equipment providers has reached a tipping point that mandates the use of regulatory rulemaking authority.

• The use of prescriptive rules departs from the FCC’s long-standing risk-management approach to cybersecurity.

• The proposed rule focuses on companies rather than equipment without explaining why all equipment from a given vendor may present a risk.

• A prospective ban on software would ban software already purchased and in use because of the “need for continual upgrades and patches” for software to work correctly.

• The proposed rule does nothing to stop communications providers that do not receive USF support from purchasing and using equipment and services from blacklisted providers.

• The ban does not take into account the complexities of the telecommunications supply chain.

• The proposed country of origin ban is arbitrary and likely insufficient to address any verified and substantiated national security risks.

• Despite the potential substantial impact of the proposed rules on numerous small businesses, the NPRM’s Initial Regulatory Flexibility Analysis is woefully inadequate.

And the list goes on. NTCA of course does not want the FCC to adopt the proposed rule. Instead, here’s what NTCA said the FCC should do:

The FCC should “step back” and work with other Federal agencies to scope and define the relevant risks prior to presenting for further comment a more detailed and well-crafted proposal with respect to the potential barred use of universal service funds in connection with procurement of equipment presenting such risks.

In other words, NTCA said come back with a more clearly-defined rule. These are initial comments, so there are probably more arguments that NTCA will make, including how many hundreds of millions (or billions) of dollars it could cost to rip out and replace Huawei and ZTE gear. But, the point here is that NTCA’s comments show how problematic the FCC’s proposed ban will be if it is adopted.

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For more on this topic, try these articles:

Red Scare II: Will FCC Blacklist Equipment Providers That Present National Security Threat

Red Scare: FCC To Blacklist Equipment Providers That Present National Security Threat – Proposed Rule Would Bar Use of Universal Service Funds to Purchase From Blacklisted Companies

FCC Asks How National Defense Authorization Act Applies To Proposal To Ban Suppliers That Pose A National Security Threat To U.S. Communications Networks

***** Footnotes *****

[1] Comments of NTCA, Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89 (June 1, 2018) (NTCA Comments).

[2] Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs, WC Docket No. 18-89, Notice of Proposed Rulemaking, FCC 18-42 (rel. Apr. 18, 2018) (NPRM).