On November 22, 2019, the Federal Communications Commission (FCC or Commission) took action to address what Chairman Ajit Pai considers dangerous Chinese influence in the nation’s communications networks. Its proceeding, Protecting National Security Through FCC Programs, heralds a new approach to oversight of the nation’s telecom networks. In the items voted on:
The Commission prohibits the use of Universal Service Funds (USF) by carriers to purchase equipment and services from companies that the FCC determines pose a national security threat, effective immediately upon publication in the Federal Register. It further mandates information collection and auditing obligations that will affect recipients of USF program funding.
The Commission also kicks off another regulatory proceeding to look at whether to require carriers receiving USF funds, known as eligible telecommunications carriers, to remove and replace existing equipment and services from covered companies.
Additionally, as part of its information collection efforts, the Commission voted to expand the scope of the Further Notice of Proposed Rulemaking (FNPRM) “beyond the initial proposal, which focused on removing equipment if the carrier receives federal support, to asking whether [the Commission] should mandate the removal of covered equipment regardless of whether the communications provider receives federal support,” as noted in the Statement of Commissioner Carr.
The FCC's vote increases regulatory risk for the private sector and confirms the expanding federal interest in supply chain and business operations across the information and communications technology sectors. It comes amidst an array of federal activities on telecom and Internet security, supply chain, trade, and global standards that will affect emerging technologies like the Internet of Things. This alert explains the item and provides important context and indications about the future of FCC activity in this area.