FCC To Consider Measures to Ban USF Recipients from Using Huawei, ZTE Equipment; Fund Equipment-Replacement Program

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The FCC has issued a press release announcing two important developments concerning its Universal Service Fund and the threat posed by telecommunications equipment developed and sold by manufacturers with ties to the Chinese government, including Huawei Technologies Co. and ZTE Corp.  Specifically, FCC Chairman Ajit Pai has presented to his fellow Commissioners a “two-part proposal” that will be voted-on at the FCC’s next Open Meeting, scheduled for November 19, 2019.  The first part of the proposal is a draft Report and Order that “would bar communications companies from using any support they receive from the FCC’s Universal Service Fund to purchase equipment or services” from companies like Huawei or ZTE, and establish a process for designating other suppliers that might pose a national security threat.  The second part of the proposal is a draft Further Notice of Proposed Rulemaking proposing that ETCs who receive USF funds must “remove existing equipment and services from designated companies from their networks.”  However, the draft FNRPM also “seek[s] comment on how to provide financial assistance to these carriers to help them transition to more trusted suppliers” and “adopt[s] an information collection to help assess the extent to which eligible telecommunications carriers have deployed Huawei and ZTE equipment in their networks as well as the costs to remove and replace it.”  In April 2018, the FCC issued a Notice of Proposed Rulemaking seeking comment on various issues related to telecommunications equipment and national security, and in October 2018, the FCC released a Public Notice seeking comment on the applicability of Section 889(b)(1) of the National Defense Authorization Act for Fiscal Year 2019 to the Commission’s ongoing rulemaking efforts.  Over the last two years, several bills have been introduced into Congress that would reimburse rural carriers who use Huawei and ZTE equipment, including the Secure and Trusted Communications Network Act of 2019 and the United States 5G Leadership Act of 2019.

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