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FCC Signals It May Be Prepared to Greatly Expand Its Proposed Ban on Huawei and ZTE Equipment

As previously reported, the FCC’s ban of Huawei and ZTE equipment and services from projects subsidized by the FCC’s Universal Service Fund (USF) became effective on January 3, 2020, following the publication of its December Order in the Federal Register. In the next phase of its plan to address perceived risks posed by such equipment and services, the FCC is now requesting public comment on what further steps it should take to secure U.S. communications networks. Public comments are due on February 3, 2020.

The latest request is focused on proposals by the FCC to “remove and replace” existing US equipment and services “produced or provided by” Huawei and ZTE from USF recipients’ network operations. Currently, the FCC plans to require “as a condition on the receipt of any USF support” that eligible telecommunications carriers (ETCs) avoid the use of communications equipment or services from covered companies and commit to removal of any such existing equipment and services from their networks.

The cost of such efforts would be compensated, at least partially, by a “reimbursement program” that the FCC would establish “to offset reasonable transition costs.” In connection with possible offsets, the FCC is now seeking comments on how best to reimburse companies for replacement costs. For example, the FCC asks for comments on whether it can reimburse technology upgrade costs in conjunction with replacements of Huawei and ZTE equipment and how best to identify and prioritize valid reimbursement claims.

As currently proposed, the “remove and replace” requirement is limited to ETC networks receiving USF support. It is also focused exclusively on equipment which the FCC considers to be “the greatest concern regarding equipment and services posing a national security threat.”

Importantly, however, the published FNPRM also invites comment on whether the FCC “can and should prohibit any communications company from purchasing, obtaining, maintaining, improving, modifying, or otherwise supporting any equipment or services produced or provided by” Huawei and ZTE, “regardless of whether they use universal service support to do so.” Moreover, the FCC has asked for comment on whether any expanded remove-and-replace order should cover all equipment and services from Huawei and ZTE. As possible support for such actions, the FCC references laws that entrust the FCC with authority to protect the public interest and cites to an increase in “the likelihood of preventing engineered, backdoor access to the network.”

These requests for additional comment could be highly significant. They strongly signal that the FCC may be prepared to require many more entities to remove and replace prohibited Huawei and ZTE equipment and services, and may seek to rely on a broad range of statutory authority to do so. Companies with an interest in USF programs as well as any company that may have Huawei and ZTE equipment and services as part of its existing or planned installed base should pay close attention to the FCC’s rulemaking process and consider commenting in response to the FNPRM.

© 2020 Faegre Drinker Biddle & Reath LLP. All Rights Reserved.National Law Review, Volume X, Number 13

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About this Author

Laura Phillips, Drinker Biddle Law Firm, Washington DC, Communications Law Attorney
Partner

Laura H. Phillips is a partner in and chair of the firm's Government & Regulatory Affairs Practice Group and a member of the Telecommunications & Mass Media Team.  She has over 25 years of experience working in nearly every aspect of the telecommunications market.

Laura counsels wireless and wired technology entrepreneurs and represents these clients on issues related to the development of new technologies, including devoting substantive attention to the development of spectrum auctions, network...

202-842-8891
Nate Bolin, Drinker Biddle Law Firm, Washington DC, Litigation Law Attorney
Partner

Nate Bolin has significant experience advising clients in compliance, transactional, litigation, policy and regulatory matters involving U.S. export controls, U.S. International Traffic in Arms Regulations (ITAR), economic sanctions, and related areas of national security and international trade law.

In corporate transactions and mergers and acquisitions, Nate regularly advises buyers, sellers and investors on the impact of U.S. export controls, customs laws, trade remedy laws, existing bilateral and multilateral trade agreements, and ongoing negotiations of new trade agreements on potential, pending and completed deals. He also counsels clients on strategic use of these laws to grow their businesses and add value to their investments.

 

(202) 230-5888
Associate

Qiusi Y. Newcom assists clients with navigating emerging issues and regulatory compliance in telecommunications laws and international trade laws. She is an associate with the Telecommunications Team and the Customs and International Trade Team.

Prior to joining Drinker Biddle, Qiusi was an associate with a boutique employment law firm where she handled labor and employment matters before federal courts and federal agencies, including the Equal Employment Opportunity Commission. Qiusi also gained valuable litigation experience...

202-230-5370