FCC Wants Help Interpreting Law to Fund Replacement of Huawei, ZTE Equipment

The Federal Communications Commission is inviting comment on a rule it’s proposed for reimbursing service providers that must replace any equipment in their systems from Huawei or ZTE in order to participate in a publicly funded program to increase access to broadband, in light of complementary legislation Congress passed in March.

“The Wireline Competition Bureau of the Federal Communications Commission seeks comment on how the recently enacted Secure and Trusted Communications Networks Act of 2019 signed into law on March 12, 2020, applies to proposals under consideration in the Commission’s Protecting Against National Security Threats to the Communications Supply Chain rulemaking and related proceedings,” reads a Federal Register notice set to publish Tuesday.  

In November, the commission unanimously adopted an order designating Huawei and ZTE national security threats. Any entity receiving money from the Universal Service Fund—an $8.5 billion a year pool amassed from fees on consumers’ phone bills to get broadband to low income and hard to reach places—would not be allowed to use equipment from the two telecommunications companies over fears they are under control of the Chinese government.

Rural internet service providers that rely on the USF—as well as low-cost gear from the Chinese companies—were concerned. 

The FCC’s rulemaking also included a proposal to refund the companies. And Congress subsequently passed the Secure and Trusted Communications Networks Act of 2019, which said $1 billion should be made available to help the smaller rural providers replace the equipment. 

The new law is “largely consistent with the Commission’s proposals,” the FCC wrote. But there are some big questions to answer, including what exactly is meant by “advanced communications services”?

“The Commission seeks comment on whether the Commission should modify the reimbursement program proposed in the [Final Notice of Proposed Rulemaking] to implement these new statutory requirements,” the notice reads. “Commenters should also specifically address how the Commission should interpret “providers of advanced communications service.”

Another big question is about the funding. Some estimates for replacing the covered equipment say it could cost up to double the amount indicated in the legislation which does not actually spell out where the $1 billion will come from.

Some advocates for the rural providers have suggested the money might be made available from the FCC’s spectrum auctions.

“The reimbursement program created by the Secure Networks Act appears to require an express appropriation from Congress,” the FCC writes. “The Secure Networks Act, however, does not provide funding for the reimbursement program and states that the program must be ‘separate from any Federal universal service program established under section 254 of the Communications Act of 1934, as amended.’ The Commission seeks comment on our reading of these provisions.” 

The commission also wants input on how it should go about constructing a list of alternative equipment providers, as required by the new law.