FCC Gets Mixed Advice on NDAA Impact on USF Plan for Supply Chain National Security

Parties disagreed on the FY 2019 National Defense Authorization Act's fallout for an FCC's rulemaking to protect the communications supply chain from national security threats. The Telecommunications Industry Association said NDAA Section 889 requires the commission to bar certain suppliers from participating in its funding programs. Huawei -- one of the targeted suppliers -- and others said the recently enacted provisions give the FCC no mandate to impose supplier restrictions on USF support. NCTA suggested the commission defer action and consult with other agencies. Comments were posted through Monday on a public notice (see 1810260044).

TIA said the NDAA affirmed federal dollars shouldn't be spent on suppliers thought to undermine security of U.S. communications and information technology networks. "Whereas earlier this year the Commission could take action to make certain suppliers ineligible for receipt of universal service funds, due to Section 889 it is now compelled to prohibit a subset of those suppliers from participation in any of the Commission’s grant or loan programs," commented TIA in docket 18-89. USTelecom backs the goal of not giving USF support to equipment or services from companies that threaten U.S. national security, recognizing "limited" FCC capabilities to determine which companies pose threats. It would be consistent with USTelecom-espoused "principles for the Commission to follow Congressional direction and apply the 2019 NDAA to its universal service program," said the telco group, encouraging the FCC to participate in cross-governmental efforts.

Huawei said the law "provides no authority" for FCC-proposed USF restrictions for national security, "and indeed provides salient reasons why it should abandon this proceeding." Section 889 "only applies to Federal executive agencies, Federal contractors, and recipients of Federal 'loan or grant' funds," said the Chinese vendor. "It does not apply to recipients of subsidies, such as Universal Service support. ... The Commission has repeatedly referred to the Universal Service Fund as a subsidy program, never as a grant." The statute "provides no substantive support for the Commission’s proposal to bar the use of any Universal Service support to purchase any equipment from Huawei (even assuming the statute applies to the Universal Service Fund at all), since the provisions of section 889 are considerably different in scope from the Commission’s proposal," it added.

Others also saw no new USF mandate. "The plain text of the 2019 NDAA does not apply to USF support, and the FCC therefore should not interpret [the law] as a directive to place additional restrictions or limitations on USF support," said the Competitive Carriers Association. The Rural Wireless Broadband Coalition said the "proposed rule has not survived passage of the 2019 NDAA." The Wireless ISP Association said "it does not appear" that Section 889(b)(1) "is intended to apply to USF support." The FCC interest in protecting national security is commendable, "but its proposed rule to do so misses the mark, and Section 889 of the 2019 NDAA provides no additional ballast," said ITTA.

Congress didn't intend "for the Commission specifically to prohibit the use" of USF support for covered telecom and equipment and services, said NTCA: "If the Commission independently determines that it is must proceed ... with an equipment prohibition, then it must immediately shift its attention to its own compliance with the related statutory requirement under Section 889(b)(2) of the Act to prioritize financial and technical assistance for affected small businesses." WTA said, "While there appears to be Congressional intent to ban the use of Huawei and ZTE equipment, the NDAA language does not specifically ban USF funds from going to those companies, and it can be argued that strict statutory construction prevents the Commission from putting a ban in place." A Further NPRM would be needed for a new rule, it said.

NCTA said it's "critical to ensure" security concerns are addressed uniformly. The FCC "should consider deferring moving forward pending further coordination with, or clarification from, the Department of Defense -- or some other arm of the Administration -- regarding implementation of Section 889 in a consistent manner across the Federal government," said the group. The FCC "should develop a clearer and more focused policy" and coordinate with other agencies such as the Department of Homeland Security," said the Computer & Communications Industry Association: "To the extent the Commission is called upon to make judgments regarding national security, it should defer to the expert U.S. Government agencies."