Senate Panel Eyes 'Team Telecom' Bill; NTIA Backs FCC Huawei/ZTE Ban

The Senate Homeland Security Investigations Subcommittee said Tuesday it believes further action from Congress is needed to define the role of the “Team Telecom” federal agencies to strengthen their ability to assist the FCC in reviewing foreign takeovers of U.S. communications assets. The committee believes more action is warranted because Team Telecom’s limited authority allowed the departments to do only “minimal oversight” of the potential national security risks a trio of Chinese telecom companies posed to U.S. networks. The team is DOD, the Department of Homeland Security and DOJ.

NTIA said it supports FCC moves to bar Chinese equipment makers Huawei and ZTE from U.S. networks. In a letter to the FCC, posted in docket 18-89, NTIA called for separate congressional funding to replace gear now in U.S. networks and determined to threaten national security, in keeping with the Secure and Trusted Communications Networks Act (HR-4998). The FCC is seeking $2 billion to implement HR-4998 as part of COVID-19 aid legislation (see 2003230066). Commissioners voted 5-0 in November for supply chain rules, designating Huawei and ZTE as the first covered companies (see 1911220033).

President Donald Trump’s April executive order to formalize the Team Telecom process “is a positive step, but formal legislative authority will provide for greater oversight over foreign carriers,” subcommittee staff reported. The committee noted Team Telecom “still has no governing statutory authority,” which is problematic because of the departments’ “historical lack of statutory authority led to a review process criticized by many as ‘opaque’ and ‘broken.’” Congress should require the team “formally coordinate reviews of foreign carrier applications with” the interagency Committee on Foreign Investment in the U.S. (CFIUS), said Senate Homeland Security. The panel urged lawmakers to give those agencies together “authority to recommend revocation of a carrier’s authorization, even where no security agreement exists between it and the carrier.”

Team Telecom “has had no interaction” with China Unicom’s U.S. arm since the FCC granted it a Communications Act Section 214 authorization in 2002 and “has never sought a security agreement” with the company, Senate Homeland Security said. The departments did “just two site visits” for China Telecom and ComNet “in more than 10 years” since reaching security agreements with those companies’ U.S. branches, the committee said.

Congress needs to “provide sustained resources necessary” for Team Telecom “to effectively assess foreign carriers’ applications and to monitor foreign carriers operating” in the U.S., the committee said. It cited language in the 2018 Foreign Investment Risk Review Modernization Act that “provided CFIUS agencies specialized authority to hire staff to ensure agencies can manage CFIUS filings” and believes Team Telecom agencies “should be provided a similar authority.”

Hill Action

Senate Homeland Security Investigations Chairman Rob Portman, R-Ohio, said in a statement he aims to work with ranking member Tom Carper, D-Del., “on legislation to ensure federal agencies have the oversight and enforcement tools necessary to protect our telecommunications networks." The subcommittee expects to discuss legislative options with the departments, an aide told reporters. DOD, DOJ and DHS didn’t comment.

The FCC “should complete” its review of whether to revoke the Section 214 authorizations for ComNet, CT, CU and Pacific Networks (see 2004240046) “in a timely manner,” Senate Homeland Security said. The FCC’s reviews of ComNet and CU should include seeking Team Telecom’s recommendation on “national security and law enforcement concerns associated with the carriers’ authorizations. The analysis should also include a decision as to whether risks can be mitigated.”

The commission should “establish a clear standard and process for revoking a foreign carrier’s existing authorizations” since “there is no clear standard or process” in place, the report said. “A formal standard and revocation process would provide clear guidance to both the government and industry as to when revocation of an existing authorization is warranted.”

CU countered earlier it’s “not subject to the exploitation, influence, or control of the Chinese government” but “is willing to engage in discussions with the FCC and the other relevant U.S. government agencies regarding a mitigation agreement that would be acceptable to resolve any national security concerns.” CU said in a letter to Senate Homeland Security it “has contributed significantly to the domestic economy, paid federal and state taxes and complied faithfully with domestic laws. It has never been accused of any criminal conduct or charged with a violation of FCC regulations (aside from a notification oversight after an internal reorganization) and has never been the subject of investigation by any law enforcement agency in the past.”

FCC and NTIA

“We look forward to reviewing the contribution of these senators and committee staff to this important national security work,” an FCC spokesperson emailed.

The Trump administration “agrees that the companies’ ties to the government of the People’s Republic of China (PRC), along with Chinese laws obligating them to cooperate with any request by the Chinese government to use or access their system, pose a threat to the security of communications networks and the communications supply chain,’” said acting NTIA Administrator Doug Kinkoph in a letter to the FCC: “We urge the Commission to promptly take all actions needed to make ... designations final.” Huawei and ZTE, like other Chinese vendors, “are beholden legally and extralegally to the PRC government and the Chinese Communist Party (CCP),” NTIA said.

Both companies “maintain internal Communist Party Committees,” NTIA said: As long as Huawei and ZTE are subject to the legal and extralegal influence and control of the Chinese government and the CCP, there are doubts that the companies can be trusted to comply fully with U.S. law.” A federal grand jury alleged Huawei sent employees from China to steal intellectual property from T-Mobile after U.S. employees were unwilling or failed to do so, NTIA alleged: “ZTE has pleaded guilty to engaging in a multi-year conspiracy to supply, build, and operate telecommunications networks using U.S.-origin equipment in violation of the U.S. trade embargo on Iran, and committing hundreds of U.S. sanctions violations involving the shipment of telecommunications equipment.”

The Public Safety Bureau sought comment by June 19 on the NTIA filing. Comments are due in docket 19-351 for Huawei, 19-352 for ZTE. The Chinese Embassy, Huawei and ZTE didn’t comment Tuesday.

FCC Commissioner Mike O’Rielly said after the body's Tuesday meeting that dealing with the Chinese providers involves numerous fronts. “There’s a lot of moving buckets here, a lot of different policy issues that are all related, but they’re moving on kind of separate tracks,” he said. “We welcome this input and have already put it out for public comment as we work hard to address these important issues as quickly and thoroughly as possible,” an FCC spokesperson said of the NTIA letter.

“It looks increasingly likely that Huawei and ZTE will be cut out of all U.S. networks, including those in rural areas,” American Enterprise Institute's Zack Cooper told us. “That the FCC and [Department of Commerce] are aligned on this issue suggests that it will be hard to reverse this momentum, even in a future administration, given the growing concerns about security risks inherent in their activities.” U.S. information and communications companies “can't operate in China, so I don't think it should be surprising that we will stop them from operating here,” he said.