Unanimous FCC Clamps Down on China During Last Big Meeting of Pai Chairmanship

The FCC voted 5-0 Thursday, as expected (see 2012080070), to put in place a system to replace insecure equipment from Chinese companies Huawei and ZTE in U.S. networks. Commissioners agreed the FCC still has work to do. Congress hasn't funded a program to pay for the equipment removed. The Rural Wireless Association noted that the order doesn’t require carriers to replace equipment until replacement is funded.

FCC commissioners also approved 5-0 an order rejecting Huawei’s application for review of a June 30 Public Safety Bureau order barring it from participating in the USF (see 2006300078). Commissioners also agreed to move forward on a proceeding revoking China Telecom Americas' U.S. authorizations for international telecom services (see 2004100062), following a recommendation by executive branch agencies, led by DOJ. The companies and the Chinese Embassy didn’t comment.

RWA members are among the mostly smaller providers that bought low-cost Huawei and ZTE gear before it was banned and are the most affected by the order. “We need leadership in Congress, not gamesmanship that puts rural residents at risk during the pandemic,” said General Counsel Carri Bennet. “Without this funding, our rural wireless carriers in some instances have had to turn down some parts of their networks due to the inability to use their universal service support on their Huawei and ZTE networks, and are therefore unable to support their communities,” she said.

Commissioner Jessica Rosenworcel said the FCC must take more steps to make 5G more secure: “China is playing the long game. ... By using state-sponsored technological development to extend its economic reach, it could put itself in a position to gather intelligence, steal intellectual property and bring down regional communications in times of crisis. Despite our efforts here, the Chinese government is still actively consolidating its global 5G authority.”

“The lack of a congressional appropriation for the replacement program leaves many of those providers in an unfortunate bind,” said Commissioner Geoffrey Starks. “For small and rural carriers, just like small businesses around the country, 2020 has been an incredibly challenging year.” Some small carriers experienced “substantial losses” from honoring the Keep Americans Connected pledge, “further weakening their ability to replace this equipment on their own,” he said.

Starks said he asked for and got language encouraging eligible telecom carriers and other recipients of reimbursement funds to consider open radio access network equipment and services. “Network security is national security,” he said.

Chairman Ajit Pai said the Obama administration ignored the risks posed by China. The previous administration's position was, “We welcome China's rise, and China's rise is potentially good for the world,” he said. Chinese equipment was added to U.S. networks “with nary an eyebrow raised by the agency leadership,” he said: “This administration and this FCC have tackled this problem head on.”

The FCC, acting on the advice of security experts, is “effectively closing our market to certain markets” and reimbursing providers “in the interest of preserving our nation’s national security,” said Commissioner Mike O’Rielly. The FCC’s actions “may have global repercussions,” but the need to act is clear, he said. This was his last meeting as a commissioner.

“The Chinese government intends to surveil persons within our borders, for government security and spying advantage, as well as for intellectual property and an industrial or business edge,” said Commissioner Brendan Carr. “Any backsliding or softening of our approach would be a monumental mistake.”

On the order rejecting Huawei’s appeal, Pai said the company has “a long and well-documented history of close ties to the Chinese military and intelligence communities, as well as the Chinese Communist Party, at every level of the company.” Concerns “aren’t just hypothetical,” he said: “Independent entities have identified numerous security vulnerabilities in Huawei equipment and found it to be less secure than that of other companies.”

Executive agencies allege China Telecom Americas “failed to comply not only with prior commitments ... but also with federal and state cybersecurity and privacy laws,” Pai said. Last year, commissioners rejected China Mobile’s application for certification under Section 214 of the Communications Act (see 1905090039).

“The FCC has been most responsive in seeking information and developing a better understanding of the unique impact of the order on small and regional carriers that have covered equipment in their networks,” emailed Competitive Carriers Association President Steve Berry. “This challenging issue is of the utmost importance to affected carriers, and CCA continues to encourage Congress to fund the Reimbursement Program so that no American is left behind in the digital world,” he said.

Telecommunications Industry Association members “support the FCC’s order for this important program that will facilitate the replacement of network equipment that could pose a significant threat to our national security,” said CEO David Stehlin. “We urge Congress to now appropriate the necessary funds and make this critical investment to ensure the security of our nation’s digital infrastructure."

Meeting Notebook

O’Rielly is looking to work in the private sector post-FCC, he said during a press call after what was likely his final FCC meeting as a commissioner. “I’m going to see what it looks like firsthand,” he said. “I’ve done my time” in government service, he said. O’Rielly said the job of FCC commissioner has changed over his seven years at the post, with more of an emphasis on commissioner personalities and Twitter. He said he feels he has been blamed for making the FCC more partisan, but he always tried to stick to the language of the statute. Asked about the prospects of a deadlocked FCC, O’Rielly said he has been able to get work done at the commission “in different formulations.” Every commissioner and numerous bureau chiefs prefaced their meeting statements with tributes to him. “He has been an important partner as the Commission has accomplished one of the most ambitious policy agendas in agency history,” said Pai, crediting O’Rielly with leading efforts to revise the 3.5 GHz band rules, loosening kidvid regulations, representing the agency at the World Radiocommunication Conference, and battling state governments on 911 fee diversion. Commissioner Rosenworcel thanked O’Rielly “for his allegiance to the Constitution” when it wasn’t “convenient or easy.” “You should be very proud of your service," Starks said. Carr said O’Rielly’s service as a congressional staffer before joining the FCC was already enough to “fill a career for most mere mortals,” and said O’Rielly “outworked everyone in the building.”

One of O'Rielly's top regrets is that four states are still diverting 911 fees (see 2012080055), despite pressure to end the practice, he told reporters. “For those last four states, I’m very sad that there’s nothing more I can do,” he said. Another of his biggest regrets is that the FCC never completed action on a 2017 NPRM on ways 5,000 “twilight” towers could be made available for collocation of wireless facilities without additional historic review (see 1712140049). O’Rielly said in June he was working with Carr on the issue (see 2006090060). “It has kind of fallen by the wayside, and that really saddens me,” he said. “Those are towers that already exist, already offer service. … They’re going to be needed.”