FCC orders telecoms to inventory Chinese equipment

Nearly a year after the federal government labeled Chinese telecommunications companies Huawei and ZTE as potential national security threats, the Federal Communications Commission is looking for more complete information about which American companies are using their equipment.

The FCC announced Feb. 26 that all telecommunications companies eligible for Universal Service Fund monies are required to inventory and report the cost of replacing any Huawei or ZTE equipment currently in use. The data, which companies can report through a portal on the FCC’s website, is due by April 22. The reporting is optional for companies that are not USF-eligible.

“Given that those designations may become final this spring, we are moving forward quickly to identify where equipment and services from these suppliers are embedded in our communications networks and, where they do have a foothold, to be in a position to help remove them,” said FCC Chairman Ajit Pai in the release.

Companies have to report the type of equipment from Huawei or ZTE they are using, how it’s being used, what they paid for it and how much it would cost to replace. The latter information could be used for a reimbursement program, according to the announcement.

Many telecommunications companies, particularly small ones, rely on the USF, which distributes billions in funding every year, paid for by telecommunications companies based on an assessment of their end-user revenues. Funds are provided through four programs: the Connect America Fund, which helps cover the costs of providing service in high-cost areas; low-income support; the E-Rate program, which provides funds to help schools and libraries obtain telecommunications services; and support for rural health care clinics.

Accusations that Huawei and ZTE pose a national security threat go back for years, linked to concerns that the companies include “back doors” in their security protocols for spyware. In 2019, President Donald Trump’s administration moved to flag Huawei—a Chinese technology company—as a potential national security threat because of security flaws discovered in some of its devices.

ZTE, another Chinese technology company known particularly for smartphones, was also added to the list. The companies’ ties to the Chinese government raised further scrutiny. Some U.S. companies, including Google, have indicated that they intend to continue working with Huawei, but Congress indicated that the FCC should require that U.S. telecommunications providers rip and replace the now-prohibited equipment.

The problem is that is incredibly expensive, especially for smaller companies. The Huawei and ZTE equipment is typically much cheaper than equivalents available from other countries. So as part of the plan to replace all the equipment, Congress is working on a bill to reimburse companies for replacing the equipment.

Sen. Dan Sullivan cosponsored the Secure and Trusted Communications Network Act of 2019, which passed the Senate March 4 and would prohibit the FCC from subsidizing the purchase of any equipment from “untrusted suppliers” as well as set up a reimbursement program for companies with fewer than two million customers to replace the equipment. The House passed a companion bill on March 3, and the legislation package is now before Trump to sign.

Alaska’s two main state-based telecommunications providers, Alaska Communications and GCI, won’t be affected by the reporting requirement and equipment replacement. Neither has any Huawei or ZTE equipment in use at this time, according to spokespeople for both companies.

“GCI has been monitoring the situation since last year and we have already conducted an inventory of our network,” said Heather Handyside, GCI’s vice president of corporate communications, in an email. “I am pleased to report that GCI has no Huawei/ZTE equipment on our network systems.”

The Alaska providers who may be required to report to the FCC are prepared to do so, said Christine O’Connor, executive director of the Alaska Telecom Association.

The details of the reimbursement program through the FCC are still up in the air. The commission has not yet adopted an order on the removal and replacement program, said Tina Pelkey, a spokesman for the FCC, in an email.

“The details are still pending, including what costs will be reimbursed, and the Commission has not yet decided specifics about the proposed program while we review the record,” she said.

The two bills passed by the House and Senate would also establish an information-sharing network for smaller companies to obtain information related to the vulnerability of their networks. The bill focuses largely on the ongoing conversion to 5G networks, which are being rolled out in some regions of the U.S. and worldwide. 5G, the fifth generation of cellular and wireless network standards, is expected to increase wireless speeds and reduce latency, among other improvements.

Alaska, with its broad geography and small population, has lagged behind the country in implementation of 4G, and some regions still don’t have reliable coverage. As companies look to adapt to the changing network standards, the bill aims to push them away from purchasing equipment from companies that could pose a national security threat — particularly Chinese companies.

Last year, AT&T announced buildouts of 5G network capability in Alaska, including Anchorage, Bethel and Kusilvak. GCI began building out its 5G infrastructure in Alaska in 2019, with completion expected in 2020 and rollout expected in the first half of the year, according to GCI’s website.

Elizabeth Earl can be reached at [email protected].

03/11/2020 - 9:55am