The Federal Communications Commission (“FCC” or the “Commission”) took a significant step forward this month in concretizing its program for extirpating equipment from the country’s communications networks that poses a threat to national security. The Commission’s Order in large part implements the objectives of the Secure and Trusted Networks Act of 2019 (the “Secure Networks Act”) and fills in some of the blanks left by the statute. There are a few notable quirks, however.
Background on the “Rip and Replace” Program
In general, the Secure Networks Act and the FCC’s rules are intended to remove from America’s communications networks equipment that has been determined to constitute a threat to the security of communications. The Secure Networks Act prohibits the use of Universal Service Fund (“USF”) support to purchase “covered” communications equipment or services. It also directs the FCC to establish a reimbursement program for costs incurred by Eligible Telecommunications Carriers (“ETCs”) – carriers determined to be eligible to receive USF support – to remove and replace covered equipment and services. The determinations regarding the equipment covered by this ban are made by a group of federal security agencies including the FBI, the Department of Defense, and the National Intelligence Director. These initial determinations, to no one’s surprise, included Chinese manufacturers Huawei, ZTE, and a handful of other Chinese companies. The roster of suspect (“covered”) equipment can change over time as new threats are detected. The federal government is already removing this equipment from its own networks, but there is still a large amount of equipment being used in privately owned telecom networks. The problem affects smaller carriers disproportionally since smaller carriers were enticed by the low prices and attractive financing offered by the Chinese companies. Continue Reading