FCC Opens Proceeding on Barring USF Funds For Suspect Tech

The FCC has voted to propose prohibiting any Universal Service Funding to be used to buy equipment or services from a company posing a national security threat to a U.S. communications or supply chain.

USF is the government subsidy program for advanced telecommunications to areas that are difficult to reach, either because of geography or economics.

The FCC voted on a Notice of Proposed Rulemaking that tees up a lot of questions that the public have time to comment on before a final order is voted. The FCC is seeking comment on:

1. "How best to implement the proposed prohibition on the use of USF support going forward

2. "What types of equipment and services should be covered by the proposed rule

3. "How the FCC should identify, and how USF recipients can learn, which suppliers are covered by the proposed rule

4. "The costs and benefits of the proposed rule "How best to enforce the proposed rule."

But while the vote was unanimous, there was also bipartisan concern about just how that would be implemented.

In their statements following the vote at the FCC's April 17 meeting, commissioners expressed various concerns about potentially hurting smaller providers, about just how a company would be identified as a threat, what tech would be affected, striking the right balance between protecting security and not making it harder to deploy plant, and a particularly pointed concern expressed by Commissioner Jessica Rosenworcel about a different national security threat she said the FCC was not addressing.

The prohibition is only a proposal, so the commissioners all appeared to be approving the launch of a process of inquiry and input, including options in addition to cutting off USF funding, though Pai seemed fairly committed to that, or at least to swift FCC action on preventing federal funding for potential national security threats.

"To be sure, the FCC doesn’t have the authority or capacity to solve this problem alone," he said. "But it does have a role to play in meeting this challenge. Specifically, given the Commission’s responsibility for overseeing the almost $9 billion Universal Service Fund (USF), we must ensure that the money in the USF—which comes from fees paid by American consumers—isn’t used in a way that undermines our national security. And we must take this action now, especially as we stand upon the precipice of the 5G future."

Pai said such swift action was the FCC doing its part--with limited authority--to protect the security of the nation, the economy, and its citizens.

Rosenworcel switched gears to point to another threat she said was being ignored. "Earlier this month, it was reported that the Department of Homeland Security acknowledged in a letter to Sen. Ron Wyden [R-Ore.] that cell site simulators are being used in the nation’s capital, potentially by foreign or criminal actors," she said "These surveillance tools can transform cell phones into real-time tracking devices by mimicking legitimate cell towers and some may even have the technical capability to record the content of calls. If these reports are true, someone needs to explain how foreign actors are transmitting over our airwaves without approval from this agency. Someone also needs to explain whether the devices being used have been certified by the FCC. The security of our communications is at stake right here, right now in Washington and this agency owes the public more than silence.”

The chairman did not respond to that characterization.

The rule proposes applying the prohibition only to future equipment purchases and does not anticipate requiring carriers to remove equipment from companies identified as a threat, though Commissioner Brendan Carr signaled it had been broadened to ask about such retroactive removal, a line of inquiry he supported.

According to senior FCC officials speaking on background, the proposal, in part, stemmed from a Dec. 20 letter from Congress expressing concerns about Chinese companies Huawei and ZTE, plus a follow-up intelligence briefing, both of which were described as impetuses to the effort to monitor the supply chain.

The Commerce Department this week rescinded the export privileges of U.S. companies sending tech to ZTE.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.