FCC Proposes Ban on Huawei/ZTE Equipment for USF Recipients
At its November meeting, the FCC plans to adopt a rule that
no universal service support may be used to purchase or obtain any equipment or
services produced or provided by any company posing a national security threat
to the integrity of communications networks or the communications supply
chain.
In brief, the draft order prohibits any recipient of universal service from using such support to purchase or obtain any equipment or services produced or provided by any company posing a national security threat (“covered company”). The Commission made an initial determination that Huawei and ZTE meet the definition of a covered company, although they will have 30 days to protest that designation.
Specifically, USF recipients, including schools, libraries and health care providers (HCPs), may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support equipment from a covered company. USF recipients may buy or maintain such equipment with their own funds, but must be able to prove no USF funds were used for those purposes.
The draft order will go into effect for E-rate and RHC in Funding Year 2020, with respect to Huawei and ZTE. Multi-year contracts are not exempt.
It is unclear whether “USF recipients” would include service providers who serve E-rate/RHC applicants but who are not eligible telecommunications carriers (ETCs). The order clearly prohibits “eligible telecommunications carriers” (ETCs), including recipients of high-cost funds, from receiving USF funds for “any and all equipment and services from a covered company.” Would the Commission’s prohibition include equipment in the networks of service providers who themselves are not direct recipients of USF funds and are not ETCs? For example, would E-rate and RHC applicants be able to purchase services from a service provider that uses Huawei or ZTE equipment in its network? In that case, the E-rate/RHC applicants would not be purchasing services or equipment directly from a covered company. Would it matter if the service provider is the party seeking reimbursement through the SPI process in the E-rate program; if so, would the service provider then be considered a “USF recipient”?
The draft Further Notice of Proposed Rulemaking (FNPRM) proposes to require as a condition on the receipt of USF support that ETCs not use, or agree not to use within a designated period of time, communications equipment or services from covered companies. The draft FNPRM seeks comment on whether the Commission should expand this proposed removal and replacement requirement to all USF recipients, including schools, libraries and HCPs.
As a reminder, this item is a draft, and any aspect of it may change before the Commission votes on it.
In brief, the draft order prohibits any recipient of universal service from using such support to purchase or obtain any equipment or services produced or provided by any company posing a national security threat (“covered company”). The Commission made an initial determination that Huawei and ZTE meet the definition of a covered company, although they will have 30 days to protest that designation.
Specifically, USF recipients, including schools, libraries and health care providers (HCPs), may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support equipment from a covered company. USF recipients may buy or maintain such equipment with their own funds, but must be able to prove no USF funds were used for those purposes.
The draft order will go into effect for E-rate and RHC in Funding Year 2020, with respect to Huawei and ZTE. Multi-year contracts are not exempt.
It is unclear whether “USF recipients” would include service providers who serve E-rate/RHC applicants but who are not eligible telecommunications carriers (ETCs). The order clearly prohibits “eligible telecommunications carriers” (ETCs), including recipients of high-cost funds, from receiving USF funds for “any and all equipment and services from a covered company.” Would the Commission’s prohibition include equipment in the networks of service providers who themselves are not direct recipients of USF funds and are not ETCs? For example, would E-rate and RHC applicants be able to purchase services from a service provider that uses Huawei or ZTE equipment in its network? In that case, the E-rate/RHC applicants would not be purchasing services or equipment directly from a covered company. Would it matter if the service provider is the party seeking reimbursement through the SPI process in the E-rate program; if so, would the service provider then be considered a “USF recipient”?
The draft Further Notice of Proposed Rulemaking (FNPRM) proposes to require as a condition on the receipt of USF support that ETCs not use, or agree not to use within a designated period of time, communications equipment or services from covered companies. The draft FNPRM seeks comment on whether the Commission should expand this proposed removal and replacement requirement to all USF recipients, including schools, libraries and HCPs.
As a reminder, this item is a draft, and any aspect of it may change before the Commission votes on it.
