FCC expands Covered List entities and proposes to revoke future equipment authorizations
China Tech Threat filed reply comments with the U.S. Federal Communications Commission (FCC) on its secure equipment proceeding and responded to other petitioners’ comments.
Below are 4 key points from the filing. A full copy of the comments is linked here.
- Selling electronic equipment in the US is a privilege, not a right.
Some IT companies have opposed the Notice of Proposed Rulemaking (NPRM) on grounds that the proposed regulation would disrupt revenue and enterprise. However, equipment authorization is a privilege, not a right, for entities which uphold the laws of the US. The opening paragraph of the Communications Act of 1934 notes its express purpose for the safety and security of communication, ensuring “adequate facilities at reasonable charges, for the purpose of the national defense, for the purpose of promoting safety of life and property through the use of wire and radio communication. . .” The purpose of the Communications Act is not to maximize revenue for firms, even though tens of thousands of firms have earned revenue through the FCC’s regime. The purpose of the Communications Act is to promote the safety and life of property through wire and radio communication.
Presently US law and the FCC’s equipment authorization program is being abused by foreign entities with unacceptable levels of national security risk. Not only do these entities profit from the FCC’s program, the equipment authorization allows them to distribute vulnerable equipment into countless locations in the US. This puts millions of Americans at risk for intrusion by actors from the government of the People’s Republic of China (PRC) and endangers the integrity of Americans’ property. Given the facts and determinations by the relevant national security agencies, the FCC must act. In fact, the FCC would be irresponsible if it authorized equipment to entities it knows present unacceptable national security risk.
- The proposed regulation will open the playing field for lawful equipment providers.
Just like a referee on the football field, a key role for regulators in a competitive market is to enforce the rules. A player or team which breaks the rules is penalized, and repeated offenses means it loses the privilege to participate. That is what has happened here. The FCC, on guidance from the DNI, has restricted the 5 entities which are upsetting fair play. Many US and equipment manufacturers of non-PRC origin have difficulty getting a foothold in the marketplace because of PRC dominance and unethical practices like illegal subsidies, forced/slave labor, theft, product dumping, predatory pricing, currency manipulation, forced tech transfer, and so on. The aggressive behavior and predatory pricing of Huawei and ZTE has forced US networking equipment vendors out of the market. Some 40+ equipment manufacturers of non-PRC origin would also like to participate. The FCC is removing the bad players so that the game can continue.
- The FCC must expand the Covered List to reflect reality.
Presently there are just 5 companies on the FCC’s Covered List. However, an estimated 900 IT companies from the PRC participate in its military civil fusion effort, and many of these entities operate in the US and could compromise Americans’ security. China Tech Threat has identified that at the very least the list should be expanded to DJI, Lenovo, YMTC, and TikTok.
- IT companies should put users’ security first.
There are many IT companies and trade associations in the proceeding, but they are not monolithic. They have different interests. The companies are not necessarily opposed to the FCC’s efforts; however, they want to avoid increased cost and burdens of regulation. China Tech Threat is sensitive to these concerns. CTT believes that the FCC can balance these concerns by placing increased obligations only on Covered List entities and only revoking future authorizations. The equipment authorization process should continue for entities which do not present unacceptable national security risk. China Tech Threat believes that non-PRC equipment manufacturers have an opportunity to demonstrate how they prioritize user security. CTT applauds the Telecommunications Industry Association and its members for its multiyear support of the FCC’s effort to restrict equipment which endangers Americans’ security.
- The proposed regulation reflects a clear, distinct mandate from Congress to the FCC to act.
The regulations close a loophole created by NDAA and Entity Designation which restricts certain vendors at the federal level while allowing them to engage at the state and consumer level. Therefore the regulations do not duplicate or disrupt other federal cybersecurity obligations.