[Federal Register Volume 86, Number 158 (Thursday, August 19, 2021)]
[Proposed Rules]
[Pages 46644-46661]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-16085]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 2
[ET Docket No. 21-232, EA Docket No. 21-233; FCC 21-73; FR ID 39522]
Protecting Against National Security Threats to the
Communications Supply Chain Through the Equipment Authorization Program
and the Competitive Bidding Program
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission proposes to revise rules related to its
equipment authorization processes to prohibit authorization of any
``covered'' equipment on the recently established Covered List. The
Commission also seeks comment on whether to require additional
certification relating to national security from applicants who wish to
participate in the Commission's competitive bidding auctions. This
action explores steps the Commission can take to further its goal of
protecting communications networks from communications equipment and
services that pose a national security risk.
DATES: Comments are due September 20, 2021. Reply comments are due
October 18, 2021. Written comments on the Paperwork Reduction Act
proposed information collection requirements must be submitted by the
public, Office of Management and Budget (OMB), and other interested
parties on or before October 18, 2021.
ADDRESSES: You may submit comments, identified by ET Docket No. 21-232,
by any of the following methods:
Electronic Filers: Comments may be filed electronically
using the internet by accessing the ECFS: http://apps.fcc.gov/ecfs/.
Paper Filers: Parties who choose to file by paper must
file an original and one copy of each filing.
Filings can be sent by commercial overnight courier, or by
first-class or overnight U.S. Postal Service mail. All filings must be
addressed to the Commission's Secretary, Office of the Secretary,
Federal Communications Commission.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9050 Junction Drive,
Annapolis Junction, MD 20701.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 45 L Street NE, Washington, DC 20554.
Effective March 19, 2020, and until further notice, the
Commission no longer accepts any hand or messenger delivered filings.
This is a temporary measure taken to help protect the health and safety
of individuals, and to mitigate the transmission of COVID-19. See FCC
Announces Closure of FCC Headquarters Open Window and Change in Hand-
Delivery Policy, Public Notice, DA 20-304 (March 19, 2020). https://www.fcc.gov/document/fcc-closes-headquarters-open-window-and-changes-hand-delivery-policy.
People with disabilities: To request materials in accessible
formats for people with disabilities (braille, large print, electronic
files, audio format), send an email to [email protected] or calling the
Consumer and Governmental Affairs Bureau at 202-418-0530 (voice), 202-
418-0432 (TTY).
FOR FURTHER INFORMATION CONTACT: Jamie Coleman, Office of Engineering
and Technology, 202-418-2705, [email protected]. For information
regarding the PRA information collection requirements contained in this
PRA, contact Nicole Ongele, Office of Managing Director, at (202) 418-
2991 or [email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM), in ET Docket No. 21-232 and EA Docket
No. 21-233; FCC 21-73, adopted and released June 17, 2021. The full
text of this document is available by downloading the text from the
Commission's website at: https://www.fcc.gov/document/equipment-authorization-and-competitive-bidding-supply-chain-nprm. When the FCC
Headquarters reopens to the public, the full text of this document will
also be available for public inspection and copying during regular
business hours in the FCC Reference Center, 45 L Street NE, Washington,
DC 20554.
Initial Paperwork Reduction Act of 1995 Analysis
This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments
are due October 18, 2021.
Comments should address: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology; and (e)
way to further reduce the information collection burden on small
business concerns with fewer than 25 employees. In addition, pursuant
to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might
further reduce the information collection burden for small business
concerns with fewer than 25 employees.
OMB Control Number: 3060-0057.
Title: Application for Equipment Authorization, FCC Form 731.
Form No.: FCC Form 731.
Type of Review: Revision of a currently approved collection.
Respondents: Business or other for-profit.
Number of Respondents and Responses: 11,305 respondents; 24,873
responses.
Estimated Time per Response: 8.11 hours (rounded).
[[Page 46645]]
Frequency of Response: On occasion and one-time reporting
requirements; third-party disclosure requirement.
Obligation to Respond: Required to obtain or retain benefits.
Statutory authority for this information collection is contained in the
47 U.S.C. 154(i), 301, 302, 303, 309(j), 312, and 316, and 47 CFR
1.411.
Total Annual Burden: 206,863 hours.
Total Annual Costs: $50,155,140.
Privacy Act Impact Assessment: Yes. The personally identifiable
information (PII) in this information collection is covered by a
Privacy Impact Assessment (PIA), Equipment Authorizations Records and
Files Information System. It is posted at: https://www.fcc.gov/general/privacy-act-information#pia.
Nature and Extent of Confidentiality: Minimal exemption from the
Freedom of Information Act (FOIA) under 5 U.S.C. 552(b)(4) and FCC
rules under 47 CFR 0.457(d) is granted for trade secrets which may be
submitted as attachments to the application FCC Form 731. No other
assurances of confidentiality are provided to respondents.
Needs and Uses: The Commission will submit this revised information
collection to the Office of Management and Budget (OMB) after this 60-
day comment period to obtain the three-year clearance. The Commission
is reporting program changes, increases to this information collection.
On June 17, 2021, the Commission adopted a Notice of Proposed
Rulemaking and Notice of Inquiry in ET Docket. No. 21-232 and EA Docket
No. 21-233, FCC 21-73, ``Protecting Against National Security Threats
to the Communications Supply Chain through the Equipment Authorization
Program.'' Among other proposed rules intended to secure our nation's
telecommunications networks, the Commission proposes to amend the 47
CFR part 2 rules related to equipment authorization to prohibit the
authorization of communications equipment if the Commission determines
that such equipment or service poses an unacceptable risk to the
national security of the United States or the security and safety of
United States persons. Accordingly, the Commission proposes to add
Sec. 2.911 to its rules, 47 CFR 2.911. The statutory authority for
this collection of information is authorized under sections 4(i), 301,
302, 303, 309(j), 312, and 316 of the Communications Act of 1934, as
amended, 47 U.S.C. 154(i), 301, 302, 303, 309(j), 312, and 316.
Ex Parte Rules--Permit-But-Disclose
The proceeding this NPRM initiates shall be treated as a ``permit-
but-disclose'' proceeding in accordance with the Commission's ex parte
rules, 47 CFR 1.1200 et seq. Persons making ex parte presentations must
file a copy of any written presentation or a memorandum summarizing any
oral presentation within two business days after the presentation
(unless a different deadline applicable to the Sunshine period
applies). Persons making oral ex parte presentations are reminded that
memoranda summarizing the presentation must (1) list all persons
attending or otherwise participating in the meeting at which the ex
parte presentation was made, and (2) summarize all data presented and
arguments made during the presentation. If the presentation consisted
in whole or in part of the presentation of data or arguments already
reflected in the presenter's written comments, memoranda or other
filings in the proceeding, the presenter may provide citations to such
data or arguments in his or her prior comments, memoranda, or other
filings (specifying the relevant page and/or paragraph numbers where
such data or arguments can be found) in lieu of summarizing them in the
memorandum. Documents shown or given to Commission staff during ex
parte meetings are deemed to be written ex parte presentations and must
be filed consistent with rule 1.1206(b). In proceedings governed by
rule 1.49(f) or for which the Commission has made available a method of
electronic filing, written ex parte presentations and memoranda
summarizing oral ex parte presentations, and all attachments thereto,
must be filed through the electronic comment filing system available
for that proceeding, and must be filed in their native format (e.g.,
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding
should familiarize themselves with the Commission's ex parte rules.
Synopsis
I. Introduction
In this Notice of Proposed Rulemaking (NPRM), the Commission
proposes revisions to its equipment authorization rules and processes
to prohibit authorization of any communications equipment on the list
of equipment and services (Covered List) that the Commission maintains
pursuant to the Secure and Trusted Communications Networks Act of 2019.
Secure and Trusted Communications Networks Act of 2019, Public Law 116-
124, 133 Stat. 158 (2020) (codified as amended at 47 U.S.C. 1601-1609)
(Secure Networks Act). This prohibition would apply to ``covered''
equipment on the Covered List maintained and updated by the
Commission's Public Safety and Homeland Security Bureau (PSHSB) at
https://www.fcc.gov/supplychain/coveredlist. The Commission also seeks
comment on whether the rules concerning equipment currently exempted
from the equipment authorization requirement should be revised to
ensure that any ``covered'' equipment cannot qualify for such
exemption. In addition, the Commission seeks comment on whether to
revoke any of the authorizations that have been previously granted for
``covered'' equipment on the Covered List, and if so, which ones and
through what procedures. Finally, the Commission seeks comment on new
certifications for applicants that wish to participate in Commission
auctions that would further address the risks posed by companies that
the Commission has designated as posing a national security threat to
the integrity of communications networks and the communications supply
chain.
II. Background
The Covered List. On March 21, 2021, PSHSB published the Covered
List identifying the covered equipment and services that specific,
enumerated sources have deemed to pose an unacceptable risk to the
national security of the United States or the security and safety of
United States persons. ``Public Safety and Homeland Security Bureau
Announces Publication of the List of Equipment and Services Covered by
Section 2 of the Secure Networks Act,'' WC Docket No. 18-89, Public
Notice, DA 21-309 (PSHSB, Mar. 12, 2021) (Covered List Public Notice);
see 47 CFR 1.50002. Pursuant to 47 CFR 1.50002, this Covered List
identified certain telecommunications equipment and services produced
or provided by Huawei Technologies Company and ZTE Corporation, and
video surveillance and telecommunications equipment and services
produced or provided by Hytera Communications Corporation, Hangzhou
Hikvision Digital Technology Company, and Dahua Technology Company--and
their respective subsidiaries and/or affiliates. The Commission tasked
PSHSB with ongoing responsibilities for monitoring the status of the
determinations and periodically updating the Covered List to address
changes as appropriate.
The equipment authorization program. The Commission's current rules
provide two different approval procedures for equipment authorization--
Certification of equipment and Supplier's Declaration of Conformity
(SDoC). As a general matter, for a radiofrequency device (RF device)
[[Page 46646]]
to be marketed or operated in the United States, it must have been
authorized for use through one of these two processes. Some RF
equipment has been exempted from the need for an equipment
authorization. At this time, the Commission's current equipment
authorization rules do not include specific provisions addressing the
``covered'' equipment on the Covered List.
Competitive bidding certifications. The Commission uses competitive
bidding to determine which among multiple applicants with mutually
exclusive applications for a license may file a full application for
the license. Congress gave the Commission the authority to require such
information and assurances from applicants to participate in
competitive bidding as is necessary to demonstrate that their
application is acceptable. Pursuant to this authority, the Commission
has required each applicant to participate in competitive bidding to
make various certifications.
III. Discussion
In this NPRM, the Commission examines its rules relating to
equipment authorization and participation in Commission auctions to
help advance the Commission's goal of protecting national security and
public safety. This proceeding builds on other actions the Commission
recently has taken to protect and secure our nation's communications
systems.
In other proceedings over the last three years, the Commission has
taken several actions to prevent use of equipment and services that
pose an unacceptable risk to our nation's communications networks. In
June 2020, the Public Safety and Homeland Security Bureau (PSHSB)
designated Huawei and ZTE as national security threats to the integrity
of communications networks, prohibiting the use of Universal Service
Fund (USF) support to purchase, obtain, maintain, improve, modify, or
otherwise support any equipment or services produced or provided by
Huawei and ZTE. See Protecting Against National Security Threats to the
Communications Supply Chain Through FCC Programs--Huawei Designation,
PS Docket No. 19-351, Order, 35 FCC Rcd 6604 (PSHSB 2020) (Huawei
Designation Order); See Protecting Against National Security Threats to
the Communications Supply Chain Through FCC Programs--ZTE Designation,
PS Docket No. 19-352, Order, 35 FCC Rcd 6633 (PSHSB 2020) (ZTE
Designation Order). Most recently, PSHSB, as required by the December
2020 Supply Chain Second Report and Order (Supply Chain Second Report
and Order, 35 FCC Rcd 14284), published the Covered List, which
identifies ``covered'' equipment and services that pose an unacceptable
risk to national security or to the security and safety of U.S.
persons. Covered List Public Notice; see 47 CFR 1.50002. PSHSB will
continue to update that list as appropriate. Although the Commission,
through PSHSB, publishes and updates the Covered List, the equipment
and services included on the list are identified by specific external
sources enumerated in the Secure Networks Act. 47 CFR 1.50002(b)(1)(i)-
(iv).
This Covered List identifies communications equipment and services
that pose an unacceptable risk to the national security of the United
States or the security and safety of United States persons. The
Commission is required to include communications equipment and services
on the list based exclusively on determinations made by Congress and by
other U.S. government agencies. 47 U.S.C. 1601(c). Currently, the list
includes equipment and services produced or provided by five entities:
``Telecommunications equipment produced or provided by'' Huawei
Technologies Company or ZTE Corporation, or their respective
subsidiaries and affiliates, ``including telecommunications or video
surveillance services produced or provided by such [entities] or using
such equipment;'' and ``Video surveillance and telecommunications
equipment produced or provided by'' Hytera Communications Corporation,
Hangzhou Hikvision Digital Technology Company, or Dahua Technology
Company, or their respective subsidiaries and affiliates, ``to the
extent it is used for the purpose of public safety, security of
government facilities, physical security surveillance of critical
infrastructure, and other national security purposes, including
telecommunications or video surveillance services produced or provided
by such [entities] or using such equipment.'' Covered List Public
Notice at 3. (As noted in this Public Notice, where equipment or
services on the list are identified by category, such category should
be construed to include only equipment or services capable of the
functions outlined in sections 2(b)(2)(A), (B), or (C) of the Secure
Networks Act. 47 U.S.C. 1601(b)(2)(A)-(C)). Under the Secure Networks
Act and the Commission's new rule, part 1, subpart DD, inclusion of
equipment and services on the Covered List precludes the use of federal
subsidy funds--e.g., funds from the Commission's Universal Service
Programs--to obtain or maintain such equipment or services. 47 U.S.C.
1602; 47 CFR 1.50000 et seq.; see Protecting Against National Security
Threats to the Communications Supply Chain Through FCC Programs, WC
Docket No. 18-89, Declaratory Ruling and Second Further Notice of
Proposed Rulemaking, 35 FCC Rcd 7821, 7825-28, paras. 16-22 (2020).
This NPRM seeks comment on various steps that the Commission could
take in its equipment authorization program, as well as its competitive
bidding program, to reduce threats posed to our nation's communications
system. The Commission proposes revisions to its equipment
authorization rules and procedures under part 2 to prohibit
authorization of any ``covered'' equipment on the Covered List. It also
seeks comment on whether to revise the rules on equipment currently
exempted from the equipment authorization requirements to no longer
permit this exemption for such ``covered'' equipment. In addition, it
seeks comment on whether the Commission should revoke equipment
authorizations of ``covered'' equipment, and if so under what
conditions and procedures. Finally, we include questions concerning
possible revisions to the Commission's competitive bidding procedures
that could address certain concerns related to ``covered'' equipment
and services. Notably, the Commission must ``periodically update the
list . . . to address changes in [external] determinations . . . [and]
shall monitor the making and reversing of determinations . . . in order
to place additional communications equipment or services on the list .
. . or to remove communications equipment and services from such
list.'' Secure Networks Act Sec. 2(d)(1)-(2); see also 47 CFR 1.50003.
If one of the enumerated sources named in the Secure Networks Act
modifies or deletes a determination, PSHSB will do the same and modify
the Covered List accordingly. See 47 CFR 1.50003(b) (if a determination
regarding covered communications equipment or service on the Covered
List is reversed or modified, directing PSHSB to remove from or modify
the entry of such equipment or service on the Covered List, except if
any of the sources identified in 47 CFR 1.50002(b)(1)(i)-(iv) maintains
a determination supporting inclusion of such equipment or service on
the Covered List). The Commission seeks comment on how future updates
to the Covered List should affect our proposals in this Notice.
[[Page 46647]]
A. Equipment Authorization Rules and Procedures
In this Notice, the Commission proposes revisions to the
Commission's equipment authorization rules and processes to prohibit
authorization of any ``covered'' equipment on the Covered List. This
prohibition would apply to ``covered'' equipment on the Covered List
maintained and updated by PSHSB. The Commission also seeks comment on
whether its rules concerning equipment currently exempted from the
equipment authorization requirement should be revised to ensure that
any ``covered'' equipment cannot qualify for such exemption. In
addition, it seeks comment on whether it should revoke any of the
authorizations that have been previously granted for ``covered''
equipment on the Covered List, and if so, which ones and through what
procedures. Finally, it seeks comment on new certifications for
applicants that wish to participate in Commission auctions that would
further address the risks posed by companies that the Commission has
designated as posing a national security threat to the integrity of
communications networks and the communications supply chain.
1. Equipment Authorization Rules Under Part 2
a. General Provisions of Subpart J
The Commission's equipment authorization rules and procedures, set
forth in 47 CFR part 2, include requirements and processes for
equipment marketing, authorization, and importation. The Commission
proposes to adopt a new provision, 47 CFR 2.903, as part of the
``General Provisions'' of subpart J, to provide general guidance
regarding the prohibition on equipment authorizations with respect to
communications equipment on the Covered List. In proposing this new
rule section, the Commission seeks to establish a clear prohibition on
authorization of any ``covered'' equipment in the Commission's
equipment authorization processes regardless of the process to which
that equipment is subject. The Commission seeks comment on this
proposed rule. Is this rule sufficient to prohibit any such equipment
on the Covered List from being authorized for use in the United States?
What modifications or clarifications are needed to this proposed
language to ensure that the rule is clear as to its scope and effect
and attains results commensurate with its purpose to protect national
security? Are there additional provisions that should be included here
to more fully capture the scope of the Commission's proposed
prohibition?
If the Commission were to adopt this proposal to revise the
Commission's subpart J equipment authorization rules to prohibit any
further authorization of ``covered'' equipment through the
certification or SDoC processes, this decision would also serve to
prohibit the marketing of such equipment that would now be prohibited
from authorization under subpart I of the Commission's part 2 rules
(Marketing of Radio-Frequency Devices) and importation of equipment
under subpart K (Importation of Devices Capable of Causing Harmful
Interference) of the Commission's part 2 rules. Section 2.803(b) of
subpart I only permits persons to import or market RF devices that are
subject to authorization under either the certification or SDoC
process, as set forth in the Commission's subpart J rules, once those
devices have been authorized, unless an exception applies. Similarly,
the Commission's proposed revisions in subpart J also would serve to
prohibit importing or marketing of ``covered'' equipment if it is
subject to authorization through either the certification or SDoC
process in subpart J and has not been authorized, per sections
2.1201(a) and 2.1204(a). The Commission seeks comment on the need to
revise or provide clarification with regard to how the Commission's
proposed prohibition of authorization of ``covered'' equipment affects
the implementation of the Commission's rules in either subpart I or
subpart K. Would the general prohibition the Commission proposes for
equipment subject to certification and SDoC make any changes to
subparts I or K unnecessary? If not, what changes are needed to the
Commission rules in those subparts?
The Commission seeks comment on other revisions that it should make
regarding equipment authorization either through the certification or
SDoC rules and procedures. The Commission discusses and seeks comment
on how the proposed rule should be implemented with respect to each of
these processes, and whether other rule revisions or clarifications are
appropriate. While the vast majority of RF devices are subject to
either certification or an SDoC under the rules in subpart J, there is
a limited category of devices that are exempt from these authorization
processes. The Commission also seeks comment on how best to address
this equipment.
b. Certification Rules
Background. As described in brief above, under the Commission's
equipment authorization rules, certain radiofrequency devices that have
the greatest potential to cause harmful interference to radio services,
must be processed through the equipment certification procedures.
Certification generally is required for equipment that consists of
radio transmitters as well as some unintentional radiators. Examples of
equipment that requires certification include mobile phones, wireless
provider base stations, point-to-point and point-to-multipoint
microwave stations, land mobile, maritime and aviation radios, remote
control transmitters, wireless medical telemetry transmitters, Wi-Fi
access points and routers, home cable set-top boxes with Wi-Fi, and
most wireless consumer equipment (e.g., tablets, smartwatches and smart
home automation devices). Applicants are required to file with an FCC-
recognized Telecommunication Certification Body (TCB) applications
containing specified information. See 47 CFR 2.907 (Certification),
2.911-926 (Applications), 2.960-964 (Telecommunication Certification
Bodies), 2.1031-1060 (Certification). Each applicant is required to
provide the TCB with all pertinent information as required by the
Commission's rules. See, e.g., 47 CFR 2.911(d), 2.1033(a). These
requirements generally specify the information necessary to document
compliance with the testing requirements that broadly apply to RF
devices used under authority of the Commission, including devices used
under licensed radio services and devices used on an unlicensed basis.
Additional application information is required to demonstrate
compliance with specific technical requirements in particular service
rules (e.g., that antennas on certain unlicensed part 15 devices are
not detachable (47 CFR 15.203) or that certain part 90 private land
mobile transmitters meet required efficiency standards (47 CFR
90.203(j))) or other broadly applicable policy-related Commission
requirements (e.g., compliance with the Anti-Drug Abuse Act (47 CFR
1.2002; 2.911(d)(2))). By signing the application for equipment
authorization (FCC Form 731), each applicant attests that the
information provided in all statements and exhibits pertaining to that
particular equipment are true and correct. The TCB then makes a
determination as to whether to grant an equipment certification based
on evaluation of the submitted documentation and test data. The
Commission, through OET, oversees the
[[Page 46648]]
certification application process, and provides guidance to applicants,
TCBs, and test labs through its pre-approval guidance (including its
knowledge database system (KDB)) with regard to required testing and
other information associated with certification approval procedures and
processes. Applications that involve new technology or for which there
are no FCC-recognized test procedures require a TCB to obtain pre-
approval guidance from the Commission before the application may be
approved. 47 CFR 2.964. Once a TCB makes a determination, either on its
own or after consultation with the Commission, to grant an equipment
certification, information about that authorization is publicly
announced ``in a timely manner'' through posting on the Commission-
maintained Equipment Authorization System (EAS) database, and
referenced via unique FCC identifier (FCC ID). Once this original
certification is granted, the device is subject to rules that specify
requirements: for modifying equipment, marketing under or changing FCC
ID, and transferring ownership of an FCC ID.
The Commission's part 2 rules also include various provisions that
help ensure that equipment certifications comply with Commission
requirements. The Commission is authorized to dismiss or deny an
application where that application is not in accordance with Commission
requirements or the Commission is unable to make a finding that grant
of the application would serve the public interest. The rules also
provide that the TCB or Commission may set aside a certification within
30 days of grant if it determines that the equipment does not comply
with necessary requirements. The rules also require the TCB to perform
``post market surveillance'' of equipment that has been certified, with
guidance from OET, as may be appropriate. Revocation of an existing
equipment authorization is also authorized for various reasons,
including for false statements and representations in the application.
And an authorization may be withdrawn if the Commission changes its
technical standards.
Discussion. The Commission proposes certain additional revisions to
the Commission's rules and processes regarding equipment certification.
In proposing to revise the Commission equipment certification rules,
the Commission goal is to design a process that efficiently and
effectively prohibits authorization of ``covered'' equipment without
delaying the authorization of innovative new equipment that benefits
lives.
The Commission proposes revising the equipment certification
application procedures to include a new provision in section 2.911 that
would require applicants to provide a written and signed attestation
that, as of the date of the filing of the application, the equipment
for which the applicant seeks certification is not ``covered''
equipment on the Covered List. Specifically, any applicant for
certification would attest that no equipment (including component part)
is comprised of any ``covered'' equipment, as identified on the current
published list of ``covered'' equipment. This new provision also would
cross-reference section 1.50002 of the Commission's rules that pertain
to the Covered List. The Commission seeks comment on this proposal. The
Commission also invites comment on particular language that should be
included in this attestation. For instance, to what extent should the
Commission consider basing this attestation language on the
certifications that providers of advanced communications services must
complete to receive a Federal subsidy made available through a program
administered by the Commission that provides funds to be used for the
capital expenditures necessary for the provision of advanced
communications services? Are there additional compliance measures
beyond the attestation that the Commission should consider? Should the
applicant have an ongoing duty during the pendency of the application
to monitor the list of covered equipment and provide notice to the TCB
or the Commission if, subsequent to the initial filing of the
application or at the time a grant of certification, the equipment or a
component part had become newly listed as ``covered'' equipment in an
updated Covered List?
Section 2.1033 discusses information that must be included in the
application. The Commission seeks comment on whether there are
revisions that the Commission should adopt in this rule provision that
would further clarify the Commission proposals regarding prohibition of
the certification of any ``covered'' equipment. What information may be
pertinent to assist the TCBs and the Commission in ensuring that
applications do not seek certification of ``covered'' equipment? Should
the Commission require that the applicant provide certain information
that would help establish that the equipment is not ``covered''
equipment to assist TCBs and the Commission in making determinations
about whether to grant the application? For example, the Commission
currently requires applicants to file block diagrams or schematic
diagrams of their devices. 47 CFR 1.50002 (Covered List). Should the
Commission also require a parts list noting the manufacturer of each
part? If the Commission were to adopt such a requirement, should it
apply to all or only certain components? Which ones? How much
additional burden, if any, would this place on applicants as compared
to the current level of effort needed to prepare an equipment
certification application?
The Commission proposes to direct the Office of Engineering and
Technology (OET) to develop guidance for use by interested parties,
including applicants and TCBs, regarding the Commission's proposed
prohibition on certification of ``covered'' equipment. In particular,
the Commission proposes to direct PSHSB, the Wireline Competition
Bureau (WCB), the Wireless Telecommunications Bureau, the International
Bureau, and the Enforcement Bureau to assist OET in developing pre-
approval guidance that provides the necessary guidance that TCBs can
use and should follow in implementing the proposed prohibition. PSHSB,
which is tasked with publication of the Covered List, and has
significant responsibilities and expertise regarding ensuring that the
nation's public safety communications networks are secure, can lend
important assistance by collaborating with OET to provide such
guidance. The Commission seeks comment on this proposal. The Commission
also seeks comment on whether the current pre-approval guidance rule
(or the use of KDBs) should be revised or clarified consistent with the
Commission goals in this proceeding.
As the Commission has noted, following a TCB's grant of
certification, the Commission will post information on that grant ``in
a timely manner'' on the Commission-maintained public EAS database. As
the Commission has also noted, the TCB or Commission may set aside a
grant of certification within 30 days of the grant date if it is
determined that such authorization does not comply with applicable
requirements or is not in the public interest. To what extent should
interested parties, whether the public or government entities (e.g.,
other expert agencies) be invited to help inform the Commission as to
whether particular equipment inadvertently received a grant by the TCB
and is in fact (or might be) ``covered'' equipment such that the grant
should be set aside? Should the Commission consider adopting any new
procedures for gathering and considering information
[[Page 46649]]
on potentially relevant concerns that the initial grant is not in the
public interest and should be set aside? Should such procedures be
limited to certain parties (e.g., expert agencies), or certain minimal
showings required by those that seek to raise questions about the
grant?
Section 2.962(g) of the Commission's current rules expressly
provides for ``post-market surveillance'' activities with respect to
products that have been certified. The Commission proposes to direct
OET, in exercising its delegated authority, to provide TCBs with
guidance on the kinds of post-market surveillance that should be
conducted to help ensure that no equipment that subsequently has been
authorized includes ``covered'' equipment that has not been authorized.
Here, the Commission seeks comment on whether revisions or
clarifications to the post-market surveillance requirements should be
adopted. Under existing rules, each TCB is required to conduct type
testing of samples of product types that it has certified. OET has
delegated authority to develop procedures that TCBs will use for
performing such post-market surveillance, including the responsibility
for publishing a document on the post-market surveillance requirements
that will provide specific information such as the numbers and types of
samples the TCBs must test. OET may also request that a grantee of
equipment certification submit a sample directly to the TCB that
performed the original certification for its evaluation. TCBs also may
request samples directly from the grantee. If in this post-market
surveillance, the TCB determines that the product fails to comply with
the technical regulation for that product, the TCB then notifies the
grantee and the grantee must then describe actions taken to the correct
the situation. The TCB provides a report of these actions to the
Commission within 30 days.
The Commission also seeks comment on how the rules should be
implemented, or revised or clarified, to ensure that equipment users
will not make modifications to existing equipment that would involve
replacing equipment (in whole or part) with ``covered'' equipment.
Should, for instance, the Commission revise or clarify its section
2.932 rules regarding modifications or the section 2.1043 provisions
concerning ``permissive changes,'' to promote the Commission goals in
this proceeding? The Commission also notes that section 2.929 of the
equipment authorization rules includes provisions regarding changes in
the name, address, ownership, or control of the grantee of an equipment
authorization. An equipment authorization may not be assigned,
exchanged, or in any other way transferred to a second party, except as
provided in this section. Should the Commission consider any revisions
or clarifications about how these provisions apply in light of the
Commission proposals regarding prohibition on authorization of
``covered'' equipment? For example, should the Commission prohibit the
ownership or control of the certification for any equipment on the
Covered List from being assigned, exchanged, or transferred to another
party?
Under the Commission's part 2 rules concerning equipment
authorization, various provisions are included that help ensure that
applicants and TCBs comply with their responsibilities related to the
Commission's equipment authorization procedures set forth in part 2
subpart J. The Commission notes, for instance, that pursuant to section
2.911(d)(1), applicants must provide a written and signed certification
to the TCB that all statements in its request for equipment
authorization are true and correct to the best of its knowledge and
belief. TCBs, which are subject to the accreditation process, must
comply with all applicable responsibilities set forth in the Commission
part 2 rules for TCBs, and if the Commission were to adopt the
proposal, would be obligated to prohibit the certification of any
``covered'' equipment. In reviewing the applications, TCBs would be
required to dismiss any application should they become aware that an
applicant has falsely asserted that its equipment (or components of the
equipment) is not ``covered'' equipment. The Commission seeks comment
on the implementation of these rules in the context of prohibiting
certification of ``covered'' equipment, and any revisions or
clarifications that may be appropriate to ensure that from this point
forward applicants and TCBs comply with the proposed prohibition on
authorization of ``covered'' equipment. Should the Commission's
existing rules or procedures concerning ensuring compliance be enhanced
with respect to applicants that intentionally attempt to circumvent the
rules or TCBs that repeatedly fail to meet their responsibilities to
comply with the Commission proposed prohibition?
The Commission seeks comment on revisions that could better ensure
that applicants comply with the proposed requirements. Under the
Commission's current equipment certification rules, the grantee of the
certification is responsible for compliance of the equipment with the
applicable requirements as the ``responsible party,'' as set forth in
section 2.909(a). In 2017, the Commission revised the rules applicable
to equipment authorized through the SDoC process (discussed below) to
require that the parties responsible under the SDoC rules for
compliance of equipment authorized under those provisions must be
located within the United States. 47 CFR 2.909(b); 2.1077(a)(3). Many
certified devices are also manufactured outside of the United States,
and there may be no party within the country other than the importer
that the Commission could readily contact if the equipment is not
compliant with the Commission's requirements. Accordingly, the
Commission proposes adopting the same requirement previously adopted
with regard to responsible parties in the SDoC process with regard to
responsible parties associated with equipment authorized through the
equipment certification process. The Commission seeks comment.
Relatedly, the Commission has encountered difficulties in achieving
service of process for enforcement matters involving foreign-based
equipment manufacturers. Should the Commission also require that the
applicant for certification of equipment include a party and/or an
agent for service of process that must be located in the United States?
How much additional burden, if any, would these requirements place on
applicants as compared to the current level of effort needed to prepare
an equipment certification application? Should the Commission impose a
similar requirement on existing equipment certification grantees? If
so, how would the Commission do so? If not, how should the Commission
address the difficulty in obtaining service of process on certain
foreign-based equipment manufacturers?
As discussed above, PSHSB will periodically publish updates to
identify the ``covered'' equipment and services that are on the Covered
List. Under the proposals, the Commission accordingly directs that OET
expeditiously take all the appropriate steps (e.g., updating as
necessary the precise certification that applicants must make that no
newly identified ``covered'' equipment is associated with the
application, as well as updating any pre-approval guidance, KDB, or
other guidance) to reflect those updates, consistent with the rules and
procedures that the Commission ultimately adopts regarding the
certification rules in this proceeding. The Commission invites comment
on
[[Page 46650]]
appropriate means for OET to include updates of the ``covered''
equipment in an expeditious fashion in ways that best ensure that
applicants, TCBs, and other interested parties will comply with the
prohibitions concerning this updated identification of ``covered''
equipment.
Finally, the Commission seeks comment on whether there are other
rule revisions or clarifications to the equipment certification rules
and processes that the Commission should make consistent with the goals
to prohibit authorization of ``covered'' equipment. Commenters should
explain their suggestions in sufficient detail, including the reasoning
behind the suggestions and associated issues (e.g., implementation).
While the proposed prohibition would be reflected in the Commission's
rules and the engagement with TCBs in ensuring compliance, the
Commission also seeks comment on any other types of action or activity
(e.g., outreach and education) that would be helpful to ensure that all
parties potentially affected by these changes understand the changes
and will comply the prohibition associated with ``covered'' equipment.
c. Supplier's Declaration of Conformity (SDoC) Rules
Background. The Supplier's Declaration of Conformity (SDoC) process
is available for many types of equipment that have less potential to
cause RF interference. Under the Commission rules, the types of
equipment that may be processed pursuant to the SDoC procedures include
fixed microwave transmitters (e.g., point-to-point or multipoint
transmitter links as well as some links used by carriers and cable
operators) authorized under part 101, broadcast TV transmitters
authorized under parts 73 and 74, certain ship earth station
transmitters authorized under part 80 (Maritime), some emergency
locator transmitters authorized under part 87 (Aviation), and private
land mobile radio services equipment and equipment associated with
special services such as global maritime distress and safety system,
aircraft locating beacons, ocean buoys), certain unlicensed equipment
(e.g., business routers, firewalls, internet routers, internet
appliances, wired surveillance cameras, business servers, workstations,
laptops, almost all enterprise network equipment, computers, alarm
clocks) that includes digital circuitry (but no radio transmitters)
authorized under part 15, certain ISM equipment (e.g., those that use
RF energy for heating or producing work) authorized under part 18. The
SDoC process differs significantly from the certification process for
equipment authorizations, and relies on determinations about the
equipment made by the party responsible for compliance (``responsible
party'' as defined in the rules) as to whether the equipment
``conforms'' with the Commission's requirements. Using the more
streamlined SDoC process for the equipment authorization is
``optional'' insofar as the responsible party may choose to apply for
equipment certification through the equipment certification process
even if SDoC is acceptable under the Commission rules.
In the SDoC process, the responsible party makes the necessary
measurements and completes other procedures found acceptable to the
Commission to ensure that the particular equipment complies with the
appropriate technical standards for that device. The information
provided with devices subject to SDoC must include a compliance
statement that lists a U.S.-based responsible party. As set forth in
the rules, the responsible party for equipment subject to the SDoC
process could include the equipment manufacturer, the assembler (if the
equipment is assembled from individual component parts and the
resulting system is subject to authorization), or the importer (if the
equipment by itself or the assembled system is subject to
authorization), and could also include retailers and parties performing
modification under certain circumstances. 47 CFR 2.909(b)(1)-(2); 47
CFR 2.909(b)(3)-(4). The SDoC signifies that the responsible party has
determined that the equipment has been shown to comply with the
applicable technical standards. Given the streamlined nature of this
particular process, responsible parties are not typically required to
submit to the Commission an equipment sample or representative data
demonstrating compliance. Also, while the Commission rules require that
the equipment authorized under the SDoC procedure must include a unique
identifier, the equipment is not listed in a Commission equipment
authorization database, they are required to retain records on the
equipment that demonstrate the equipment's compliance with the
Commission's applicable requirements for that equipment. 47 CFR 2.1074;
47 CFR 2.938. The Commission can specifically request that the
responsible parties provide such information on particular equipment to
the Commission. 47 CFR 2.906(a); 2.945(b)(1).
Discussion. The Commission proposes that any equipment produced or
provided by any of the entities (or their respective subsidiaries or
affiliates) that produce or provide ``covered'' equipment, as specified
on the Covered List, can no longer be authorized pursuant to the
Commission's SDoC processes, and the equipment of any of these entities
would have to be processed pursuant to the Commission's certification
rules and processes as proposed above. Accordingly, responsible parties
would be prohibited altogether from using the SDoC process with respect
to any equipment produced or provided, in whole or part, by these
entities (or their respective subsidiaries or affiliates), and such
equipment would be prohibited from utilizing the SDoC process. That is
not to say that all equipment produced or provided by these entities
currently subject to the SDoC process would be prohibited; as the
Commission discussed above, under the current rules, responsible
parties always have the option of seeking equipment authorization
through the Commission's equipment certification procedures. Under the
Commission's proposed rules, responsible parties would now be required
to use the certification procedures for any equipment produced or
provided by these entities, as the option of using the SDoC processes
would no longer be available. This proposal will help ensure consistent
application of the Commission's proposed prohibition on further
equipment authorization of any ``covered'' equipment by requiring use
of only one process, which includes the Commission's more active
oversight and proactive guidance when working directly with TCBs prior
to any equipment authorization in the first place, and in guiding
appropriate post-market surveillance after any equipment authorization.
The Commission finds this approach consistent with the public interest.
The Commission seeks comment on the specific information that must
be included in the SDoC compliance statement that will ensure that
responsible parties do not use the SDoC process for ``covered''
equipment. This compliance statement would need to be sufficiently
complete to require a responsible party to exercise necessary diligence
with respect to the equipment that it is subjecting to the SDoC process
that will ensure that it is attesting, in clear terms, that the
equipment (or any component part thereof) is not produced or provided
by any entity that has produced or provided ``covered'' equipment on
the Covered List. This compliance statement should be crafted in such a
manner as to assist responsible
[[Page 46651]]
parties in identifying equipment that can no longer be processed
through the SDoC process while also ensuring that responsible parties
are held accountable, by their compliance statement, for any
misrepresentations or violation of the prohibition that the Commission
is proposing. The Commission notes that current rules require that the
responsible party be located within the United States. 47 CFR
2.1077(a)(3). As discussed above regarding equipment subject to the
certification process, should the Commission also require that the
compliance statement include the name of a U.S. agent for service of
process (if different from the responsible party)?
What steps should the Commission take to help inform responsible
parties that use the SDoC process of this proposed prohibition, as well
as the requirement that any equipment (including component parts)
produced or provided by entities (and their subsidiaries and
affiliates) that produce or provide ``covered'' equipment must be
subject to the equipment certification process? The Commission notes
that the rules allow many entities to take on the role of a responsible
party under the part 2 rules, including retailers and parties
performing modifications to equipment. The Commission seeks comment on
how best to ensure that all responsible parties that use the SDoC
processes to enable importing or marketing of equipment in the United
States will understand and comply with the Commission's proposed
revisions with respect to equipment produced or provided by entities
that produce or provide ``covered'' equipment on the Covered List. What
types of actions or activities (e.g., outreach and education) to
equipment manufacturers, assemblers, importers, retailers, parties
performing modification under certain circumstances, and others that
serve as responsible parties and use the SDoC process regarding
particular equipment would be advised and most helpful? Should the
Commission impose a similar requirement with respect to existing
authorizations obtained through the SDoC process? If so, how would the
Commission do so? If not, how should the Commission address the
difficulty of obtaining service of process on certain foreign-based
equipment manufacturers?
As noted above, the Commission can specifically request that the
responsible parties provide information on any equipment to the
Commission that has been authorized through the SDoC process. Under the
Commission's proposal, in an effort to ensure that responsible parties
are complying with the prohibition, the Commission would exercise its
equipment authorization oversight, as appropriate, in requesting that
the responsible parties provide information--e.g., an equipment sample,
representative data demonstrating compliance, and the compliance
statement itself--regarding particular equipment to the Commission. The
Commission seeks comment on what kinds of situations in which such
requests might be appropriate. What kinds of information might inform
the Commission's consideration as to whether any equipment may have
been inappropriately processed through the SDoC process, thus
triggering the Commission's request for information from the
responsible party to make sure that no violation of the Commission's
prohibition has occurred?
As the Commission has discussed, PSHSB will periodically publish
updates to identify the ``covered'' equipment on the Covered List. As
with the equipment certification proposals above, the Commission would
direct that OET expeditiously take all the appropriate steps (e.g.,
updating as necessary the information that SDoC applicants must make to
establish that no newly identified ``covered'' equipment is associated
with the application to reflect those updates), consistent with the
rules and procedures that the Commission ultimately adopts regarding
the SDoC rules in this proceeding. The Commission invites comment on
appropriate means for OET to include updates of the ``covered''
equipment in an expeditious fashion in ways that best ensure that
applicants, responsible parties, and other interested parties will
comply with the prohibitions that the Commission has proposed.
Finally, the Commission seeks comment on whether there are other
rule revisions or clarifications to the SDoC rules and processes that
the Commission should make consistent with the goals to prohibit
authorization of ``covered'' equipment. Commenters should explain their
suggestions in sufficient detail, including the reasoning behind the
suggestions and associated issues (e.g., implementation).
d. Legal Authority
Adopting rules that take security into consideration in the
equipment authorization process would serve the public interest by
addressing significant national security risks that have been
identified by this Commission in other proceedings, and by Congress and
other federal agencies, and doing so would be consistent with the
Commission's statutory ``purpose of regulating interstate and foreign
commerce in communication by wire and radio . . . for the purpose of
the national defense [and] for the purpose of promoting safety of life
and property through the use of wire and radio communications.'' 47
U.S.C. 151. The Commission tentatively concludes that doing so is not
specifically authorized by the Secure Networks Act itself, pursuant to
which the Commission adopted the Covered List. However, the Commission
has broad authority to adopt rules, not inconsistent with the
Communications Act, ``as may be necessary in the execution of its
functions.'' 47 U.S.C. 154(i). The Commission believes that, in order
to ensure that the Commission's rules under the Secure Networks Act
effectively preclude use of equipment on the Covered List by USF
recipients as contemplated by Congress, it is necessary to rely on the
Commission's established equipment authorization procedures to restrict
further equipment authorization, and the importation and marketing, of
such devices in the first instance. As discussed above, the Commission
also relies on the equipment authorization process to implement other
statutory duties, including the duty to promote efficient use of the
radio spectrum, the duties under the National Environmental Policy Act
to regulate human RF exposure, the Commission's duty to ensure that
mobile handsets are compatible with hearing aids, and the duty to deny
federal benefits to certain individuals who have been convicted
multiple times of federal offenses related to trafficking in or
possession of controlled substances. The Commission believes that these
processes can and should also serve the purpose of fulfilling other
Commission responsibilities under the Secure Networks Act, and the
Commission seeks comment on that issue.
The Commission also believes that other authorities in the
Communications Act of 1934, as amended, provide authority for the
Commission to rely on for the proposed modifications to its rules and
procedures governing equipment authorization. Since Congress added
section 302 to the Act, the Commission's part 2 equipment authorization
rules and processes have served to ensure that RF equipment marketed,
sold, imported, and used in the United States complies with the
applicable rules governing use of such equipment. See Equipment
Authorization of RF Devices, Docket No. 19356, Report and Order, 39 FR
5912, 5912, para. 2 (1970). That section
[[Page 46652]]
authorizes the Commission to, ``consistent with the public interest,
convenience, and necessity, make reasonable regulations . . . governing
the interference potential of devices which in their operation are
capable of emitting radio frequency energy by radiation, conduction, or
other means in sufficient degree to cause harmful interference to radio
communications.'' 47 U.S.C. 302(a)(1). Regulations that the Commission
adopts in implementing that authority ``shall be applicable to the
manufacture, import, sale, offer for sale, or shipment of such devices
and . . . to the use of such devices.'' 47 U.S.C. 302(a)(2). The
authorization processes are primarily for the purpose of evaluating
equipment's compliance with technical specifications intended to
minimize the interference potential of devices that emit RF energy. As
noted above, however, these rules are also designed to implement other
statutory responsibilities. The Commission seeks comment on the scope
of the authority to rely on such rules to effectuate other public
interest responsibilities, including the Commission's section 303(e)
authority to ``[r]egulate the kind of apparatus to be used with respect
to its external effects.'' 47 U.S.C. 303(e). Does Congress's inclusion
of the phrase ``to be used,'' rather than ``used,'' give the Commission
authority to prevent the marketing and sale of equipment in addition to
preventing licensees and others from using such equipment?
Alternatively, does the ``public interest'' phrase in section 302
itself provide independent authority to deny equipment authorization to
equipment deemed to pose an unacceptable security risk? Section 302(a)
directs the Commission to make reasonable regulations consistent with
the public interest governing the interference potential of devices; it
would appear to be in the public interest not to approve devices
capable of emitting RF energy in sufficient degree to cause harmful
interference to radio communications if such equipment has been deemed,
pursuant to law, to pose an unacceptable risk to the national security
of the United States or the security and safety of United States
persons. The Commission seeks comment on this tentative conclusion.
The Commission also seeks comment on a potential alternative basis
for such security rules. The Communications Assistance for Law
Enforcement Act (CALEA) includes security requirements that apply
directly to equipment intended for use by providers of
telecommunications services. 47 U.S.C. 1001-1010. Section 105 requires
telecommunications carriers to ensure that the surveillance
capabilities built into their networks ``can be activated only in
accordance with a court order or other lawful authorization and with
the affirmative intervention of an individual officer or employee of
the carrier acting in accordance with regulations prescribed by the
Commission,'' (47 U.S.C. 1004) and the Commission has concluded that
its rule prohibiting the use of equipment produced or provided by any
company posing a national security threat implements that provision.
Supply Chain First Report and Order, 34 FCC Rcd at 11436-37, paras. 35-
36. The Commission is required to prescribe rules necessary to
implement CALEA's requirements. 47 U.S.C. 229. Would rules prohibiting
authorization of equipment on the Covered List, or that otherwise poses
security risks, be justified as implementation of CALEA?
As noted above, the Commission believes it has ancillary authority
under section 4(i) of the Act to adopt these revisions to its part 2
rules as reasonably necessary to the effective enforcement of the
Secure Networks Act. The Commission also tentatively concludes that
such rules would be consistent with the Commission's specific
statutorily mandated responsibilities under the Communications Act to
make reasonable regulations consistent with the public interest
governing the interference potential of electronic devices, to protect
consumers through the oversight of common carriers under Title II of
that Act, and to prescribe the nature of services to be rendered by
radio licensees under section 303(b) of that Act. The Commission seeks
comment on this reasoning as well. The Commission also seeks comment on
any other sources of authority for the Commission proposed rules.
e. Cost-Effectiveness Analysis
The Commission's proposed revisions to the equipment authorization
rules and processes to prohibit authorization of any ``covered''
equipment on the Covered List would apply only to equipment that has
been determined by other agencies to pose ``an unacceptable risk'' to
national security. The Commission has already concluded that it has no
discretion to disregard determinations from these sources, which are
enumerated in section 1.50002(b) of its rules. Hence, the Commission
accepts the determination of these expert agencies.
Because the Commission has no discretion to ignore these
determinations, the Commission believes that a conventional cost-
benefit analysis--which would seek to determine whether the costs of
the proposed actions exceed their benefits--is not directly called for.
Instead, the Commission will consider whether the proposed actions
would be a cost-effective means to prevent this dangerous equipment
from being introduced into the nation's communications networks.
The Commission therefore seeks comment on the cost-effectiveness of
the proposed revisions to the rules and procedures associated with the
Commission's equipment authorization rules under part 2. Do the
Commission's proposed rules promote the goals of ensuring that the
national security interests are adequately protected from equipment on
the Covered List, while simultaneously continuing the mission of making
communications services available to all Americans? Are there
alternative approaches that would achieve this goal in a more cost-
effective manner?
2. Devices Exempt From the Requirement of an Equipment Authorization
Background. Under the Commission's rules, certain types of RF
devices are exempt from demonstrating compliance under one of the
equipment authorization procedures (either certification or SDoC). This
exemption applies to specified digital devices in several types of
products, including many part 15 devices (including incidental and
unintentional radiators) because they generate such low levels of RF
emission that they have virtually no potential for interfering with
authorized radio services. Revision of Part 15 of the Rules Regarding
the Operation of Radio Frequency Devices without an Individual License,
GN Docket No. 87-389, Notice of Proposed Rulemaking, 2 FCC Rcd 6135,
6140, para. 39 (1987). In other services, the Commission has determined
that because operators must be individually licensed and responsible
for their stations (e.g., Amateur Radio Service) or the type of
operation poses low risk of harmful interference, such an exemption is
warranted. See, e.g., 47 CFR 97.315. Exempt devices are required to
comply with general conditions of operation, including the requirement
that if an exempt device causes interference to other radio services
the operator of that device must cease operating the device upon
notification from the Commission and must remedy the interference. See
47 CFR 15.5.
The most diverse set of exempted devices operate under the part 15
unlicensed device rules. The categories of part 15 exempt devices
include
[[Page 46653]]
incidental radiators, unintentional radiators exempt under section
15.103, and subassemblies exempt under section 15.101. Specifically,
section 15.103 of the Commission's rules provides that certain
unintentional radiators, which are subject to the general conditions of
operation provided in part 15, are exempt from the specific technical
standards and other requirements of part 15. This includes: (1) Digital
devices used exclusively in any transportation vehicle as an electronic
control or power system equipment used by a public utility or in an
industrial plant, as industrial, commercial, or medical test equipment,
or in an appliance (e.g., microwave oven, dishwasher, clothes dryer,
air conditioner, etc.); (2) specialized medical digital devices; (3)
digital devices that have very low power consumption (i.e., not
exceeding 6 nW); (4) joystick controllers or similar devices used with
digital devices; and (5) digital devices that both use and generate a
very low frequency (i.e. less than 1.705 MHz) and which do not operate
from the AC power lines or contain provisions for operation while
connected to the AC power lines. Digital device subassemblies also are
exempt from equipment authorization under section 15.101. Examples of
subassemblies include circuit boards, integrated circuit chops, and
other components that are completely internal to a product that do not
constitute a final product. These include internal memory expansion
boards, internal disk drives, internal disk drive controller boards,
CPU boards, and power supplies. Subassemblies may be sold to the
general public or to manufacturers for incorporation into a final
product.
Discussion. The Commission recognizes that ``covered'' equipment
potentially could include equipment that currently is exempt from the
need to demonstrate compliance under the Commission's equipment
authorization processes, which, to date, has looked only at the RF
emissions capability of equipment. As noted above, most devices that
are generally exempt from the Commission's equipment authorization
requirements typically have such low RF emissions that they present
virtually no potential for causing harmful interference to the
authorized radio services. However, the Commission's concerns in
relation to security considerations that pose unacceptable risks to the
nation's communications networks are distinct from the concerns related
to interference to authorized services. As such, the Commission finds
it necessary to assess the regulation of otherwise exempt devices in
relation to security concerns.
Accordingly, the Commission seeks comment on whether the Commission
should consider possible revisions or clarifications to its rules to
address issues related to ``covered'' equipment and the potential of
such equipment, regardless of RF emissions characteristics, to pose an
unacceptable risk to U.S. networks or users. The Commission seeks
comment on whether the Commission should revise its rules to no longer
provide an equipment authorization exemption to ``covered'' equipment.
The Commission seeks comment on whether such a provision, if adopted,
should apply only to part 15 unlicensed devices or should include any
device, regardless of rule part under which it operates, in the
consideration of possible revisions or clarifications to the
Commission's rules to address issues related to ``covered'' equipment
and the potential of such equipment, regardless of RF emissions
characteristics, to nonetheless pose an unacceptable risk to U.S.
networks or users. The Commission also asks whether it should require
that any equipment (in whole or in part), regardless of claim of
exemption, that is produced or provided by any entity that has produced
or provided ``covered'' equipment on the Covered List be processed
pursuant to the Commission's certification rules and processes (similar
to the proposal requiring use of the certification process for such
equipment instead of continued use of the SDoC process).
Currently, devices that are exempt from the equipment authorization
requirement are not subject to FCC testing, filing, or record retention
requirements. Such devices ordinarily would come to the attention of
the Commission only in the event that harmful interference with other
devices becomes an issue. In order to determine whether otherwise
exempt ``covered'' equipment may present a security concern, the
Commission would need to implement some means by which to identify such
equipment that is in use in the United States. The Commission seeks
comment on possible methods that the Commission could implement to
identify otherwise exempt equipment. The Commission could, for
instance, implement a registration system for otherwise exempt
equipment produced or provided by any of the entities (or their
respective subsidiaries or affiliates) that produce or provide
``covered'' equipment, as specified on the Covered List. Such a system
could require that relevant responsible parties notify the Commission
of the marketing, importation, or operation of such otherwise exempt
equipment. Such notification would include identification of the
responsible party, manufacturer, or importer and the general operating
parameters of the equipment. Another example includes an attestation at
time of marketing or import that the equipment is not ``covered.'' What
are some potential burdens to responsible parties or other entities
that would arise in connection with such a registration or attestation
system? In what ways and to what extent would such burdens be
acceptable to responsible parties to help protect the U.S. against the
related security concerns? What type of information, and from which
entities, should the Commission collect in order to identify otherwise
exempt ``covered'' equipment? How many responsible parties would be
impacted by these potential information collections and in what way
would it impact their ability to conduct business? If the Commission
were to revise its rules to remove the exemption with respect to
``covered'' equipment, the Commission seeks comment on any other types
of action or activity (e.g., outreach and education) that also would be
helpful to ensure that all parties potentially affected by these
changes understand the changes and will comply the prohibition
associated with ``covered'' equipment.
The Commission discussed above the legal authority associated with
the Commission's proposal to prohibit authorization of ``covered''
equipment in its equipment authorization process. The Commission
tentatively concludes that the legal bases enunciated above also
provide, pursuant to section 302 and section 4(i) of the Act, for
actions that the Commission might take with respect to precluding
``covered'' equipment from being exempted from the equipment
authorization process. The Commission seeks comment on this tentative
conclusion.
If the Commission were to conclude that the rules should be revised
to prohibit certain ``covered'' equipment from being exempted from the
equipment authorization processes, this action would apply only to
equipment that has been determined by other agencies to pose ``an
unacceptable risk'' to national security. Because the Commission has no
discretion to ignore these determinations, it believes that a
conventional cost-benefit analysis--which would seek to determine
whether the costs of the proposed actions exceed their benefits--is not
necessary. Instead, as discussed above, the Commission will consider
whether the proposed actions would be an effective means to
[[Page 46654]]
prevent this dangerous equipment from being introduced into the
nation's communications networks.
3. Revoking Equipment Authorizations
The actions that the Commission proposes above would serve to
prohibit any prospective authorization of ``covered'' communications
equipment on the Covered List as posing an unacceptable risk to
national security. Those proposed actions do not, however, address
whether the Commission could or should revoke any existing equipment
authorizations of such ``covered'' communications equipment, and if so,
the processes for doing so. The Commission addresses those issues here.
Background. Section 2.939 sets forth the Commission's rules for
revoking authorizations of equipment. Section 2.939(a)(1) provides that
the Commission may revoke an equipment authorization ``[f]or false
statements or representations either in the application or in materials
or response submitted in connection therewith'' or in records that the
responsible party is required to maintain about the authorized
equipment (e.g., drawings and specifications, description of the
equipment, any test report, equipment compliance information). Section
2.939(a)(2) states that the Commission may revoke an equipment
authorization ``[i]f upon subsequent inspection or operation it is
determined that the equipment does not conform to the pertinent
technical requirements or to the representations made in the original
application.'' Section 2.939(a)(3) provides that the Commission may
revoke an equipment authorization ``[i]f it is determined that changes
have been made in the equipment other than those authorized by the
rules or otherwise expressly authorized by the Commission.'' Section
2.939(a)(4) provides that the Commission may revoke any equipment
authorization ``[b]ecause of conditions coming to the attention of the
Commission which would warrant it in refusing to grant an original
application.'' As set forth in Sec. 2.939(b) of the Commission's
rules, the procedures for revoking an equipment authorization are the
same procedures as revoking a radio station license under section 312
of the Communications Act. See 47 CFR 2.939(b); 47 U.S.C. 312. Finally,
under Sec. 2.939(c), the Commission also ``may withdraw any equipment
authorization in the event of changes in its technical standards.''
Discussion. If the Commission adopts the rules proposed above to
prohibit any further authorization of ``covered'' equipment on the
Covered List, the Commission seeks comment here on the extent to which
the Commission should revoke any existing equipment authorizations of
such ``covered'' equipment pursuant to the Commission's section 2.939
revocation rules. The Commission notes that if it revoked an existing
equipment authorization, the marketing of that equipment would be
prohibited pursuant to part 2 subpart I, per section 2.803(b), and
import and marketing would be prohibited pursuant to part 2 subpart K,
per sections 2.1201(a) and 2.1204(a).
The Commission tentatively concludes that sections 2.939(a)(1) and
(2) would apply to ``covered'' equipment, such that the Commission has
authority to revoke any existing equipment authorizations that may have
been granted under false statements or representations (including non-
disclosure) concerning whether an equipment authorization application
that was subsequently granted had in fact included ``covered''
equipment (in whole or as a component part). Shenzhen Tangreat
Technology Co., Ltd., 30 FCC Rcd 3501,3505, paras. 12-14 (EB 2015)
(Shenzhen) (``substantial and material questions exist as to whether
the authorization should be revoked because the information in the
application was false or misleading''). This would enable the
Commission to revoke any equipment authorizations that are granted
after adoption of the rules proposed in this NPRM, even if the TCBs or
the Commission had not acted to set aside the grant within the 30-day
period following the posting of the grant on the Equipment
Authorization System (EAS) database. The Commission seeks comment on
this tentative conclusion.
To assure that otherwise authorized equipment is not subsequently
replaced by any ``covered'' equipment (whether in whole or with
component part(s) of ``covered'' equipment), the Commission also
tentatively concludes that section 2.939(a)(3) would apply, and that
the Commission can revoke an existing equipment authorization if
changes have been made in the equipment other than those authorized by
the rules or otherwise expressly authorized by the Commission.
Shenzhen, 30 FCC Rcd at 3505-06, paras. 15-17 (Commission investigation
demonstrated that the equipment marketed does not match the
specifications described in the granted application). The Commission
seeks comment on these and any other scenarios that implicate the need
to revoke an existing equipment authorization to exclude ``covered''
equipment from the U.S. market.
The Commission also seeks comment on other circumstances that would
merit Commission action to revoke any existing authorization of
``covered'' equipment. Under what circumstances should the Commission
revoke an existing authorization? For instance, to what extent does
section 2.939(a)(4), which allows revocation ``[b]ecause of conditions
coming to the attention of the Commission which would warrant it in
refusing to grant an original application,'' provide guidance?
Specifically, if the Commission would not have granted an application
with equipment from an entity on the Covered List under newly adopted
rules, then could the Commission use section 2.939(a)(4) to revoke an
equipment authorization with said equipment that had been granted prior
to the adoption of the rule? Shenzhen, 30 FCC Rcd at 3506, paras. 18-20
(when Commission investigation determined device was a radio frequency
jammer, ``substantial and material questions exist as to whether the
application should have been granted''), see also J Communications Co.,
Ltd., 19 FCC Rcd 10643, 10645, para. 9 (EB 2004) (revoking GMRS radios
because the Commission could have denied the original equipment
authorization application for the devices ``had this fact been made
known to the Commission''). The Commission seeks comment on this
approach and on any other approach or particular circumstances that
would merit Commission action to revoke any existing authorization that
concerns ``covered'' equipment on the Covered List.
The Commission seeks comment on the applicability of section
2.939(c), which states that the Commission also ``may withdraw any
equipment authorization in the event of changes in its technical
standards,'' with regard to revocation of authorizations that include
``covered'' equipment. In the event the Commission were to adopt rules
barring new equipment authorizations for equipment on the Covered List,
it tentatively concludes that such a change should constitute a change
to the Commission's technical standards that could warrant withdrawal
of equipment authorizations that are contrary to these new rules. The
Commission seeks comment.
In addition, the Commission seeks comment on the specific
procedures the Commission should use if and when it seeks to revoke an
existing equipment authorization. Section 2.939(b) requires that
revocation of an equipment authorization must be made in the ``same
manner as revocation of radio
[[Page 46655]]
station licenses,'' and thus presumably would include the requirement
that the Commission serve the grantee/responsible party with an order
to show cause why revocation should not be issued and must provide that
party with an opportunity for a hearing. See 47 U.S.C. 312(c). The
Commission seeks comment on this requirement. What precisely are the
procedures that the Commission should employ if seeking to revoke
particular ``covered'' equipment? As the Commission discussed above,
Sec. 2.939(c) authorizes the Commission to ``withdraw any equipment
authorization in the event of changes in its technical standards.''
Pursuant to this provision, should the Commission provide a suitable
amortization period for equipment already in the hands of users or in
the manufacturing process? If so, what would that be? What other
factors should the Commission consider that might warrant revocation
under the new rules, such as those applicable to Title III licenses
under section 312 of the Communications Act? 47 U.S.C. 312. Should the
Commission revise or clarify the existing requirements to enable the
Commission to revoke authorizations of this ``covered'' equipment given
that it already has been determined that the equipment poses an
unacceptable risk?
In considering whether any existing equipment authorizations of
``covered'' equipment should be revoked, is there some process in which
the Commission should engage to help identify particular equipment
authorizations that should be considered for revocation? What process
should the Commission use to identify equipment authorizations for
revocation? For example, to what extent might the Commission rely on
others' reports of a violation, and to what extent might such reports
need to be supported in the record or independently verified? If the
Commission were to conclude that revocation may be appropriate
regarding particular ``covered'' equipment, this action would apply
only to equipment that has been determined by other agencies to pose
``an unacceptable risk'' to national security. The Commission
nonetheless recognizes the need to avoid taking actions that are
overbroad in terms of affecting users of the equipment or would require
removal of this equipment faster than it reasonably can be replaced. If
the Commission concludes that revocation may be appropriate regarding
particular ``covered'' equipment, the Commission seeks comment on the
appropriate and reasonable transition period for removing that
particular equipment. This could include a transition period for non-
conforming equipment to make any necessary modifications to
communications equipment or services, including removing the ``covered
equipment'' (in whole or as a component) from that equipment or
service. To what extent should the Commission apply different
transition periods to different equipment authorizations that the
Commission revokes? Are there any situations that might merit immediate
compliance with the new equipment restrictions? Pursuant to section
503(b)(5) of the Act, the Commission must issue citations against non-
regulatees for violations of FCC rules before proposing any monetary
penalties. 47 U.S.C. 503(b)(5). Such citations ``provide notice to
parties that one or more actions violate the Act and/or the FCC's
rules--and that they could face a monetary forfeiture if the conduct
continues.'' See Federal Communications Commission, Enforcement Bureau,
``Enforcement Overview'' at 10 (April 2020), https://www.fcc.gov/sites/default/files/public_enforcement_overview.pdf. Given this requirement,
what enforcement policy would be appropriate for the continued
marketing, sale, or operation of equipment by such parties during this
transition period? What, if any, educational and outreach efforts
should the Commission undertake to inform the public regarding any such
revocations and their legal effect?
Finally, the Commission seeks comment on whether the Commission
should make any revisions to Sec. 2.939. Should this section be
revised and/or clarified to specifically include ``covered'' equipment
or whether the rule should be clarified to better encompass the intent
in this rulemaking? What other specific revisions might be appropriate
for consideration?
B. Competitive Bidding Certification
Background. The Commission's competitive bidding process requires
each applicant to make various certifications as a prerequisite for
participation in an auction. Requiring certifications as a condition of
participation guards against potential harms to the public interest
before the harms could occur.
As described above, the Commission has designated Huawei and ZTE,
and their subsidiaries, parents, or affiliates, as companies that pose
a national security threat to the integrity of communications networks
and the communications supply chain. See generally Huawei Designation
Order, 35 FCC Rcd 6604, ZTE Designation Order, 35 FCC Rcd 6633. As a
result of this determination, funds from the Commission's Universal
Service Fund may no longer be used to purchase, obtain, maintain,
improve, modify, or otherwise support any equipment or services
produced or provided by these covered companies.
In reaching this determination, the Commission noted Huawei's and
ZTE's ties to the Chinese government and military apparatus, along with
Chinese laws obligating it to cooperate with requests by the Chinese
government to use or access its systems. Huawei Designation Order, 35
FCC Rcd at 6609, paras. 13-14. However, it also is well-established
that the Chinese government helps fuel Huawei's growth by deploying
powerful industrial policies to make Huawei equipment cheaper to deploy
than the alternatives. Chuin-Wei Yap, State Support Helped Fuel
Huawei's Global Rise, Wall Street Journal (Dec. 25, 2019), https://www.wsj.com/articles/state-support-helped-fuel-huaweis-global-rise-11577280736. These policies include both direct subsidies to Huawei and
state-funded export financing.
To illustrate, a recent report by the Center for American Progress
found that China's state-owned banks have provided billions of dollars
to Huawei's customers. Melanie Hart and Jordan Link, Center for
American Progress, There Is a Solution to the Huawei Challenge (Oct.
14, 2020), https://www.americanprogress.org/issues/security/reports/2020/10/14/491476/solution-huawei-challenge/. According to the report,
these loans ``can make Huawei impossible to beat--even if competitors
can match the company's state-subsidized prices--because China's state
banks offer packages that commercial banks generally cannot match.''
Id. at para. 25. These loans may be run through Huawei or provided
directly to Huawei's customers.
The Commission notes that the nature of state support for Huawei
and ZTE has shifted over time. Recently, the Commission has observed
how state-funded export financing may provide substantial funding to
mobile operators already using equipment from Huawei or ZTE prior to
national spectrum auctions in other countries. In one recent case, a
Huawei customer was able to substantially outbid a rival new entrant in
a spectrum auction--thereby denying entry to a new competitor that was
planning on using trustworthy equipment in its 5G build-out.
Distortionary financing intended to support participation in
spectrum auctions of network operators who then deploy covered
equipment and services
[[Page 46656]]
may raise concerns about risks to the national security of the United
States and the security and safety of United States persons. The
Commission considers here the benefits of protecting against such risks
prior to the start of a Commission auction.
Discussion. Given recent developments internationally, the
Commission seeks comment on whether the Commission should require an
applicant to participate in competitive bidding to certify that its
bids do not and will not rely on financial support from any entity that
the Commission has designated under section 54.9 of its rules as a
national security threat to the integrity of communications networks or
the communications supply chain. Could such support implicate the kinds
of influence over the applicant that would pose risks to national
security? Or could it distort auction outcomes in ways that would pose
risks to national security? What challenges would an applicant have in
satisfying such a certification, given potential uncertainties
regarding the ultimate origin of financial support? Can the
certification be crafted to address these challenges? Do these
uncertainties present difficulties for the Commission in enforcing the
certification? How can these difficulties be mitigated?
If the Commission adopts a requirement that an applicant certify
that its bids do not and will not rely on financial support by an
entity designated by the Commission as a national security threat,
should the certification be limited to just the entities so designated
by the Commission under section 54.9 or be more expansive? What are the
challenges with including indirect provision of financing in the
certification and how can they be mitigated to ensure it accomplishes
its purpose? Should the certification be expanded to include an
identified set of related entities, e.g., entities subject to control
by an entity designated by the Commission? What entities should such a
set include? How does the fungibility of financial resources complicate
compliance? How can enforcement challenges be alleviated?
IV. Initial Regulatory Flexibility Analysis
As required by the Regulatory Flexibility Act of 1980, as amended
(RFA), the Commission has prepared this present Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities by the policies and rules
proposed in this Notice of Proposed Rule Making (Notice). 5 U.S.C. 603.
(The RFA, 5 U.S.C. 601-612, has been amended by the Small Business
Regulatory Enforcement Fairness Act of 1996 (SBREFA), Public Law 104-
121, Title II, 110 Stat. 857 (1996)). Written public comments are
requested on this IRFA. Comments must be identified as responses to the
IRFA and must be filed by the deadlines for comments on the Notice,
including this IRFA, to the Chief Counsel for Advocacy of the Small
Business Administration (SBA). 5 U.S.C. 603(a). In addition, the Notice
and IRFA (or summaries thereof) will be published in the Federal
Register. 5 U.S.C. 603(a).
A. Need for, and Objectives of, the Proposed Rules
In this Notice of Proposed Rulemaking, we propose prohibiting the
authorization of any equipment on the list of equipment and services
(Covered List) that the Commission maintains pursuant to the Secure and
Trusted Communications Networks Act of 2019. Secure and Trusted
Communications Networks Act of 2019, Public Law 116-124, 133 Stat. 158
(2020) (codified as amended at 47 U.S.C. 1601-1609) (Secure Networks
Act). (The Commission's Public Safety and Homeland Security Bureau
maintains the list at https://www.fcc.gov/supplychain/coveredlist).
Such equipment has been found to pose an unacceptable risk to the
national security of the United States or the security and safety of
United States persons. We also seek comment on whether and under what
circumstances we should revoke any existing authorizations of such
``covered'' communications equipment. Finally, we invite comment on
whether we should require additional certifications relating to
national security from applicants who wish to participate in Commission
auctions.
B. Legal Basis
The proposed action is taken under authority found in sections
4(i), 301, 302, 303, 309(j), 312, and 316 of the Communications Act of
1934, as amended, 47 U.S.C. 154(i), 301, 302, 303, 309(j), 312 and 316;
and Sec. 1.411 of the Commission's rules, 47 CFR 1.411.
C. Small Businesses, Small Organizations, and Small Governmental
Jurisdictions
Our actions, over time, may affect small entities that are not
easily categorized at present. We therefore describe here, at the
outset, three broad groups of small entities that could be directly
affected herein. See 5 U.S.C. 601(3)-(6). First, while there are
industry specific size standards for small businesses that are used in
the regulatory flexibility analysis, according to data from the Small
Business Administration's (SBA) Office of Advocacy, in general a small
business is an independent business having fewer than 500 employees.
See SBA, Office of Advocacy, ``What's New With Small Business?''
https://cdn.advocacy.sba.gov/wp-content/uploads/2019/09/23172859/Whats-New-With-Small-Business-2019.pdf (Sept. 2019). These types of small
businesses represent 99.9% of all businesses in the United States,
which translates to 30.7 million businesses. Id.
Next, the type of small entity described as a ``small
organization'' is generally ``any not-for-profit enterprise which is
independently owned and operated and is not dominant in its field.'' 5
U.S.C. 601(4). The Internal Revenue Service (IRS) uses a revenue
benchmark of $50,000 or less to delineate its annual electronic filing
requirements for small exempt organizations. Nationwide, for tax year
2018, there were approximately 571,709 small exempt organizations in
the U.S. reporting revenues of $50,000 or less according to the
registration and tax data for exempt organizations available from the
IRS. See Exempt Organizations Business Master File Extract (E.O. BMF),
``CSV Files by Region,'' https://www.irs.gov/charities-non-profits/exempt-organizations-business-master-file-extract-eo-bmf.
Finally, the small entity described as a ``small governmental
jurisdiction'' is defined generally as ``governments of cities,
counties, towns, townships, villages, school districts, or special
districts, with a population of less than fifty thousand.'' 5 U.S.C.
601(5). U.S. Census Bureau data from the 2017 Census of Governments
(see 13 U.S.C. 161) indicate that there were 90,075 local governmental
jurisdictions consisting of general purpose governments and special
purpose governments in the United States. See U.S. Census Bureau, 2017
Census of Governments--Organization Table 2. Local Governments by Type
and State: 2017 [CG1700ORG02]. https://www.census.gov/data/tables/2017/econ/gus/2017-governments.html. (Local governmental jurisdictions are
made up of general purpose governments (county, municipal and town or
township) and special purpose governments (special districts and
independent school districts). See also Table 2. CG1700ORG02 Table
Notes_Local Governments by Type and State_2017). Of this number there
were 36,931
[[Page 46657]]
general purpose governments (county, municipal and town or township)
with populations of less than 50,000 and 12,040 special purpose
governments--independent school districts with enrollment populations
of less than 50,000. Accordingly, based on the 2017 U.S. Census of
Governments data, we estimate that at least 48,971 entities fall into
the category of ``small governmental jurisdictions.''
Satellite Telecommunications. This category comprises firms
``primarily engaged in providing telecommunications services to other
establishments in the telecommunications and broadcasting industries by
forwarding and receiving communications signals via a system of
satellites or reselling satellite telecommunications.'' See U.S. Census
Bureau, 2017 NAICS Definition, ``517410 Satellite Telecommunications,''
https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=517410&search=2017+NAICS+Search&search=2017. Satellite
telecommunications service providers include satellite and earth
station operators. The category has a small business size standard of
$35 million or less in average annual receipts, under SBA rules. See 13
CFR 121.201, NAICS Code 517410. For this category, U.S. Census Bureau
data for 2012 show that there were a total of 333 firms that operated
for the entire year. See U.S. Census Bureau, 2012 Economic Census of
the United States, Table ID: EC1251SSSZ4, Information: Subject Series--
Estab and Firm Size: Receipts Size of Firms for the U.S.: 2012, NAICS
Code 517410, https://data.census.gov/cedsci/table?text=EC1251SSSZ4&n=517410&tid=ECNSIZE2012.EC1251SSSZ4&hidePreview=false&vintage=2012. Of this total, 299 firms had annual receipts of
less than $25 million. Consequently, we estimate that the majority of
satellite telecommunications providers are small entities.
All Other Telecommunications. The ``All Other Telecommunications''
category is comprised of establishments primarily engaged in providing
specialized telecommunications services, such as satellite tracking,
communications telemetry, and radar station operation. See U.S. Census
Bureau, 2017 NAICS Definition, ``517919 All Other Telecommunications,''
https://www.census.gov/naics/?input=517919&year=2017&details=517919.
This industry also includes establishments primarily engaged in
providing satellite terminal stations and associated facilities
connected with one or more terrestrial systems and capable of
transmitting telecommunications to, and receiving telecommunications
from, satellite systems. Id. Establishments providing internet services
or voice over internet protocol (VoIP) services via client-supplied
telecommunications connections are also included in this industry. Id.
The SBA has developed a small business size standard for ``All Other
Telecommunications'', which consists of all such firms with annual
receipts of $35 million or less. See 13 CFR 121.201, NAICS Code 517919.
For this category, U.S. Census Bureau data for 2012 show that there
were 1,442 firms that operated for the entire year. See U.S. Census
Bureau, 2012 Economic Census of the United States, Table ID:
EC1251SSSZ4, Information: Subject Series--Estab and Firm Size: Receipts
Size of Firms for the U.S.: 2012, NAICS Code 517919, https://data.census.gov/cedsci/table?text=EC1251SSSZ4&n=517919&tid=ECNSIZE2012.EC1251SSSZ4&hidePreview=false. Of those firms, a total of 1,400 had annual receipts less than
$25 million and 15 firms had annual receipts of $25 million to
$49,999,999. Id. Thus, the Commission estimates that the majority of
``All Other Telecommunications'' firms potentially affected by our
action can be considered small.
Fixed Satellite Transmit/Receive Earth Stations. There are
approximately 4,303 earth station authorizations, a portion of which
are Fixed Satellite Transmit/Receive Earth Stations. We do not request
nor collect annual revenue information and are unable to estimate the
number of the earth stations that would constitute a small business
under the SBA definition. However, the majority of these stations could
be impacted by our proposed rules.
Fixed Satellite Small Transmit/Receive Earth Stations. There are
approximately 4,303 earth station authorizations, a portion of which
are Fixed Satellite Small Transmit/Receive Earth Stations. We do not
request nor collect annual revenue information and are unable to
estimate the number of fixed small satellite transmit/receive earth
stations that would constitute a small business under the SBA
definition. However, the majority of these stations could be impacted
by our proposed rules.
Mobile Satellite Earth Stations. There are 19 licensees. We do not
request nor collect annual revenue information and are unable to
estimate the number of mobile satellite earth stations that would
constitute a small business under the SBA definition. However, it is
expected that many of these stations could be impacted by our proposed
rules.
Wireless Telecommunications Carriers (except satellite). This
industry comprises establishments engaged in operating and maintaining
switching and transmission facilities to provide communications via the
airwaves. Establishments in this industry have spectrum licenses and
provide services using that spectrum, such as cellular services, paging
services, wireless internet access, and wireless video services. See
U.S. Census Bureau, 2017 NAICS Definition, ``517312 Wireless
Telecommunications Carriers (except Satellite),'' https://www.census.gov/naics/?input=517312&year=2017&details=517312. The
appropriate size standard under SBA rules is that such a business is
small if it has 1,500 or fewer employees. See 13 CFR 121.201, NAICS
Code 517312 (previously 517210). For this industry, U.S. Census Bureau
data for 2012 show that there were 967 firms that operated for the
entire year. See U.S. Census Bureau, 2012 Economic Census of the United
States, Table ID: EC1251SSSZ5, Information: Subject Series: Estab and
Firm Size: Employment Size of Firms for the U.S.: 2012, NAICS Code
517210, https://data.census.gov/cedsci/table?text=EC1251SSSZ5&n=517210&tid=ECNSIZE2012.EC1251SSSZ5&hidePreview=false&vintage=2012. Of this total, 955 firms employed fewer than 1,000
employees and 12 firms employed of 1000 employees or more. Id. Thus
under this category and the associated size standard, the Commission
estimates that the majority of Wireless Telecommunications Carriers
(except Satellite) are small entities.
Wireless Carriers and Service Providers. Neither the SBA nor the
Commission has developed a size standard specifically applicable to
Wireless Carriers and Service Providers. The closest applicable is
Wireless Telecommunications Carriers (except Satellite) (see U.S.
Census Bureau, 2017 NAICS Definition, ``517312 Wireless
Telecommunications Carriers (except Satellite),'' https://www.census.gov/naics/?input=517312&year=2017&details=517312), which the
SBA small business size standard is such a business is small if it
1,500 persons or less. Id. For this industry, U.S. Census Bureau data
for 2012 show that there were 967 firms that operated for the entire
year. See U.S. Census Bureau, 2012 Economic Census of the United
States, Table ID: EC1251SSSZ5, Information: Subject Series: Estab and
Firm Size: Employment Size of Firms for the U.S.: 2012, NAICS Code
517210,
[[Page 46658]]
https://data.census.gov/cedsci/table?text=EC1251SSSZ5&n=517210&tid=ECNSIZE2012.EC1251SSSZ5&hidePreview=false&vintage=2012. Of this total, 955 firms had employment of 999 or
fewer employees and 12 had employment of 1000 employees or more. Thus
under this category and the associated size standard, the Commission
estimates that the majority of Wireless Carriers and Service Providers
are small entities.
According to internally developed Commission data for all classes
of Wireless Service Providers, there are 970 carriers that reported
they were engaged in the provision of wireless services. See Federal
Communications Commission, Wireline Competition Bureau, Industry
Analysis and Technology Division, Trends in Telephone Service at Table
5.3 (Sept. 2010) (Trends in Telephone Service), https://apps.fcc.gov/edocs_public/attachmatch/DOC-301823A1.pdf. Of this total, an estimated
815 have 1,500 or fewer employees, and 155 have more than 1,500
employees. See id. Thus, using available data, we estimate that the
majority of Wireless Carriers and Service Providers can be considered
small.
Wired Telecommunications Carriers. The U.S. Census Bureau defines
this industry as ``establishments primarily engaged in operating and/or
providing access to transmission facilities and infrastructure that
they own and/or lease for the transmission of voice, data, text, sound,
and video using wired communications networks. Transmission facilities
may be based on a single technology or a combination of technologies.
Establishments in this industry use the wired telecommunications
network facilities that they operate to provide a variety of services,
such as wired telephony services, including VoIP services, wired
(cable) audio and video programming distribution, and wired broadband
internet services. By exception, establishments providing satellite
television distribution services using facilities and infrastructure
that they operate are included in this industry.'' See U.S. Census
Bureau, 2017 NAICS Definition, ``517311 Wired Telecommunications
Carriers,'' https://www.census.gov/naics/?input=517311&year=2017&details=517311. The SBA has developed a small
business size standard for Wired Telecommunications Carriers, which
consists of all such companies having 1,500 or fewer employees. See 13
CFR 121.201, NAICS Code 517311 (previously 517110). U.S. Census Bureau
data for 2012 show that there were 3,117 firms that operated that year.
See U.S. Census Bureau, 2012 Economic Census of the United States,
Table ID: EC1251SSSZ5, Information: Subject Series--Estab & Firm Size:
Employment Size of Firms for the U.S.: 2012, NAICS Code 517110, https://data.census.gov/cedsci/table?text=EC1251SSSZ5&n=517110&tid=ECNSIZE2012.EC1251SSSZ5&hidePreview=false. Of this total, 3,083 operated with fewer than 1,000 employees.
Id. Thus, under this size standard, the majority of firms in this
industry can be considered small.
Licenses Assigned by Auctions. Initially, we note that, as a
general matter, the number of winning bidders that qualify as small
businesses at the close of an auction does not necessarily represent
the number of small businesses currently in service. Also, the
Commission does not generally track subsequent business size unless, in
the context of assignments or transfers, unjust enrichment issues are
implicated.
Private Land Mobile Radio (``PLMR''). PLMR systems serve an
essential role in a range of industrial, business, land transportation,
and public safety activities. Companies of all sizes operating in all
U.S. business categories use these radios. Because of the vast array of
PLMR users, the Commission has not developed a small business size
standard specifically applicable to PLMR users. The closest applicable
SBA category is Wireless Telecommunications Carriers (except Satellite)
which encompasses business entities engaged in radiotelephone
communications. See U.S. Census Bureau, 2017 NAICS Definition, ``517312
Wireless Telecommunications Carriers (except Satellite),'' https://www.census.gov/naics/?input=517312&year=2017&details=517312. The
appropriate size standard for this category under SBA rules is that
such a business is small if it has 1,500 or fewer employees. See 13 CFR
121.201, NAICS Code 517312 (formerly 517210). For this industry, U.S.
Census Bureau data for 2012 show that there were 967 firms that
operated for the entire year. See U.S. Census Bureau, 2012 Economic
Census of the United States, Table ID: EC1251SSSZ5, Information:
Subject Series: Estab and Firm Size: Employment Size of Firms for the
U.S.: 2012, NAICS Code 517210, https://data.census.gov/cedsci/table?text=EC1251SSSZ5&n=517210&tid=ECNSIZE2012.EC1251SSSZ5&hidePreview=false&vintage=2012. Of this total, 955 firms had employment of 999 or
fewer employees and 12 had employment of 1000 employees or more. Id.
Thus under this category and the associated size standard, the
Commission estimates that the majority of PLMR Licensees are small
entities.
According to the Commission's records, a total of approximately
400,622 licenses comprise PLMR users. This figure was derived from
Commission licensing records as of September 19, 2016. (Licensing
numbers change on a daily basis. This does not indicate the number of
licensees, as licensees may hold multiple licenses. There is no
information currently available about the number of PLMR licensees that
have fewer than 1,500 employees). There are a total of approximately
3,577 PLMR licenses in the 4.9 GHz band; 19,359 PLMR licenses in the
800 MHz band; and 3,374 licenses in the frequencies range 173.225 MHz
to 173.375 MHz. The Commission does not require PLMR licensees to
disclose information about number of employees, and does not have
information that could be used to determine how many PLMR licensees
constitute small entities under this definition. The Commission however
believes that a substantial number of PLMR licensees may be small
entities despite the lack of specific information.
Radio and Television Broadcasting and Wireless Communications
Equipment Manufacturing. This industry comprises establishments
primarily engaged in manufacturing radio and television broadcast and
wireless communications equipment. See U.S. Census Bureau, 2017 NAICS
Definition, ``334220 Radio and Television Broadcasting and Wireless
Communications Equipment Manufacturing,'' https://www.census.gov/naics/?input=334220&year=2017&details=334220. Examples of products made by
these establishments are: Transmitting and receiving antennas, cable
television equipment, GPS equipment, pagers, cellular phones, mobile
communications equipment, and radio and television studio and
broadcasting equipment. Id. The SBA has established a small business
size standard for this industry of 1,250 employees or less. See 13 CFR
121.201, NAICS Code 334220. U.S. Census Bureau data for 2012 show that
841 establishments operated in this industry in that year. See U.S.
Census Bureau, 2012 Economic Census of the United States, Table ID:
EC1231SG2, Manufacturing: Summary Series: General Summary: Industry
Statistics for Subsectors and Industries by Employment Size: 2012,
NAICS Code 334220, https://data.census.gov/cedsci/table?text=EC1231SG2&n=334220&tid=ECNSIZE2012.EC1231SG2&
[[Page 46659]]
hidePreview=false. Of that number, 828 establishments operated with
fewer than 1,000 employees, 7 establishments operated with between
1,000 and 2,499 employees and 6 establishments operated with 2,500 or
more employees. Id. Based on this data, we conclude that a majority of
manufacturers in this industry are small.
Auxiliary Special Broadcast and Other Program Distribution
Services. This service involves a variety of transmitters, generally
used to relay broadcast programming to the public (through translator
and booster stations) or within the program distribution chain (from a
remote news gathering unit back to the station). Neither the SBA nor
the Commission has developed a size standard applicable to broadcast
auxiliary licensees. The closest applicable SBA category and small
business size standard falls under two SBA categories--Radio Stations
and Television Broadcasting. The SBA size standard for Radio Stations
is firms having $41.5 million or less in annual receipts. See 13 CFR
121.201, NAICS Code 515112. U.S. Census Bureau data for 2012 show that
2,849 radio station firms operated during that year. See U.S. Census
Bureau, 2012 Economic Census of the United States, Table ID:
EC1251SSSZ4, Information: Subject Series--Estab and Firm Size: Receipts
Size of Firms for the U.S.: 2012, NAICS Code 515112, https://data.census.gov/cedsci/table?text=EC1251SSSZ4&n=515112&tid=ECNSIZE2012.EC1251SSSZ4&hidePreview=false. Of that number, 2,806 firms operated with annual receipts of
less than $25 million per year and 17 with annual receipts between $25
million and $49,999,999 million. Id. For Television Broadcasting the
SBA small business size standard is such businesses having $41.5
million or less in annual receipts. See 13 CFR 121.201, NAICS Code
515120. U.S. Census Bureau data show that 751 firms in this category
operated in that year. See U.S. Census Bureau, 2012 Economic Census of
the United States, Table ID: EC1251SSSZ4, Information: Subject Series--
Estab and Firm Size: Receipts Size of Firms for the U.S.: 2012, NAICS
Code 515120, https://data.census.gov/cedsci/table?text=EC1251SSSZ4&n=515120&tid=ECNSIZE2012.EC1251SSSZ4&hidePreview=false. Of that number, 656 had annual receipts of $25,000,000 or less,
25 had annual receipts between $25,000,000 and $49,999,999 and 70 had
annual receipts of $50,000,000 or more. Id. Accordingly, based on the
U.S. Census Bureau data for Radio Stations and Television Broadcasting,
the Commission estimates that the majority of Auxiliary, Special
Broadcast and Other Program Distribution Services firms are small.
Radio Frequency Equipment Manufacturers (RF Manufacturers). Neither
the Commission nor the SBA has developed a small business size standard
applicable to Radio Frequency Equipment Manufacturers (RF
Manufacturers). There are several analogous SBA small entity categories
applicable to RF Manufacturers--Fixed Microwave Services, Other
Communications Equipment Manufacturing, and Radio and Television
Broadcasting and Wireless Communications Equipment Manufacturing. A
description of these small entity categories and the small business
size standards under the SBA rules are detailed below.
Other Communications Equipment Manufacturing. This industry
comprises establishments primarily engaged in manufacturing
communications equipment (except telephone apparatus, and radio and
television broadcast, and wireless communications equipment). See U.S.
Census Bureau, 2017 NAICS Definitions, ``334290 Other Communications
Equipment Manufacturing,'' https://www.census.gov/cgi-bin/sssd/naics/naicsrch?input=334290&search=2017+NAICS+Search&search=2017. Examples of
such manufacturing include fire detection and alarm systems
manufacturing, Intercom systems and equipment manufacturing, and
signals (e.g., highway, pedestrian, railway, traffic) manufacturing.
Id. The SBA has established a size standard for this industry as all
such firms having 750 or fewer employees. See 13 CFR 121.201, NAICS
Code 334290. U.S. Census Bureau data for 2012 show that 383
establishments operated in that year. See U.S. Census Bureau, 2012
Economic Census of the United States, Table ID: EC1231SG2,
Manufacturing: Summary Series: General Summary: Industry Statistics for
Subsectors and Industries by Employment Size: 2012, NAICS Code 334290,
https://data.census.gov/cedsci/table?text=EC1231SG2&n=334290&tid=ECNSIZE2012.EC1231SG2&hidePreview=false&vintage=2012. Of that number, 379 operated with fewer than 500
employees and 4 had 500 to 999 employees. Id. Based on this data, we
conclude that the majority of Other Communications Equipment
Manufacturers are small.
Fixed Microwave Services. Microwave services include common
carrier, private-operational fixed, and broadcast auxiliary radio
services. They also include the Upper Microwave Flexible Use Service,
Millimeter Wave Service, Local Multipoint Distribution Service (LMDS),
the Digital Electronic Message Service (DEMS), and the 24 GHz Service,
where licensees can choose between common carrier and non-common
carrier status. There are approximately 66,680 common carrier fixed
licensees, 69,360 private and public safety operational-fixed
licensees, 20,150 broadcast auxiliary radio licensees, 411 LMDS
licenses, 33 24 GHz DEMS licenses, 777 39 GHz licenses, and five 24 GHz
licenses, and 467 Millimeter Wave licenses in the microwave services.
(These statistics are based on a review of the Universal Licensing
System on September 22, 2015). The Commission has not yet defined a
small business with respect to microwave services. The closest
applicable SBA category is Wireless Telecommunications Carriers (except
Satellite) and the appropriate size standard for this category under
SBA rules is that such a business is small if it has 1,500 or fewer
employees. See 13 CFR 121.201, NAICS Code 517312 (previously 517210).
For this industry, U.S. Census Bureau data for 2012 show that there
were 967 firms that operated for the entire year. See U.S. Census
Bureau, 2012 Economic Census of the United States, Table ID:
EC1251SSSZ5, Information: Subject Series, Estab and Firm Size:
Employment Size of Firms for the U.S.: 2012, NAICS Code 517210, https://data.census.gov/cedsci/table?text=EC1251SSSZ5&n=517210&tid=ECNSIZE2012.EC1251SSSZ5&hidePreview=false&vintage=2012. Of this total, 955 firms had employment of 999 or
fewer employees and 12 had employment of 1,000 employees or more. Id.
Thus under this SBA category and the associated size standard, the
Commission estimates that a majority of fixed microwave service
licensees can be considered small.
The Commission does not have data specifying the number of these
licensees that have more than 1,500 employees, and thus is unable at
this time to estimate with greater precision the number of fixed
microwave service licensees that would qualify as small business
concerns under the SBA's small business size standard. Consequently,
the Commission estimates that there are up to 36,708 common carrier
fixed licensees and up to 59,291 private operational-fixed licensees
and broadcast auxiliary radio licensees in the microwave services that
may be small and may be affected by the rules and policies discussed
herein. We note, however, that the microwave fixed
[[Page 46660]]
licensee category includes some large entities.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
The proposals being made in this Notice may require additional
analysis and mitigation activities to the part 2 rules that include
various provisions to help ensure the integrity of the equipment
authorization process. The Commission is authorized to dismiss or deny
an application where that application is not in accordance with
Commission requirements or the Commission is unable to make the finding
that grant of the application would serve the public interest. The
rules also require the TCB to perform ``post market surveillance'' of
equipment that has been certified, with guidance from OET, as may be
appropriate.
The Supplier's Declaration of Conformity (SDoC) process is
available with respect to certain types of RF devices that have less
potential to cause interference. The SDoC procedure requires the party
responsible for compliance (``responsible party'') to make the
necessary measurements and complete other procedures found acceptable
to the Commission to ensure that the particular equipment complies with
the appropriate technical standards for that device. At this time, the
Commission's current equipment authorization rules do not include
specific provisions addressing the ``covered'' equipment on the Covered
List. This Covered List identifies communications equipment and
services that pose an unacceptable risk to the national security of the
United States or the security and safety of United States persons. The
Commission is required to include communications equipment and services
on the list based exclusively on determinations made by Congress and by
other U.S. government agencies. Currently, the list includes equipment
and services produced or provided by five entities.
In this Notice we examine our rules relating to equipment
authorization and participation in Commission auctions to help advance
the Commission's goal of protecting national security and public
safety. This builds on other actions the Commission recently has taken
to protect and secure our nation's communications systems.
E. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
The RFA requires an agency to describe any significant,
specifically small business, alternatives that it has considered in
reaching its proposed approach, which may include the following four
alternatives (among others): ``(1) the establishment of differing
compliance or reporting requirements or timetables that take into
account the resources available to small entities; (2) the
clarification, consolidation, or simplification of compliance or
reporting requirements under the rule for such small entities; (3) the
use of performance rather than design standards; and (4) an exemption
from coverage of the rule, or any part thereof, for such small
entities.'' 5 U.S.C. 603(c). In this proceeding, our proposals are
consistent with (2), in that our goal is to seek comment on various
steps that the Commission could take in its equipment authorization
program, as well as its competitive bidding program, to reduce threats
posed to our nation's communications system by ``covered'' equipment
and services on the Covered List. We also seek comment on whether the
Commission should revoke equipment authorizations of ``covered''
equipment, and if so under what conditions and procedures.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
None.
List of Subjects
Communications, Communication equipment, Reporting and
recordkeeping requirements, Telecommunications, and Wiretapping and
electronic surveillance.
Federal Communications Commission.
Marlene Dortch,
Secretary.
Proposed Rules
For the reasons discussed in the preamble, the Federal
Communications Commission proposes to amend 47 CFR part 2 as follows:
PART 2--FREQUENCY ALLOCATIONS AND RADIO TREATY MATTERS; GENERAL
RULES AND REGULATIONS
0
1. The authority citation for part 2 continues to read as follows:
Authority: 47 U.S.C. 154, 302a, 303, and 336, unless otherwise
noted.
0
2. Add Sec. 2.903 to subpart J to read as follows:
Sec. 2.903 Prohibition on equipment authorization of equipment on the
Covered List.
Any equipment on the Covered List, as defined in Sec. 1.50002 of
this chapter, is prohibited from obtaining an equipment authorization
under this subpart. This includes:
(a) Equipment subject to certification procedures:
Telecommunication Certification Bodies and the Federal Communications
Commission are prohibited from issuing a certification under this
subpart for any equipment on the Covered List; and
(b) Equipment subject to Supplier's Declaration of Conformity
procedures.
0
3. Amend Sec. 2.906 by adding paragraph (d) to read as follows:
Sec. 2.906 Supplier's Declaration of Conformity.
* * * * *
(d) All equipment produced or provided by any of the entities, or
their respective subsidiaries or affiliates, that produce or provide
``covered'' equipment on the Covered List established pursuant to Sec.
1.50002 of this chapter, is prohibited from obtaining equipment
authorization through the Supplier's Declaration of Conformity process.
0
4. Amend Sec. 2.907 by adding paragraph (c) to read as follows:
Sec. 2.907 Certification.
* * * * *
(c) All equipment produced or provided by any of the entities, or
their respective subsidiaries or affiliates, that produce or provide
``covered'' equipment, as specified on the Covered List established
pursuant to Sec. 1.50002 of this chapter, must obtain equipment
authorization through the certification process.
0
5. Amend Sec. 2.909 by revising paragraph (a) to read as follows:
Sec. 2.909 Responsible Party.
(a) For equipment that requires the issuance of a grant of
certification, the party to whom that grant of certification is issued
is responsible for the compliance of the equipment with the applicable
standards. If the radio frequency equipment is modified by any party
other than the grantee and that party is not working under the
authorization of the grantee pursuant to Sec. 2.929(b), the party
performing the modification is responsible for compliance of the
product with the applicable administrative and technical provisions in
this chapter. In either case, the responsible party must be located in
the United States (see Sec. 2.1033).
* * * * *
[[Page 46661]]
0
6. Amend Sec. 2.911 by adding paragraph (d)(5) to read as follows:
Sec. 2.911 Application requirements.
* * * * *
(d) * * *
(5) The applicant shall provide a written and signed certification
that, as of the date of the filing of the application, the equipment
for which the applicant seeks equipment authorization through
certification is not ``covered'' equipment on the Covered List
established pursuant to Sec. 1.50002 of this chapter.
* * * * *
0
7. Amend Sec. 2.1033 by revising paragraph (b)(1) to read as follows:
Sec. 2.1033 Application for certification.
* * * * *
(b) * * *
(1) The identification, by name, mailing address and telephone
number or internet contact information, of the manufacturer of the
device, the applicant for certification, and the responsible party as
defined in Sec. 2.909. The responsible party must be located within
the United States.
* * * * *
[FR Doc. 2021-16085 Filed 8-18-21; 8:45 am]
BILLING CODE 6712-01-P