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FCC Advances Plan To Stop Most Chinese Equipment Sales

This article comes from Law360, a LexisNexis Company.

The Federal Communications Commission voted Thursday on a plan that could further restrict the flow of Chinese-made technologies into the U.S., kicking off a rulemaking to examine how the agency can hone its device approval rules “to help keep insecure devices off the market.”

Acting FCC Chairwoman Jessica Rosenworcel said the proposed rule would prevent equipment from being authorized for sale in the U.S. if the manufacturers are barred from participating in other FCC programs for national security reasons, as many Chinese providers already are.

So far, the FCC has blocked Chinese companies Huawei, ZTE, Hytera, Hikvision and Dahua from receiving federal broadband expansion subsidies, and the agency will soon help internet service providers fund the replacement of preexisting network equipment from those vendors.

“It does not make sense to have these bans in place but leave open other opportunities for this equipment to reach our markets and be present in our networks. Yet that is exactly the state of our rules today,” Rosenworcel said. “Here, we propose to close that door.”

Products that emit radio frequency energy — ranging from large-scale network equipment to everyday electronics such as laptops, TVs, Wi-Fi routers, mobile phones, fitness trackers and home appliances — must receive routine FCC approval before they go to market. Under the proposal, the FCC would stop approving devices for sale to consumers if they come from untrusted vendors.

FCC Democrat Geoffrey Starks said his colleagues agreed to update the final rulemaking with language that requires foreign equipment sellers to provide a U.S. point of contact for enforcement purposes. The agency also agreed to add questions about how the FCC can “educate the public about any changes in our equipment authorization rules resulting from this proceeding” and how retailers might voluntarily stop selling risky equipment on their websites, he said.

A bipartisan group of lawmakers — Sen. Edward J. Markey, D-Mass.; Sen. Marco Rubio, R-Fla.; Rep. Anna Eshoo, D-Calif.; and Rep. Steve Scalise, R-La. — praised the FCC vote in a statement Thursday, adding that it reflects the goals of their recently introduced Secure Equipment Act.

“We introduced bipartisan, bicameral legislation to make this action permanent, blocking technology manufactured by companies that pose a threat to our national security,” they said in a joint statement. “We … look forward to working with the commission to protect our nation’s networks from foreign adversaries.”

However, in a statement provided to Law360, Huawei Technologies USA Vice President Glenn Schloss called Thursday’s vote “misguided and unnecessarily punitive.”

“Blocking the purchase of equipment, based on a ‘predictive judgment,’ related to country of origin or brand is without merit, discriminatory and will do nothing to protect the integrity of U.S. communications networks or supply chains,” he said.

Consumer Technology Association CEO Gary Shapiro also said his group is concerned about the FCC overstepping its role in regulating device security.

“Our nation’s technology industry works closely with policymakers to ensure these devices are secure against emerging threats,” Shapiro said. “We urge the FCC to take more time to evaluate its role in security of devices and ensure a process that best promotes innovation and protects consumers.”

Republican FCC Commissioner Brendan Carr told reporters during a call Thursday that he personally supports the rulemaking despite expecting it to be unpopular among some carriers and trade groups. He emphasized that detractors will be able to make their voices heard during the forthcoming comment period.

“This will be a proceeding that will allow them the full airing of those perspectives,” he said.

Rosenworcel similarly told reporters that she doesn’t want to rush into a decision before hearing what the many affected parties have to say.

“I want to make sure we spend some time with the record that develops before we decide precisely what to do next,” she said.

Also on Thursday, the FCC eased its rules surrounding the marketing and importation of wireless devices, allowing “crowdfunding and other popular marketing campaigns” to go forward while the FCC reviews the products for compliance.

Further, the agency announced the creation of an online portal so commercial entities can report robocall-related problems they have experienced or observed. Rosenworcel said the portal is intended to be a resource for companies such as hospitals with phone lines that have been clogged by robocalls or ISPs that might have information about illegal robocalling activities.

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