On August 19, 2021, the Federal Communications Commission (“FCC”) published a notice of proposed rulemaking (the “NPRM”) discussing potential changes it is considering making to its equipment authorization and competitive bidding programs to restrict the use of telecommunications and video surveillance equipment and services produced or provided by five Chinese companies. Those changes could further narrow the availability and use of such equipment in the United States, and restrict companies that accept financing from two of the companies, Huawei Technologies Company (“Huawei”) and ZTE Corporation (“ZTE”), from participating in the FCC’s competitive bidding program.

The Covered List

In March 2021, the FCC published a list of equipment and services (the “Covered List”) identifying certain telecommunications equipment and services produced or provided by Huawei and ZTE 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.

Proposed Changes to the Equipment Authorization Program

In order to obtain authorization to market or operate radiofrequency devices (“RF devices”) in the United States, companies generally must submit either a certification of equipment (“the certification process”) or a Supplier’s Declaration of Conformity (“the SDoC process”) to the FCC as part of its equipment authorization program. Under the FCC’s current equipment authorization rules, some RF devices have been exempted from the need for an equipment authorization, and the rules do not include specific provisions addressing equipment on the Covered List. The NPRM proposes changes to the equipment authorization rules that would:

– Prohibit authorization of any equipment on the Covered List under either the certification process or the SDoC process;

– Revise the rules on equipment currently exempted from the equipment authorization requirements to no longer permit this exemption for equipment on the “Covered List”; and/or

– Revoke existing equipment authorizations of equipment on the “Covered List.”

Proposed Changes to the Competitive Bidding Program

The FCC uses a competitive bidding process to determine which among multiple applicants with mutually exclusive applications for a license may file a full application for the license. Applicants participating in competitive bidding are required to provide certifications to the FCC to demonstrate that their application is acceptable.

The NPRM proposes changes to the competitive bidding program that would require applicants to certify that their bids do not and will not rely on financial support from any entity the FCC has designated as a national security threat to the integrity of communications networks or the communications supply chain.

The FCC has designated Huawei and ZTE and their respective subsidiaries and affiliates as a national security threat, and notes in the NPRM that it is concerned about financing offered by state-owned banks in support of Huawei and ZTE. As such, the proposal would require participants in the competitive bidding program to certify that they are not relying on financial support offered by Huawei or ZTE.

Comments on the NPRM were due on September 20, 2021, and reply comments are due on October 18, 2021. Implementation of any regulatory changes related to those described in the NPRM would likely follow afterward.