President Trump signed the Secure and Trusted Communications Network Act yesterday– a move that will make up to $1 billion available to network operators to replace equipment that, according to the government, poses a threat to national security.

The act stops short of naming the companies whose equipment should be replaced. Instead, the act directs the FCC to publish a list of “covered” equipment and services on its website within one year. However, the FCC has said previously that equipment from Chinese suppliers Huawei and ZTE poses a threat. The concern is that the manufacturers could gain access to U.S. communications networks through the equipment and could be directed to provide such access to the Chinese government.

The primary U.S. users of Huawei and ZTE equipment are smaller providers, operating largely in rural areas. Some of these companies receive funding through the Universal Service Fund program, but since late last year, the FCC has not permitted those companies to use those funds to purchase equipment from Huawei and ZTE.

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At the time it made the prohibition on USF funds, the FCC also said it would consider requiring companies receiving USF and that had deployed equipment from Huawei or ZTE to replace that equipment. Subsequently, the commission required all USF recipients to report whether they use Huawei or ZTE equipment and to estimate the cost to replace it.

Secure and Trusted Communications Network Act
The Secure and Trusted Communications Network Act prohibits companies receiving federal subsidies through any program administered by the FCC from using those subsidies to purchase, rent, lease or otherwise obtain covered communications equipment. Funding recipients also may not use the funding to maintain any covered communications equipment or service previously purchased, rented, leased or otherwise obtained.

To be eligible to receive reimbursement for the cost of replacing Huawei or ZTE equipment, a company must have two million customers or fewer, must make a range of certifications, and must provide an estimate of equipment replacement costs.

The act also requires the FCC to alert the Committee on Energy and Commerce and the Committee on Appropriations of the House of Representatives and the Senate Committees on Appropriations and on Commerce, Science and Transportation if the $1 billion budget is not sufficient to fund all approved applications for reimbursement under the program.

FCC Commissioner Geoffrey Starks said previously that the cost to replace Huawei and ZTE equipment could be as high as $2 billion.

The full text of the Secure and Trusted Communications Network Act can be found at this link.

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