By Jeff Schervone
The FCC’s 5G small cell deployment order is set to go into effect on January 14, 2019. In September 2018, the FCC issued its Declaratory Ruling and Third Report & Order, Accelerating Wireless Broadband Deployment by Removing Barriers to Infrastructure Investment (the “September Order”). Facing a wave of right-of-way (“ROW”) applications from wireless companies to deploy small cell wireless facilities onto utility poles, municipalities from across the country petitioned for review of FCC September Order in federal court. In the consolidated multidistrict litigation pending before the Tenth Circuit, Case 18-9571, the municipalities filed a motion to stay the September Order prior to date the Order goes into effect citing irreparable harm and likelihood of success on the merits. That is, that the FCC September Order unconstitutionally preempts local authority of ROWs, that it arbitrarily caps ROW application and rental fees, and that the shot clocks and remedies are unreasonable given the anticipated waves of new applications once the Order goes into effect. The FCC argues against a stay. The Tenth Circuit Court of Appeals denied the Plaintiff Municipalities’ Motion to Stay. But the Tenth Circuit granted the Plaintiff Municipalities Motion to transfer the case — review of the FCC’s September Order — to the Ninth Circuit Court of Appeals.
At the same time, the FCC is still considering a recent Notice of Proposed Rulemaking for Protecting Against National Security Threats to the Communications Supply Chain Through FCC Programs (the “Supply Chain NPRM”). Under the Supply Chain NPRM, “no USF [Universal Service Fees] support may be used to purchase or obtain any equipment or services produced or provided by a company posing a national security threat to the integrity of communications networks or the communications supply chain.” Regarding 5G deployment, Nokia cautioned “tariffs imposed on trade with China, which specifically target a wide range of components that are critical to 5G. Unless exemptions are provided for these products, these latest duties threaten to raise the cost of 5G infrastructure in the U.S. by hundreds of millions of dollars.” Notably in August, 2018, Huawei opposed the NPRM in a fifty page comment, and accused Nokia, Ericsson and others with global supply chains of having “ties to the Chinese government” and “joint ventures with Chinese government-owned entities.” Nokia responded by defending its control and diligence with regard to Nokia’s operations throughout China.
ALARM BELLS AT ALL LEVELS OF GOVERNMENT
In October, 2018, the White House held a summit on 5G deployment which is a Trump Administration and FCC priority, as well as for Congress, to address the issue of keeping tabs on companies with key tech but links to the Chinese government, and doing so without preventing U.S. access to key components of the next-generation of wireless broadband delivery system deemed critical infrastructure. At the summit, former House Energy & Commerce Committee Chair Rep. Greg Walden said: “There have been alarm bells at all levels of government about potential risks to the supply chain.”
Also in October, 2018, the Department of Homeland Security (DHS) launched the Information and Communications Technology (ICT) Supply Chain Risk Management Task Force. “The task force is a public-private partnership formed to examine and develop consensus recommendations to identify and manage risk to the global ICT supply chain.” In November, the Task Force announced its industry members: Accenture, AT&T, CenturyLink, Charter, Cisco, Comcast, CTIA, CyberRx, Cybersecurity Coalition, Cyxtera, FireEye, Intel, Information Technology Industry Council, Information Technology Information Sharing and Analysis Center, Microsoft, National Association of Broadcasters, NCTA, NTCA, Palo Alto Networks, Samsung, Sprint, Threat Sketch, TIA, T-Mobile, USTelecom and Verizon.
The issue has new urgency as U.S. wireless carriers look for partners as they prepare to adopt next generation 5G wireless networks. Reportedly, the Trump Administration is preparing an executive order, which has been under consideration for more than eight months, and would direct the Commerce Department to block U.S. companies from buying equipment from foreign telecommunications makers that pose significant national security risks. More recently, the arrest of Huawei’s CFO in Canada furthered “worries by U.S. Intelligence that Huawei’s telecommunications equipment could contain “backdoors” for Chinese espionage.”
Despite alarm bells about the supply chain, Wireless companies, including Verizon, AT&T and others have for months now filed applications to attach 5G small wireless facilities to existing utility poles or clusters of poles. Since 5G small cell attachments are spaced relatively close together, the number of small cells planned for deployment across the country may reach into the millions. Review boards from local municipalities and cities, including Palo Alto, CA and Seattle, WA are pushing back against some of the applications, citing safety and environmental concerns, aesthetics and compliance with other local ordinances. Once the September Order goes into effect, the process in favor of swift approval of small cell attachments is streamlined (or short-circuited, depending on perspective). It is expected that municipalities will then face not a wave, but a tsunami of applications.
Review of some of these applications and publicly available information shows vendors of key components, including switches, remote radio units, antennas and other gear are international conglomerates with significant manufacturing affiliations, joint ventures and operations in China. Notably, the FCC September Order does not address supply chain security, but the Supply Chain NPRM and industry comments suggest that 5G deployment is at least partially dependent on potentially compromised global supply chains and that the government is worried about it.
On the one hand, the FCC, DHS and others in partnership with the wireless industry are still scratching their heads about potential threats to the supply chain in critical infrastructure, including the FCC-governed wireless telecommunications sector and the 5G small cell deployment. On the other hand, the FCC and the wireless industry are pushing forward with rapid deployment of 5G small wireless facilities that could propagate components that may be compromised. Does the one hand know what the other hand is doing? Let’s hope so.