On October 29, 2019, the FCC released a Report and Order and Further Notice of Proposed Rulemaking which prohibits Universal Service funding for network equipment which poses a threat to national security.

In the Report and Order, the Commission adopts a rule that “no universal service support may be used to purchase or obtain any equipment or services produced or provided by a covered company posing a national security threat to the integrity of communications networks or the communications supply chain. Accordingly, USF recipients may not use USF funds to maintain, improve, modify, operate, manage, or otherwise support such equipment or services in any way, including upgrades to existing equipment and services.” Initially, both Huawei Technologies Company and ZTE Corporation are designated as being covered under the prohibition.

The Commission’s Further Notice of Proposed Rulemaking seeks comment on going a step further, with the possibility of requiring “USF recipients that are eligible telecommunications carriers (ETCs) to remove existing equipment and services produced or provided by covered companies from their networks” and establishing “a reimbursement program to offset reasonable transition costs and make the requirement that ETCs remove covered equipment and services contingent on the availability of a funded reimbursement program.”

The Report and Order and Further Notice of Proposed Rulemaking may be accessed here