On November 25, 2022, the FCC effectively banned certain Chinese telecom and video surveillance devices from the U.S. market – demonstrating the power of its authority over virtually all electronics equipment, which until last week’s decision had been exercised only to address technical, scientific and engineering concerns. With Congressional backing, the FCC now has established itself as a potent vehicle for excluding products from the U.S. market on national security concerns.

Specifically, the FCC released a Report and Order (“R&O”) and a Further Notice of Proposed Rulemaking (“FNPRM”) that changes the FCC’s device and equipment authorization rules to broadly prohibit the importation, marketing, and sale of radiofrequency (“RF”) devices and equipment by entities that the FCC has determined, based on input from the national security community, to pose a threat to the security of U.S. supply chains and networks. The FCC has published the list of such entities on its Covered List, and each of the equipment manufacturers on the list reportedly has some affiliation with the Chinese government. RF devices and equipment are those that generate and/or emit RF energy and thus effectively amount to all electronic devices. Going forward, all applicants for FCC device and equipment authorizations will be required to attest that they are not subject to this prohibition to secure their authorizations.

Of equal or greater noteworthiness, the FCC previewed potentially greater changes to its rules as part of its efforts to advance national security goals. For example, the FCC has asked for comment on whether and to what extent to revoke existing device and equipment authorizations held by covered entities, such that equipment already in the marketplace could be rendered unlawful. It also asked whether the new ban should extend to “components” made by covered entities but used by others in their own devices and equipment. How the FCC decides these and other issues presented in the FNPRM could have profound effects on the market for RF devices and equipment in the U.S.

I.       Background

By way of background, the Communications Act requires the FCC to issue authorizations for devices and equipment that generate and/or emit RF emissions before they can be imported, marketed, or sold in the U.S. Such authorizations are needed to ensure that devices and equipment do not exceed certain RF emissions thresholds, as exceeding such thresholds can cause harmful interference to other services and equipment or present health and safety risks.

For decades, the FCC generally has been expansive in issuing device and equipment authorizations, including to foreign-owned companies, provided they satisfied the RF emissions rules. But newly-enacted laws, resulting in part from increased strains in U.S.-China relations, have prompted the FCC to reconsider this approach.

Through the National Defense Authorization Act for Fiscal Year 2019, the SECURE Technology Act, and the Secure and Trusted Communications Networks Act of 2019 (“Secure Networks Act”), Congress limited the use of federal funds to procure equipment, services, or systems from certain foreign covered entities. The Secure Networks Act required that the FCC publish and periodically update the aforementioned Covered List. Last week’s R&O expanded these initiatives by adopting new rules that will prohibit certain RF devices and equipment from the U.S. market if they are deemed to be imported, marketed, or sold by an entity on the Covered List.

II.      The Report and Order

The R&O amended the FCC’s device and equipment authorization rules to prohibit the authorization of telecommunications and video surveillance equipment imported, marketed, or sold by an entity on the Covered List. Underscoring the impact of refusing equipment authorizations to these entities, FCC Chairwoman Rosenworcel explained in an accompanying statement:

The action we take today covers base station equipment that goes into our networks. It covers phones, cameras, and Wi-Fi routers that go into our homes. And it covers re-branded or “white label” equipment that is developed for the marketplace. In other words, this approach is comprehensive.

The FCC also took steps to close loopholes that might otherwise have enabled continued sales of equipment on the Covered List, e.g., by removing exemptions from the equipment authorization process for certain types of devices and emphasizing that the prohibition applies to “white label” equipment. Moreover, although the FCC declined to decide immediately whether existing authorizations for equipment by Covered List manufacturers should be revoked, it set the stage to do so in the future by concluding that the agency has authority to revoke, in the future, authorizations of equipment on the Covered List authorized before the Report and Order’s adoption on November 11, 2022.

III.    The Further Notice of Proposed Rulemaking

In the accompanying FNPRM, the FCC made clear that it may continue to use the equipment authorization rules as a lever to promote national security concerns. For example:

Revocation of existing authorizations for Covered List equipment. The ban adopted in the R&O is prospective and therefore doesn’t require removal of equipment manufactured by Covered List entities in the past. In the FNPRM, the FCC asks whether and under what circumstances it should apply the ban retroactively. Given that equipment on the Covered List remains in the telecommunications networks of many carriers, any retroactive ban could cause a meaningful financial impact. While Congress previously has appropriated funding for carriers to “rip and replace” such equipment from their networks, demand for the available funding far exceeds the appropriated amounts.

Component parts. The new rules do not require applicants for equipment authorizations to state whether any component part of the equipment to be authorized is comprised of covered equipment. In the FNPRM, the FCC recognizes that this may be a gap in the rules. The FCC accordingly has sought comment on the extent to which component equipment parts should be considered in the FCC’s prohibition on covered equipment and on a range of related issues, including what should be considered a “component part.”

Competitive bidding procedures. The FNPRM seeks comment on whether participants in competitive bidding procedures (e.g., for spectrum licenses) should be required to certify that bids do not rely on financial support from Covered List entities. While the FCC had previously sought input on this topic, it now asks for more precise information about the contours of any such requirement, such as the level of diligence required of a bidder to confirm that its financing is not ultimately sourced from an entity on the Covered List.

Agent for service of process. The FCC proposes to require that any application for equipment certification provide a “responsible party located in the United States” to respond to inquiries and remedy any violations of the FCC’s rules with respect to the equipment.

If you have any questions concerning the material discussed here, please contact the members of our Communications and Media practice.

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Photo of Yaron Dori Yaron Dori

Yaron Dori has over 25 years of experience advising technology, telecommunications, media, life sciences, and other types of companies on their most pressing business challenges. He is a former chair of the firm’s technology, communications and media practices and currently serves on the…

Yaron Dori has over 25 years of experience advising technology, telecommunications, media, life sciences, and other types of companies on their most pressing business challenges. He is a former chair of the firm’s technology, communications and media practices and currently serves on the firm’s eight-person Management Committee.

Yaron’s practice advises clients on strategic planning, policy development, transactions, investigations and enforcement, and regulatory compliance.

Early in his career, Yaron advised telecommunications companies and investors on regulatory policy and frameworks that led to the development of broadband networks. When those networks became bidirectional and enabled companies to collect consumer data, he advised those companies on their data privacy and consumer protection obligations. Today, as new technologies such as Artificial Intelligence (AI) are being used to enhance the applications and services offered by such companies, he advises them on associated legal and regulatory obligations and risks. It is this varied background – which tracks the evolution of the technology industry – that enables Yaron to provide clients with a holistic, 360-degree view of technology policy, regulation, compliance, and enforcement.

Yaron represents clients before federal regulatory agencies—including the Federal Communications Commission (FCC), the Federal Trade Commission (FTC), and the Department of Commerce (DOC)—and the U.S. Congress in connection with a range of issues under the Communications Act, the Federal Trade Commission Act, and similar statutes. He also represents clients on state regulatory and enforcement matters, including those that pertain to telecommunications, data privacy, and consumer protection regulation. His deep experience in each of these areas enables him to advise clients on a wide range of technology regulations and key business issues in which these areas intersect.

With respect to technology and telecommunications matters, Yaron advises clients on a broad range of business, policy and consumer-facing issues, including:

  • Artificial Intelligence and the Internet of Things;
  • Broadband deployment and regulation;
  • IP-enabled applications, services and content;
  • Section 230 and digital safety considerations;
  • Equipment and device authorization procedures;
  • The Communications Assistance for Law Enforcement Act (CALEA);
  • Customer Proprietary Network Information (CPNI) requirements;
  • The Cable Privacy Act
  • Net Neutrality; and
  • Local competition, universal service, and intercarrier compensation.

Yaron also has extensive experience in structuring transactions and securing regulatory approvals at both the federal and state levels for mergers, asset acquisitions and similar transactions involving large and small FCC and state communication licensees.

With respect to privacy and consumer protection matters, Yaron advises clients on a range of business, strategic, policy and compliance issues, including those that pertain to:

  • The FTC Act and related agency guidance and regulations;
  • State privacy laws, such as the California Consumer Privacy Act (CCPA) and California Privacy Rights Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, the Virginia Consumer Data Protection Act, and the Utah Consumer Privacy Act;
  • The Electronic Communications Privacy Act (ECPA);
  • Location-based services that use WiFi, beacons or similar technologies;
  • Digital advertising practices, including native advertising and endorsements and testimonials; and
  • The application of federal and state telemarketing, commercial fax, and other consumer protection laws, such as the Telephone Consumer Protection Act (TCPA), to voice, text, and video transmissions.

Yaron also has experience advising companies on congressional, FCC, FTC and state attorney general investigations into various consumer protection and communications matters, including those pertaining to social media influencers, digital disclosures, product discontinuance, and advertising claims.

Photo of Matthew DelNero Matthew DelNero

Matt DelNero provides expert regulatory counsel to companies of all sizes in the telecommunications, technology and media sectors. As a former senior official with the FCC and longtime private practitioner, Matt helps clients achieve their goals and navigate complex regulatory and public policy…

Matt DelNero provides expert regulatory counsel to companies of all sizes in the telecommunications, technology and media sectors. As a former senior official with the FCC and longtime private practitioner, Matt helps clients achieve their goals and navigate complex regulatory and public policy challenges.

Matt serves as co-chair of Covington’s Technology & Communications Regulation (“TechComm”) Practice Group and co-chair of the firm’s Diversity & Inclusion initiative.

Matt advises clients on the full range of issues impacting telecommunications, technology and media providers today, including:

  • Structuring and securing FCC and other regulatory approvals for media and telecommunications transactions.
  • Conducting regulatory due diligence for transactions in the telecommunications, media, and technology sectors.
  • Obtaining approval for foreign investment in broadcasters and telecommunications providers.
  • Universal Service Fund (USF) programs, including the FCC’s Rural Digital Opportunities Fund (RDOF).
  • FCC enforcement actions and inquiries.
  • Online video accessibility, including under the Communications and Video Accessibility Act (CVAA) and Americans with Disabilities Act (ADA).
  • Equipment authorizations for IoT and other devices.
  • Spectrum policy and auctions, including for 5G.
  • Privacy and data protection, with a focus on telecommunications and broadband providers.

Matt also maintains an active pro bono practice representing LGBTQ+ asylum seekers, as well as veterans petitioning for discharge upgrades—including discharges under ‘Don’t Ask, Don’t Tell’ and predecessor policies that targeted LGBTQ+ servicemembers.

Prior to rejoining Covington in January 2017, Matt served as Chief of the FCC’s Wireline Competition Bureau. He played a leading role in development of policies around net neutrality, broadband privacy, and broadband deployment and affordability under the federal Universal Service Fund (USF).

Chambers USA has recognized Matt as a “go-to attorney for complex matters before the FCC and other federal agencies, drawing on impressive former government experience.”

Photo of Jennifer Johnson Jennifer Johnson

Jennifer Johnson is a partner specializing in communications, media and technology matters who serves as co-chair of Covington’s global and multi-disciplinary Internet of Things (IoT) group. She represents and advises content distributors, broadcast companies, trade associations, and other media and technology entities on…

Jennifer Johnson is a partner specializing in communications, media and technology matters who serves as co-chair of Covington’s global and multi-disciplinary Internet of Things (IoT) group. She represents and advises content distributors, broadcast companies, trade associations, and other media and technology entities on a wide range of issues. Jennifer has more than two decades of experience advising clients in the communications, media and technology sectors, and has served as a co-chair for these practices for more than 15 years. On IoT issues, she collaborates with Covington’s global, multi-disciplinary team to assist companies navigating the complex statutory and regulatory constructs surrounding this evolving area, including legal issues with respect to connected and autonomous vehicles, internet connected devices, smart ecosystems, and other IoT products and services.

Jennifer assists clients in developing and pursuing strategic business and policy objectives before the Federal Communications Commission (FCC) and Congress and through transactions and other business arrangements. She regularly advises clients on FCC regulatory matters and advocates frequently before the FCC. Jennifer has extensive experience negotiating content acquisition and distribution agreements for media and technology companies, including program distribution agreements with cable, satellite, and telco companies, network affiliation and other program rights agreements for television companies, and agreements providing for the aggregation and distribution of content on over-the-top app-based platforms. She also assists investment clients in structuring, evaluating, and pursuing potential investments in media and technology companies.

Photo of Gerard J. Waldron Gerard J. Waldron

Gerry Waldron represents communications, media, and technology clients before the Federal Communications Commission and Congress, and in commercial transactions. Gerry served as chair of the firm’s Communications and Media Practice Group from 1998 to 2008. Prior to joining Covington, Gerry served as the…

Gerry Waldron represents communications, media, and technology clients before the Federal Communications Commission and Congress, and in commercial transactions. Gerry served as chair of the firm’s Communications and Media Practice Group from 1998 to 2008. Prior to joining Covington, Gerry served as the senior counsel on the House Subcommittee on Telecommunications. During his work for Congress, he was deeply involved in the drafting of the 1993 Spectrum Auction legislation, the 1992 Cable Act, the Telephone Consumer Protection Act (TCPA), CALEA, and key provisions that became part of the 1996 Telecommunications Act.

Gerry’s practice includes working closely on strategic and regulatory issues with leading IT companies, high-quality content providers in the broadcasting and sports industries, telephone and cable companies on FCC proceedings, spectrum entrepreneurs, purchasers of telecommunications services, and companies across an array of industries facing privacy, TCPA and online content, gaming, and online gambling and sports betting-related issues.

Gerry has testified on communications and Internet issues before the FCC, U.S. House of Representatives Energy & Commerce Committee, the House Judiciary Committee, the Maryland Public Utility Commission, and the Nevada Gaming Commission.

Photo of Jocelyn Jezierny Jocelyn Jezierny

Jocelyn Jezierny is an associate in Covington’s Washington, DC office and a member of the firm’s Communications and Media Industry Group. Before joining Covington, Jocelyn was an Attorney-Advisor in the Federal Communications Commission’s International Bureau, where she worked on matters pertaining to the…

Jocelyn Jezierny is an associate in Covington’s Washington, DC office and a member of the firm’s Communications and Media Industry Group. Before joining Covington, Jocelyn was an Attorney-Advisor in the Federal Communications Commission’s International Bureau, where she worked on matters pertaining to the licensing of foreign-owned U.S. telecommunications services providers.

Jocelyn is a member of the Bar of New York. District of Columbia bar application pending; supervised by principals of the firm.

Photo of Trevor Bernardo Trevor Bernardo

Trevor Bernardo is an associate in Covington’s Washington, DC office. As a member of the Communications and Media Industry Group and Public Policy Group, Trevor represents and advises clients pursuing public policy strategies and conducting commercial transactions involving entities regulated by the Federal…

Trevor Bernardo is an associate in Covington’s Washington, DC office. As a member of the Communications and Media Industry Group and Public Policy Group, Trevor represents and advises clients pursuing public policy strategies and conducting commercial transactions involving entities regulated by the Federal Communications Commission and state public utility commissions. He also maintains an active pro bono practice. Before joining Covington, Trevor worked on various state and federal campaigns across the country.