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12 December 2019

FCC replaces flawed mobility fund with new $9bn rural 5G program

In the USA, the FCC has unveiled plans to scrap its Mobility Fund Phase II (MF-II), after a probe found that several operators – including T-Mobile, Verizon and US Cellular – had submitted overstated LTE coverage maps. FCC chair Ajit Pai proposes subsidies of up to $9bn – including the $4.5bn originally earmarked for LTE under MF-II – for rural mobile 5G over the next 10 years. About $1bn of the new fund will be allocated specifically for precision agriculture.

The Competitive Carriers Association (CAA), which represents smaller and rural operators, said it supported the move to end MF-II, saying that reporting methods and coverage maps were “fatally flawed”.

CCA president Steven Berry said in a statement: “I welcome the recommendation to update data specifications, including signal strength, cell loading factors, cell edge probability, clutter factors, and fading statistics.”

Pai is expected to circulate a Notice of Proposed Rulemaking for the 5G fund next year.  Exact eligibility parameters have not been decided but 5G will be defined in two ways – compliance with 3GPP standards, and meeting an as-yet undetermined minimum speed.

“5G has the potential to bring many benefits to American consumers and businesses, including wireless networks that are more responsive, more secure, and up to 100 times faster than today’s 4G LTE networks,” said Pai in his statement. “We want to make sure that rural Americans enjoy these benefits, just as residents of large urban areas will.  In order to do that, the Universal Service Fund must be forward-looking and support the networks of tomorrow.”

He added: “America’s farms and ranches have unique wireless connectivity needs, as I’ve seen across the country.  That’s why I will move forward as quickly as possible to establish a 5G Fund that would bring next generation 5G services to rural areas and would reserve some of that funding for 5G networks that promote precision agriculture. We must ensure that 5G narrows rather than widens the digital divide and that rural Americans receive the benefits that come from wireless innovation.”

Huawei is stepping up its fight to be able to benefit from the new fund. Although it has been barred from national cellular networks for years (see separate item), it does a significant amount of business with local and rural carriers, some of which now face the prospect of having to rip out and replace their networks. The Chinese vendor has filed a lawsuit with the US Court of Appeals for the Fifth Circuit, asking it to overturn an FCC order of November 22, which bars operators from using Universal Service Fund money to buy Huawei equipment.

Huawei’s lawyers are arguing that the FCC has no authority to designate Huawei as a national security threat. They also claim that federal laws were violated because notice-and-comment rulemaking requirements were not observed when the FCC voted to bar recipients of USF funds – which would include the new 5G fund – from buying kit from companies deemed as national security risks. The order specifically named Huawei and ZTE.

Huawei remains on the USA’s entity list, which bans any US company from trading with the Chinese firm without a special licence. However, after a ban imposed on ZTE in mid-2019, the US administration relented and in theory, the smaller Chinese vendor can trade with US firms, though it is barred from national infrastructure under separate rules introduced by the Obama administration.

Huawei’s lead counsel for this action, Glen Nager of Jones Day, said in statements that “the Commission has no national security expertise or authority. The designation is based on a fundamental misunderstanding of Chinese law and on unsound, unreliable, and inadmissible accusations and innuendo, not evidence.”

In making its decision on the USF restrictions, Pai at the time that the decision was taken “based on evidence in the record, as well as longstanding concerns from the executive and legislative branches about the national security threats posed by certain foreign communications equipment manufacturers, most particularly Huawei and ZTE”.

The FCC also adopted a Further Notice of Proposed Rulemaking to require carriers to rip and replace any insecure telecom equipment that is already in use and seeks comment on how to fund this process.