March 26, 2018 - 1:30 pm
By Ajit Pai | FCC Chairman

The FCC’s first purpose, as set forth in the first section of our founding statute back in 1934, is to make communications available to all the people of the United States. Hardly a surprise. What might surprise people is that our second stated purpose is “the national defense.”  It was clear over 80 years ago that the reliability and resiliency of our communications networks were national security issues. The importance of securing those networks is even clearer today, in an age when they’ve become the indispensable infrastructure of our modern economy.

The changing communications landscape has not only elevated the importance of network security, but also created new challenges. One such challenge is the integrity of the supply chain—that is, the process by which products and services are manufactured, distributed, sold, and ultimately integrated into networks. Over the past decade, the Executive Branch and Congress have repeatedly stressed the importance of identifying and eliminating vulnerabilities in communications networks and their supply chains. Of particular concern are the national security threats that certain communications equipment providers pose. On December 20, 2017, for example, a group of 18 Senators and Representatives wrote to me expressing their continued concern about the national security risks posed by certain Chinese communications equipment providers. (My response here.)

The FCC does not have the authority or capacity to solve this problem alone. But we do have a role to play in addressing these concerns. For example, we have a responsibility to make sure that the money from our Universal Service Fund (USF) programs is not used in a way that undermines our national security. That’s why the Commission will be voting in April on a targeted proposal to prohibit the use of USF dollars to purchase equipment or services from any company that poses a national security threat to the integrity of U.S. communications networks or the communications supply chain. 

But as number-one ranked Virginia reminded us in its historic first-round loss to UMBC in this year’s NCAA tournament, it’s not enough just to be great at defense. So while the Commission is working to secure our networks, we are simultaneously going on offense to upgrade our networks and ensure American leadership in 5G.

Building on our progress last week modernizing our wireless infrastructure rules so that they are 5G ready, the Commission in April will continue to move full steam ahead in making spectrum available for next-generation 5G networks. In February, at this year’s Mobile World Congress, I announced that the FCC intends to hold an auction beginning this November of spectrum in the 28 GHz band, followed immediately thereafter by an auction of spectrum in the 24 GHz band.  To meet that timeline, we need to move quickly. And because legislation signed last Friday by the President has fixed a technical problem involving upfront payments by auction bidders for spectrum, we are now able to do just that.

At our April meeting, the Commission will vote on a public notice seeking input on auction procedures for the 28 GHz and 24 GHz bands. And under the draft that I have presented my colleagues, the 28 GHz auction would commence on November 14. By kicking off the pre-auction processes, we take another important step to promote American innovation in 5G wireless services, the Internet of Things, and other advanced spectrum-based services at previously underused high-band frequencies.

But our focus on the future isn’t limited to wireless; we also want to advance next-generation satellite technologies. Smaller, less expensive satellites with short-duration missions—often known as “small satellites”—are being developed and launched into space in increasing numbers.  More satellites mean more regulatory reviews.  Hence the problem: our current regulations weren’t designed with these smaller satellites in mind.

That’s why I’m proposing to streamline the process for authorizing commercial small satellite operations. Under this proposal, if satellites or systems have certain characteristics, such as short orbital lifetimes, they could choose to file under a new, alternative small-satellite process. This process would be less burdensome in some respects, while still addressing important issues such as using spectrum efficiently and limiting orbital debris (if you saw Gravity, you know what I’m talking about).

Back to Earth. This April, we’ll also take the next step toward ensuring that phone calls to all Americans go through, including those in rural America. That isn’t always the case; too often, calls aren’t completed or drop for no reason, particularly inconveniencing rural consumers and businesses. To address this problem, I’m seeking to enact new rules to improve the monitoring by long-distance carriers of “intermediate providers” to which calls are handed off. The goal is to ensure that carriers that are handed a call — those who take the baton, so to speak — don’t drop it, but instead take care to ensure it gets to its destination. At the same time, my proposal would free carriers from burdensome FCC reporting requirements because those rules haven’t produced reports that are useful to the agency. In addition, Congress recently enacted the Improving Rural Call Quality and Reliability Act of 2017. We’ll work diligently to implement this new law, including by seeking public input on certain aspects of rural call completion, and continue to take other measures “to ensure the integrity of voice communications and to prevent unjust or unreasonable discrimination among areas of the United States in the delivery of such communications” (as the new law instructs).

The next item on our April agenda is — well, admittedly a little arcane, but hear me out. It would provide a path for rate-of-return carriers that receive high-cost universal service support under the Alternative Connect America Cost Model to voluntarily elect to migrate their business data services offerings to incentive regulation. Easy enough, right? In a nutshell, this Notice of Proposed Rulemaking recognizes the fact that incentive regulation — that is, rules that set broad goals and reward a company for being productive and efficient in meeting those goals, as opposed to rules (like rate-of-return rules) that simply tell a company what its allowable costs and return on investment will be — promotes better investment decisions and consumer welfare. Incentive regulation also minimizes the administrative burdens of regulation for everyone; companies don’t have to spend a lot of hours and money on expensive cost studies, and the FCC doesn’t have to spend a lot of hours and money verifying those studies. The bottom line is that incentive regulation will allow carriers to spend scarce resources on things that more directly benefit consumers — say, investing in better, stronger networks — instead of paperwork to satisfy archaic rules.

Rounding out our April meeting agenda are two matters connected to our ongoing Modernization of Media Regulation Initiative. First, we’ll consider a Notice of Proposed Rulemaking that proposes to eliminate the requirement that cable operators maintain at their local offices a current listing of the cable television channels that each cable system delivers to its subscribers. Most people probably aren’t even aware of this, but cable companies are required to keep such listings in hardcopy thanks to an FCC regulation passed way back in 1972. Talk about outdated; channel listings are a quick Internet search away, making absurd the notion of a trip to the company office for the answer. Second, we’ll vote on an order that would relax a requirement that TV stations must report annually to the FCC about the revenues they receive from ancillary and supplemental services. Astute observers will note that we teed up this proposal a few months ago. If adopted, broadcasters without any such revenues would no longer need to file a report with the Commission. Taking this step would eliminate unnecessary paperwork and is simple common sense; that might explain why the record reveals no opposition at all to this proposal.

This week, with a lot of schools adjourning for spring break, I hope that many of you are on vacation (and that you watched justice be served as Kansas beat Duke). But when you return in April, you’ll find the FCC hard at work during another busy month.