Recent Developments Regarding National Security Risks in Telecommunications Components Sourced from Chinese Companies
We are writing to inform you of recent developments that may have implications for businesses sourcing products, services, or components from China, especially in the field of telecommunications, including Internet of Things (“IoT”).
Overview of Recent Developments:
Federal Communications Commission Chairwoman Jessica Rosenworcel has taken steps to address potential national security risks associated with Chinese companies operating in the field of telecommunications and IoT devices. This includes companies like Quectel and Fibocom Wireless, which produce cellular modules that enable IoT devices to connect to the internet.
The House of Representatives China Select Committee, with bipartisan support, requested the FCC to consider adding these companies to the “Covered List.” Inclusion on this list restricts the use of federal funds to purchase equipment from these companies and prohibits the authorization of new equipment from entities deemed national security threats.
Chairwoman Rosenworcel has communicated this request to various U.S. government agencies, including the FBI, the Justice Department, the National Security Agency, and the Defense Department, seeking their input and collaboration to address these national security concerns.
The Chairwoman has emphasized that the FCC welcomes the opportunity to collaborate and consider the inclusion of equipment from Quectel and Fibocom on the Covered List.
It is important to note that national security authorities may have the power to direct the FCC to update the Covered List. This list currently includes other Chinese and Russian companies, such as Huawei, ZTE, Hytera Communications Corp, Hangzhou Hikvision Digital Technology, and Zhejiang Dahua Technology.
The lawmakers who requested this action have raised concerns that U.S. medical equipment, vehicles, and farm equipment using Chinese cellular modules could be accessed and controlled remotely from China. They have pointed out that these modules are a vital link between the device and the internet, and if China can control them, it may pose security risks, such as data exfiltration or shutting down IoT devices.
Our Cautionary Note:
At The CommLaw Group, we believe it is prudent to share this information with our clients as a cautionary note, especially for those who source products, services, or components from China. As we have seen, the list of companies subject to restrictions may evolve, impacting various industries, including telecommunications, technology, and RF devices.
While we cannot predict precisely which companies may be targeted by the FCC or other national security authorities, we encourage all our clients to exercise caution when considering the purchase of Chinese components or products with Chinese components. There is the potential that they may end up on a sanction list in the future, which could have implications for your business operations.
We will continue to monitor these developments and provide updates as necessary to help you make informed decisions regarding your supply chain and sourcing practices.
Please do not hesitate to reach out to us if you have any questions or concerns. We are here to support you and provide guidance on how to navigate these changing dynamics.