FCC Draft Would Bar Approval of Devices With Blacklisted Chips Inside

Federal regulators are considering rules that would block U.S. approval of consumer electronics if key internal parts are made by companies on the agency’s national-security blacklist.The Federal Communications Commission (FCC) draft, released July 1 and scheduled for a July 22 vote, is not final. The agency says the proposal remains under consideration and “does not constitute any official action” by the commission.The proposal would reach beyond the brand name on a device and examine what is inside it: chips, modules, circuit boards, wireless components, and other digital hardware that can process or move data.That means a phone, router, camera, drone, or smart-home device would not have to carry the name of Huawei, ZTE, Hikvision, Dahua, Hytera, or another company on the FCC Covered List to face scrutiny. If a listed company made a key internal component, the device could be barred from FCC authorization.FCC authorization is the approval process that allows many radio-frequency devices to be legally marketed in the United States.The draft says the FCC would close a “component part loophole” by prohibiting authorization of devices containing “logic-bearing hardware components” made by Covered List entities. The FCC is targeting the core components of a device—not screws, paint, plastic shells, or other passive parts.The Covered List identifies equipment and services deemed an unacceptable risk to U.S. national security or the safety of Americans.The draft defines the covered parts as digital components operating above 9 kilohertz, or 9,000 pulses per second, that process, store, retrieve, transfer, or control data. The FCC says that threshold tracks the lowest frequency at which the agency regulates spectrum for interference.The agency says the rule would apply to new and pending equipment-authorization applications. Previously authorized equipment would not be affected.Online Marketplaces Drawn InThe draft also puts online marketplaces closer to the center of FCC enforcement.The FCC says platforms are engaged in “marketing” when they list regulated equipment and also provide services such as warehousing, inventory management, order processing, packaging, billing, or fulfillment—even if a third-party seller owns the product.The agency says online marketplaces that list third-party products are offering goods for sale under FCC rules, regardless of who holds title to the products.The proposal would require online marketplaces to display the FCC ID of certified devices at the online point of sale. The ID allows buyers, sellers, and regulators to check whether a device has been certified in the FCC’s public database.The FCC says online purchases now account for more than 70 percent of consumer electronics sales.The agency rejected calls to exempt online marketplaces from liability, saying platforms have more resources than consumers to check FCC databases, use APIs, and demand compliance information from suppliers.The draft says exempting marketplaces would let them profit from marketing unauthorized equipment while leaving consumers to bear the costs.The Consumer Technology Association (CTA), the trade group behind the yearly Consumer Electronics Show in Las Vegas, said it is still reviewing the proposal.“We’re engaging our members to understand their perspective on the proposal, and don’t have anything to share at this stage,” Carolyn Posner, the group’s director of policy communications, told The Epoch Times.The FCC draft says CTA previously opposed mandatory FCC ID display at online points of sale, arguing that it could impose heavy burdens without meaningful security benefits and could confuse consumers.Industry ConcernsThe draft acknowledges industry concern that the phrase “logic-bearing hardware” could be hard to apply.CTIA–The Wireless Association, a trade group representing the U.S. wireless communications industry, told the FCC the term was “not specific enough” for affected parties to identify prohibited equipment.CTA said unclear component restrictions could slow product development, increase manufacturing costs, and limit design options.The FCC declined to list covered parts one by one. It also declined, for now, to adopt a broader ban on all components made by Covered List entities or to extend the current order to software and firmware from listed companies.The agency estimates the adopted measures would create about $50 million in annual costs, while producing security benefits of $100 million or more a year.The commission is scheduled to consider the draft at its July 22 open meeting.