Focus on Policy on ZTE, T-Mobile/Sprint Seen Possible at House Communications Hearing

Trump's ZTE push remained a hot topic on Capitol Hill Tuesday. Senate Republicans didn't register their concerns about the policy shift during a Tuesday caucus lunch with Trump, though Senate Commerce Committee Chairman John Thune, R-S.D., and Senate Majority Whip John Cornyn, R-Texas, told reporters Monday they intended to raise the issue with the president. Senate Majority Leader Mitch McConnell, R-Ky., said during a post-lunch news conference that senators didn't bring up the ZTE sanctions. National Counterintelligence and Security Center Director nominee William Evanina, meanwhile, declined during a Senate Intelligence Committee confirmation hearing Tuesday to say whether he thinks lifting sanctions against ZTE is a good idea. He told Sen. Marco Rubio, R-Fla., he wouldn't use a ZTE phone and noted U.S. intelligence agencies' longstanding concerns about connections among ZTE, fellow Chinese telecom firm Huawei and the Chinese government.

Senate Democrats also highlighted their concerns about ZTE Tuesday, including in a letter to Trump from Senate Minority Leader Chuck Schumer, D-N.Y., and other party leaders. “America’s national security must not be used as a bargaining chip in trade negotiations,” the senators said: Trump's offer “to trade American sanctions enforcement [against ZTE] to promote jobs in China is plainly a bad deal.”

“I would be very surprised” if at least some House Communications members don't invoke Trump's stance on ZTE during the hearing since it's part of the news cycle and is a bipartisan concern, said Venable communications lawyer Jamie Barnett. “It probably won't be a good day for either Huawei or ZTE” even if Trump's policy shift isn't a major point of discussion, a telecom lobbyist said. Concerns about China's influence also could factor into House Communications' interest in discussing “how vulnerable the cores of U.S. networks are when the equipment purchased to run them come from supply chains that don't have the same rigorous safeguards,” the lobbyist said.

A House Communications GOP staff memo cites the FY 2019 National Defense Authorization Act as a potential focus. The subcommittee will “examine whether the definition of 'covered telecommunications equipment or services'” that are banned from doing business with Huawei and ZTE “could be interpreted to include all domestic telecommunications providers and, if so, how it would affect Federal agencies’ ability [to] meet their communications needs,” the memo said. House Armed Services Committee Chairman Mac Thornberry, R-Texas, and others on the Hill are resistant to altering the NDAA legislation to rescind the ZTE sanctions, Barnett said.

China also could come up in questions about how to ensure the U.S. plays a leadership role in 5G deployments and innovation, Barnett said. China is developing plans that will allow it to “no longer be restrained by others for core technologies in strategically competitive fields and has prioritized projects,” the Republican staff memo said. Administration officials repeatedly cited the national security implications of maintaining U.S. leadership in 5G innovation, which lawmakers said is a sign Congress needs to act on broader telecom policy issues that would help sustain that dominance (see 1712180071, 1712270032 and 1803210019).

A discussion about 5G could lead to mentions of T-Mobile/Sprint, Barnett and others said. The carriers argued the transaction would help them deploy the technology (see 1804290001, 1804300055 and 1805010072). House Communications also may seek to explore the deal's ramifications for foreign ownership of U.S. communications sector companies since both firms are foreign-owned, said a communications sector lobbyist not connected to either firm. The House Communications memo cites federal government mechanisms for addressing foreign ownership concerns, including via the Committee on Foreign Investment in the United States and Team Telecom -- DOJ, DOD and the Department of Homeland Security.

FCC Commissioner Mike O'Rielly urged House Communications leaders Tuesday to consider “potential reforms to the Team Telecom process” as part of its examination of the administration-backed Foreign Investment Risk Review Modernization Act's (HR-4311/S-2098) proposed CFIUS expansion to probe more investments, including in "critical" technology or infrastructure companies. O'Rielly backed adding Team Telecom language to the bill before a late April House Digital Commerce Subcommittee hearing (see 1804260029). Team Telecom reviews, unlike those that go through the CFIUS process, “can take significant time to complete” because of a “lack of statutory structure” that legislation could fix, O'Rielly said.

Center for Strategic and International Studies Technology Policy Program Senior Fellow Samm Sacks' testimony centered on China-related issues. Virginia Tech Hume Center for National Security and Technology Director Charles Clancy and Wilkinson Barker attorney Clete Johnson focused on recommendations for securing the U.S. telecom sector supply chain. Protectionist measures “may help promote a domestic market, but in the long term companies will only be viable if they can compete internationally as the US is only around 20% of the global telecommunications market,” Clancy said. Johnson highlighted the FCC national security NPRM, saying the proposal's implications are “potentially far-reaching.” The FCC should “ensure that any further requirements or prohibitions derive directly from broader interagency policy processes or statutory requirements,” he said.