FCC Bans Risky Firms from Phone Nets: Security Over Spies?
Published Date: 5/8/2026
Proposed Rule
Summary
The FCC is proposing new rules to keep America’s phone and internet services safe from companies on a special 'Covered List' that pose national security risks. These companies won’t be allowed to provide certain telecom services anymore. If you’re involved in telecom, get ready to comment by early July 2026—these changes could affect who you work with and how business gets done.
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Analyzed Economic Effects
6 provisions identified: 0 benefits, 4 costs, 2 mixed.
Covered-List Firms Barred From Blanket Authorization
The FCC proposes to change 47 CFR 63.01 so that any entity named on the federal "Covered List" (including their current and future affiliates and subsidiaries) would be excluded from receiving blanket domestic section 214 authority to provide interstate telecommunications services. If adopted, those Covered List entities would be prohibited from constructing, acquiring, operating lines, or transmitting over lines pursuant to blanket section 214 authority and could be barred even as proposed transferees or assignees.
Excluded Firms Must Apply Individually
The NPRM proposes that entities excluded from blanket domestic section 214 authority could still submit individual applications for domestic section 214 approval. The Commission seeks comment on requiring such applications to follow procedures like international section 214 (47 CFR 63.18), including foreign-ownership disclosures (identifying anyone owning 10% or more) and referral to Executive Branch agencies (Team Telecom) for national security review.
Possible Revocation and Transition Periods
The FCC seeks comment on revoking existing blanket section 214 authority for Covered List entities and on alternative approaches such as declaring authority "deemed revoked" after a set transition period (for example, six months after the rule's effective date). The Commission asks whether entities added to the Covered List in the future should get a similar six-month window and whether affected providers should be required to provide notice and transition support such as number-porting assistance to customers.
Proposed Ban on Interconnecting With Excluded Entities
The FCC tentatively concludes it may prohibit telecommunications carriers from interconnecting with entities excluded from blanket section 214 authority (including entities whose authority is revoked), and from interconnecting with facilities such as Points of Presence (PoPs) or data centers owned or operated by Covered List entities. The Commission also asks whether interconnection should be unlawful or "unreasonable" under section 201(b) and whether carriers would be relieved of any duty to interconnect under section 251(a).
Limitations on Unlicensed Wireless Use
The FCC seeks comment on modifying its part 15 unlicensed wireless rules so that Covered List entities could not, by default, offer services to the public or third parties using equipment that merely meets unlicensed technical rules (for example, fixed wireless broadband offered via part 15 devices). The agency asks whether use-based restrictions or other rule changes are needed to prevent national-security risks from unlicensed operations.
Substantial Small Telecom Firms May Be Affected
The FCC's Initial Regulatory Flexibility Analysis states the proposed rules could affect a substantial number of small entities in the telecom sector. For example, the IRFA shows 3,729 Competitive Local Exchange Carriers (CLECs) with 3,576 qualifying as small firms, and 4,682 wired telecommunications carriers with 4,276 qualifying as small firms (data as of December 2023 / 2022 Census). The NPRM explicitly requests comment on costs to small providers and how to reduce paperwork burdens for businesses with fewer than 25 employees.
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