The Federal Communications Commission (FCC) has embarked on a drastic measure that might revolutionize the distribution of electronic gadgets into the American market. In a unanimous decision, the regulatory body has proposed a rule that will prohibit all laboratories in China and Hong Kong from issuing certificates for any product to be sold in America.
The FCC intends to curb a vital section of the international supply chain. At present, the majority of electronic products distributed in the United States undergo certification tests in China. As per the FCC estimate, over 75 percent of electronics in the United States receive certification in laboratories situated in China. The commission is worried about the dependency on such laboratories.
FCC’s National Security Overhaul of Device Certification
According to FCC chair Brendan Carr, the new policy will minimize the dangers associated with national security. The commission fears that laboratories under the jurisdiction of foreign states and those located in dangerous areas will exert their influence on the process of product certification.
Any transmitting device such as phones, routers, and smart devices require equipment authorization by the FCC. This process involves making sure that devices are safe and do not interfere with others. It requires manufacturers to use FCC-approved laboratories. In the past, companies used laboratories in China because they were near manufacturing plants. It helped save time and money.
With the proposal, however, this system will collapse overnight. According to industry information, 126 out of 591 laboratories approved by the FCC are located in mainland China or Hong Kong.
The majority of them operate in Shenzhen and its surrounding Pearl River Delta region, one of the biggest electronics centers in the world. Eliminating these laboratories would require companies to conduct tests in other areas.
Some multinational corporations might handle the transition without difficulty. International companies like Intertek, SGS, TÜV Rheinland, and Bureau Veritas have laboratories elsewhere. They can simply transfer their operations to other locations such as the United States, Europe, or Taiwan. However, the transition is unlikely to be an easy process.
FCC Expands Restrictions on Chinese Labs and Telecoms: Impact on Costs, Speed, and Security
Cost is an important consideration. FCC basic testing in China can cost anything from $400 to $1,300. However, testing in the US typically costs about $3,000 to $4,000. This may increase testing costs. Small businesses may be the most affected, given their reliance on cheaper tests to introduce products into the market.
Time is also another consideration. Testing close to factories reduces the time taken to launch products. Shifting testing operations away from factories will take more time, which may affect fast-growing industries such as consumer electronics.
The proposed action is an improvement from what the FCC did previously. The agency banned 15 laboratories associated with Chinese government interests under its “Bad Labs” order. This was based on ownership relations, while the new decision extends to all laboratories in China and Hong Kong, regardless of ownership.
In addition to this measure, the FCC decided upon a separate but related matter. In its next unanimous resolution, it proposed regulating the activity of Chinese telecom companies working at American data centres. Specifically mentioned are China Mobile, China Telecom, and China Unicom.
Strengthening Infrastructure Security and Redefining Hardware Certification
All these firms are no longer authorized for the retail telecommunications business in America. This proposal, however, aims to ban their participation in building infrastructure and wholesale telecom activities. At the same time, this measure can prevent other companies from connecting their networks with companies listed as being under threat by the FCC on the “Covered List.” Among such companies are those providing the hardware from China’s Huawei and ZTE.
This approach demonstrates an evident shift in policy, where the FCC seeks to control hardware authorisation and network management.
The effects may not be felt immediately by consumers, as devices will still come to the market. But eventually, costs can increase, and launches could also become less frequent. Manufacturers, meanwhile, will need to change their approach to supply chains and testing.
But this proposal is not yet final. There will be a comment period before any rule becomes effective. This will give industry organizations, companies, and other interested parties an opportunity to voice out.
Nevertheless, it’s quite evident that the FCC aims to lessen dependence on foreign labs for testing. If the rule does pass, it will be among the most significant changes in electronics certification regulations in recent years.
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