SoftBank/Sprint Deal Clears CFIUS Review

Government will get opportunity to decommission some Clearwire equipment
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According to Sprint and SoftBank, their deal
has received clearance from CFIUS (the Committee on Foreign Investment in the United States).

In a filing with the
Securities & Exchange Commission, the companies said there are no more
unresolved national security issues related to the proposed purchase of Sprint
by Japanese company SoftBank.

That review also
included the sale of spectrum from Clearwire, whose purchase by Sprint from a
consortium of cable operators and Google the FCC approved back in December.
SoftBank is seeking a waiver of the FCC's 25% cap on foreign ownership to be
able to own Clearwire.

But the CFIUS approval
comes with a few conditions.

Softbank and Sprint
have entered into a national security agreements with the NSA, DOD and DHS and
must appoint a government-approved independent member of the board to serve as
security director and oversee the agreement.

The government also
has a one-time right to require Sprint to decommission certain equipment in the
Clearwire network assuming it completes that purchase and an ongoing right to
review and approve certain network vendors for Sprint and Clearwire.

Some national security
concerns have been raised about the deal in the FCC docket.

In its comments, the
Communications Workers of America said they were concerned about the
connections of SoftBank and Clearwire's association with Chinese vendors Huawei
and ZTE, which are supplying equipment for their networks. At minimum, CWA
wants restrictions on the use of Huawei and ZTE technology in Sprint/Clearwire
networks, which it concedes would have the possible side benefit of boosting
jobs in domestic equipment companies.

Back in October and
following an almost year-long investigation, the House Permanent Select
Committee on Intelligence recommended that telecom providers steer clear of
Chinese-based global tech companies Huawei and ZTE.

During congressional
debates over cybersecurity, one issue both sides of the aisle agreed on was
that the country needed to better track the foreign-made telecom-related
hardware and software in critical U.S. telecom systems.

If the FCC and DOJ do
sign off on the SoftBank/Sprint deal, it will likely be with conditions agreed
to by the companies to insulate the U.S. operations from ZTE
or Huawei network equipment.

The FCC Wednesday was on day 180 of its review of the
Sprint/SoftBank/Clearwire deal. It sets itself a 180-day informal shot clock
for merger reviews.

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