Schumer: SoftBank's Sprint Deal Could Open Door to Hackers

Friday, 24 May 2013 01:57 PM

 

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Sen. Charles Schumer urged regulators to "use extreme caution" when reviewing the proposed acquisition of No. 3 cell carrier Sprint Nextel by Japan's SoftBank, saying the Japanese company's use of Chinese networking equipment could open up U.S. networks to snooping and hacking.

The New York Democrat sent letters Friday to the Treasury Department and Federal Communications Commission, both of which are reviewing SoftBank Corp.'s offer to buy 70 percent of Sprint Nextel Corp. for $20.1 billion.

Satellite TV broadcaster Dish Network Corp. has a competing, $25.5 billion offer for all of Sprint, and has raised the security issue as one reason Sprint shareholders should prefer its bid.

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“I have real concerns that this deal, if approved, could make American industry and government agencies far more susceptible to cyberattacks from China and the People’s Liberation Army, already the number one source of electronic espionage against American interest,” Schumer wrote.

“We must proceed with extreme caution before allowing something as vital as our communications and internet infrastructure from falling into the hands of a foreign company with reported ties to China.”

SoftBank has offered to remove the Chinese-made equipment that's already in Sprint's network.

China's Huawei Technologies has in recent years become one of the world's largest makers of telecommunications equipment. Its products are widely deployed except in the U.S., where security concerns have kept it out of the running for most contracts.

Huawei wasn't mentioned by Schumer or SoftBank by name. A Huawei spokesman didn't immediately respond to a request for comment.

Schumer wrote that he is still concerned that "critical parts of Sprint’s future network may also become dependent on unsecure Chinese equipment and vulnerable to interference."

"With Sprint’s ultimate control in foreign hands, there are significant questions as to whether the United States would have sufficient influence and oversight to mitigate these concerns," he wrote.

"In these circumstances, I urge you to take a very careful look at SoftBank’s proposed acquisition of Sprint, a key provider of U.S. communications networks and services, to ensure that our nation’s security is not placed at risk," he wrote.

The Pentagon said this month that China appeared to be engaged in cyberspying against the U.S. government, the first time it has made such an assertion in its annual report on Chinese military power. Chinese authorities dismiss the allegations. There have been no reports of Chinese-made networking equipment helping the hackers.

SoftBank hopes to close the Sprint deal on July 1, but needs approval from the FCC and the Treasury Department's Committee on Foreign Investment in the United States.

Editor's Note: Save, shop and invest like an insider! Our experts lead the way each month in The Franklin Prosperity Report. Click here to learn more.

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