Softbank And Sprint Say No To Chinese Companies
March 29, 2013

Softbank And Sprint Say No To Chinese Companies

Michael Harper for — Your Universe Online

Amidst rising concerns about cyber spying and a House Intelligence Committee report last October, Sprint and Softbank have said they will not use any equipment from China-based Huawei Technologies. The two companies are preparing for a merger, which is being overseen by the US government. The government has asked only to be informed when these two companies buy new equipment and where they buy it.

Mike Rogers, a Michigan Republican who leads the House Intelligence Committee, has confirmed these two companies have made this pledge.

"I ... was assured they would not integrate Huawei into the Sprint network and would take mitigation efforts to replace Huawei equipment in the Clearwire network," said Rogers in a statement on Thursday.

"I expect them to make the same assurances before any approval of the deal in the CFIUS process. I am pleased with their mitigation plans, but will continue to look for opportunities to improve the government's existing authorities to thoroughly review all the national security aspects of proposed transactions."

CFIUS, or the Committee on Foreign Investment in the United States, is the agency that reviews transactions between foreign and domestic companies. They recently approved the T-Mobile and MetroPCS merger, as T-Mobile is owned by German company Deutsche Telecom.

China´s military (specifically the People´s Liberation Army, or PLA) has come under repeat fire in recent months, facing accusations of hacking, spying, and other means of cyber sabotage. In January, the New York Times claimed Chinese hackers had infiltrated their networks after they ran a story uncovering some shady business dealings by the relatives of China´s Prime Minister. Mandiant, the company that helped the Times uncover these digital break-ins, released a separate report in February that found the New York Times attack was but one of many attacks being launched against North American companies. The bulk of these attacks were found to have originated in one building where a secret arm of the PLA, known as “Unit 61398,” is said to operate.

It was last October, however, when the House Intelligence Committee issued a report that urged American companies not to do business with Huawei and ZTE, two companies which have been found to supply gear to the Chinese military. The House Intelligence Committee is concerned that Huawei and ZTE might try to use these components to spy on American companies.

According to the Wall Street Journal, the US Government cannot single out Huawei and ZTE, for fear of violating trade rules. Furthermore, the government cannot turn down this merger, were the two companies to use gear from these Chinese manufacturers.

"You have to find a way to say, 'Don't buy from the Chinese,' without saying, 'Don't buy from the Chinese,' " said a Sprint source, speaking to the Wall Street Journal.

Softbank, which is based in Tokyo, uses gear from Huawei in their home market, thus raising some concern amongst an already wary US government.

"It's a pity that US carriers cannot use our equipment," said a ZTE spokesperson in a statement to the Journal. Both Huawei and ZTE have roundly denied working with the Chinese government to spy on other countries.

“We realize that the situation is complicated, but we are trying to prove that ZTE's equipment is safe and poses no threat to US security."