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U.S. Wants Oversight of Sprint-Softbank Network Purchases

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Mar 28, 2013, 7:21 AM   by Eric M. Zeman

In order to win U.S. government approval of its equity sale to Softbank, Sprint may have to allow government officials to unofficially greenlight networking equipment purchases. According to sources cited by The Wall Street Journal, the intent of the provision would be to keep Chinese suppliers Huawei and ZTE from selling their gear to U.S. companies. The U.S. government has long been wary of allowing Huawei and ZTE to provide telecommunications infrastructure due to fears about espionage. Sprint is selling 70% of itself to Japanese network operator Softbank for $20 billion. The Journal notes that any such provisions could not be spelled out explicitly, as that would violate international trade law, and would instead only require Sprint to let the government know when it is making telecommunications gear purchases. A law signed by President Barack Obama last week included a new cyber-espionage review process for U.S. government technology purchases. This law more explicitly states that the U.S. government needs to approve of IT purchases made by NASA, the U.S. Department of Justice, and the U.S. Department of Commerce. The intent behind this new law is the same as that being applied to the Sprint deal: the government wants to be able to restrict the sale of Chinese networking equipment to U.S. agencies. Huawei spokesperson Bill Plummer said to the Journal, "The adoption of such a policy would seem little more than a market-distorting political or protectionist exercise."

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