Softbank, Sprint Toss Huawei Under the Bus

March 29th, 2013 by · 4 Comments

Not that it’s a big surprise, but Sprint Nextel (NYSE:S, news, filings) and its proposed acquirer Softbank are vowing to stop using equipment from Huawei. The deal remains under a review by US regulators, and lawmakers are taking the opportunity for a few photo-ops along the way protecting us from evil.

Given last October’s report by the House Intelligence Committee painting the Chinese vendors’ equipment as a national security risk, the decision to eschew using gear that has become politically sensitive won’t surprise anyone.  Softbank and Sprint want to make this happen, and will make such promises as a matter of course.  Clearwire does have some Huawei gear in their network, which Softbank and Sprint say they would take mitigating steps toward replacing the technology.

The whole thing is more of a political scare than a technical one in my view. One has to understand that the Chinese leadership has far more invested in Huawei’s success as a company than it could ever get back from a one time espionage triumph. After all, they’re the ones that own much of the company whether publicly or not, and actually getting caught just once using it that way would cost them billions personally as the company’s worldwide sales would vanish overnight.  Ah well…

Meanwhile, Clearwire has decided to take more of Sprint’s funds, just like last month, pushing Dish’s hopes further to the shoulder. Actually, I’ve been somewhat surprised at how little has happened on this front lately. Perhaps it’s too quiet, and in fact there is some wheeling and dealing going on between Dish and Softbank that we’ll hear about soon enough.

Regulators seem quite likely to stamp this one sooner or later, as they really want a third and perhaps fourth viable competitor to keep Verizon Wireless and AT&T honest while the Dish option just seems less likely to produce that.

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Categories: Mergers and Acquisitions · Wireless

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4 Comments So Far

  • Steve Maloney says:

    Robert, I heard a rumor last month that Level 3 was considering switching from Adva to Huawei. Have you heard anything like that? I would think that would create problems with fed’l contracts.

    • Haven’t heard that, but I would assume that they could have a separate segment of their network for federal contracts that didn’t touch Huawei gear if they wanted to.

      • Makes sense says:

        Robert, it would be interesting to hear your take on whether Huawei would be competitive if it weren’t for the U.S. cloud around their company on the one hand and the Chinese government’s support on the other. Would they be competitive here?

        • In order to answer that, one would have to quantify the unquantifiable – just what Chinese government ‘support’ brings to Huawei. Unlike in the US, where main relationships are campaign contributions and revolving door lobbyists, for major companies in China you’re talking about stuff that’s never on the books and is conducted at a personal level across all layers of an enterprise, each with its own agendas beneficiaries. They *can’t* be separated, which is why the proper court for justifiable anti-Huawei sentiment ought to be in tariffs and dumping and all that, rather than in national security.

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