By Doug Palmer and Liana B. Baker
WASHINGTON May 24 An influential U.S. senator
expressed strong concerns on Friday about Japanese company
SoftBank Corp's plan to buy 70 percent of Sprint Nextel
, warning it could expose the United States to Chinese
"I have real concerns that this deal, if approved, could
make American industry and government agencies far more
susceptible to cyber attacks from China and the People's
Liberation Army," Senator Charles Schumer of New York said in a
"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," said Schumer, the third-ranking
Schumer elaborated on his concerns in a letter to U.S.
Treasury Secretary Jack Lew and acting Federal Communications
Commission Chairwoman Mignon Clyburn.
SoftBank owns nearly a third of the Chinese e-commerce
company Alibaba and uses equipment manufactured by Chinese
telecommunications companies Huawei and ZTE.
Both the FCC and the Committee on Foreign Investment in the
United States, an interagency panel chaired by the U.S.
Treasury, have to sign off on the proposed deal, which
U.S.-based Dish Network Corp has been trying to stop
because it wants to buy Sprint.
Dish ramped up a public relations offensive in Washington
this week against SoftBank, meeting with staffers on Capitol
Hill and taking out full-page ads in Washington newspapers.
The satellite company has been trying to draw parallels to
the 2006 Dubai Ports World controversy, when a political storm
disrupted a deal by the United Arab Emirates company to buy
several U.S. ports even after it was approved by national
Schumer was also involved in bringing attention to that
Matt House, a spokesman for Schumer, confirmed the senator
had discussed the issue with Jessica Straus, his former campaign
finance director who now works for Dish as its government
But Schumer decided he had concerns about the
SoftBank-Sprint deal before his conversation with Straus, House
Questions about Straus' ties to Schumer are "a sideshow that
fails to address the serious national security concerns raised
by a SoftBank-Sprint deal that have been recognized by a chorus
of leaders on both sides of the aisle," Dish spokesman Bob Toevs
SoftBank bid $20.1 billion last October for a 70 percent
stake in Sprint. Dish countered with its own $25.5 billion offer
in April and quickly launched an offensive to undermine
SoftBank's standing with regulators and the public.
In his letter to Lew and Clyburn, Schumer said the
SoftBank-Sprint deal raised national security concerns because
Sprint, together with its affiliate Clearwire Corp,
controlled more broadband spectrum than any other company.
As part of the deal, SoftBank has promised to remove Huawei
equipment from Clearwire's systems.
"Unlike Dish, SoftBank has publicly committed to removing
equipment already located inside a U.S. network that the
government has national security concerns about. SoftBank's
proposal therefore, enhances U.S. national security," said Jim
Barron, managing director of Sard Verbinnen & Co in New York, a
public relations firm working for SoftBank.
"Dish has made no such commitment to remove this network
equipment and to do so would require Dish to further increase
the amount of debt it will need to complete any transaction,"
While Dish has not committed to removing Clearwire's Huawei
equipment if it buys Sprint, Toevs, the Dish spokesman, pointed
to a Dish statement on Thursday saying the satellite company was
"committed to working with the appropriate agencies to meet
national security goals."