CHARLES E. SCHUMER
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WASHINGTON, DC 20510
May 23, 2013
Jack Lew
Secretary
US Department of Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 202220
Mignon Clyburn
Acting Chairwoman
Federal Communications Commission
44512'" Street SW
Washington, DC 20554
Dear Secretary Lew and Chairwoman Clyburn:
BANKING
DEMOCRATIC POUCY &: COMMUNICATIONS
FINANCE
JUDICIARY
RULES
As a member of the Senate Judiciary Committee, as well as its Subcommittees on
Antitrust, Competition Policy and Consumer Rights, and on Privacy, Technology, and the Law, I
write to urge careful consideration of the proposed acquisition by SoftBank Corporation of a
controlling interest in Sprint Nextel Corporation, in light of the serious national security concerns
that this deal raises. The deal is subject to review by both the Committee on Foreign Investment
in the United States (CFIUS) and the Federal Communications Commission (FCC) because
control of Sprint and the substantial spectrum and common carrier licenses it holds would be
transferred to a foreign entity.
There are several reasons this deal requires careful scrutiny. First, the transfer of Sprint's
substantial U.S. telecommunications infrastructure to a foreign company raises national security
questions. Sprint, together with its affiliate Clearwire Corporation, controls more broadband
spectrum than any other company. It also controls a fiber optic network across the continental
United States and contracts with numerous federal agencies. Specifically, Sprint controls
approximately 40,000 miles of a high-capacity optical fiber network that carries a significant
portion of the country's Internet traffic-both public and private. In addition, Sprint has
significant and sensitive government contracts, including with the Department of Defense and
the General Services Administration. Sprint also operates special, secure networks---ealled
Peerless IP or PIP-used by the federal government. PIP networks provide the government with
an IP network that is completely isolated from the public Internet; these networks are important
for high security government communications, but that also means that any risk of their breach is
worthy of scrutiny.
SoftBank, which proposes to acquire Sprint as well as its spectrum, is a Japanese
company with alleged ties to China, the country that is currently the leading source of cyber
breaches. SoftBank's Japanese wireless network reportedly relies heavily on Chinese equipment
manufacturers with ties to the Chinese government; the House Select Committee on Intelligence
recently found the use of such equipment "could undermine core U.S. national.sccurity
interests." In addition, SoftBank was apparently affiliated with a company that admitted to
bribing Chinese officials in order to procure telecommunications contracts. As the New York
Times reported just this week, hacking from China appears to be on the rise. In light of these
facts, I am 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.
The protection of our critical infrastructure is a topic of intense legislative scrutiny;
indeed Congress is actively debating various proposals to improve our cybersecurity. In these
circumstances, I urge you to take a very careful look at SoftBank's proposed acquisition of
Sprint, a key provider ofV.S. communications networks and services, to ensure that our nation's
security is not placed at risk. Of course, I hope and expect that your respective agencies will take
whatever action you deem appropriate and consistent with existing rules, regulations, ethical
guidelines, and the public interest.
&~
Charles E. Schumer
United States Senator
cc: The Honorable Neal S. Wolin
The Honorable Ashton B. Carter
The Honorable Rand Beers
The Honorable James Cole