The DOJ has asked the FCC to place the Softbank acquisition of Sprint on Hold
“DOJ, [Department of Homeland Security], and FBI (“the Agencies”) are currently reviewing this matter for any national security, law enforcement, and public safety issues but have not yet completed that effort. We therefore request that the Commission defer action until such time as the Agencies notify the Commission of the completion of their review and, based on the results of such review, request appropriate action by the Commission.
“DOJ, FBI, and DHS will advise the Commission promptly upon completion of our review.”
This comes after a period os silence from the DOJ and throws a wrench into the FCC review process that plays more into the hands of DISH, AT&T and others who wish to gain spectrum.
Maybe someone can explain these events? The function of the FCC is completely separate but equal from the function of the DOJ. I thought I understood that either or both could slow or stop this deal at anytime within their own review process, why would the DOJ ask the FCC to defer action unless they are looking at allocation spectrum rather than simply permitting a purchase?
I can only guess the DOJ will be needing the wireless expertise within the FCC for what they already have in mind.
They are separate departments but they more often work in concert than at odds or completely separate investigations. Since the issues have to do with the structure of how the ownership of companies and underlying spectrum is held, the DOJ works with the FCC. The DOJ's role is concentrated in the two areas of defense/security and anticompetitiveness/monopoly but they defer to the FCC for handling of spectrum licensing and other communications regulation. The FCC has developed their internal review process for determining industry competitiveness. They gather data from operators and others and take inputs from other public and private groups, holding public hearings and submissions for example. Even though the FCC has developed their own internal mechanisms for determining competitiveness, they defer to DOJ for setting the guidelines and final determinations in their area of responsibility. For example, the FCC uses a template/spreadsheet for evaluation of how much control operators have over the market and, therefore, underlying spectrum. They plug in figures from the operators and allow inputs/arguments as to how the inputs are applied and determination is made. However, this can be overridden or adjusted on advice of DOJ. Likewise, DOJ may review spectrum holdings and judge that they provide an operator, when combined with marketshare and other considerations, undue power over markets that threaten the monopoly status if the structure is allowed to move forward. While its up to the FCC to render rulings on the licensing of spectrum, the DOJ can, nonetheless, assert effective priority on the grounds that it impacts anticompetitveness.
The issue of security/defense can also be viewed somewhat in this same way: The DOJ may look at Huawei or ZTE's sales of equipment to a smaller operator as being not of a scale or nature to impact these concerns. However, when foreign participation is to the degree proposed by Softbank with involvement of vendors to them or one or more subsidiaries, then it can be viewed as crossing over the line into their areas of concern.
The DOJ is normally very tight lipped about their internal review process.. what I posted is the complete letter minus the header and footer and no further information is now apparently available.
The letter states that the review is in regards to "...currently reviewing this matter for any
national security, law enforcement, and public safety issues but have not yet completed that
What is not stated may be as important as what is: The DOJ has not objected on the grounds of anti-competitiveness, similar to in their review of the AT&T attempt to acquire T-Mobile. While that does not rule out anti-trust issues, the posture has thus far fit with what I had thought - that their view would be that the deal is more pro and anti-competitive given the overall circumstances.
What are the nature of DOJ's concerns? The first issue is the degree of foreign ownership. The guidelines are for over 25% ownership of major US telecommunications companies to come into question. This rule has been set aside in the ownership of T-Mobile, Verizon Wireless, and owing to the international conglomerate spread nature of AT&T. Apparently, this is not DOJ's current primary concern but that does not rule it out. Past concerns of Homeland Defense, DOD, law enforcement and public safety groups/agencies in other cases has been over security and network access/exclusivity. The issue of supply of network infrastructure by Chinese companies Huawei and ZTE may be part of their concerns. However, its my understanding that Clearwire's use of these vendors has been such that it is argued as secondary/supplemental to the core network where security could be circumvented and that both companies have offered assurances including third party review. Nonetheless, DOJ may wish for there to be requirements placed on the deal including in other areas such as how 900MHz will be treated in the future so that the issues of interference and collaboration with public safety are assured.
What this does in regards to DISH and AT&T or others who have called for a delay and a review of the spectrum aggregation is that it gives them the time they say they need. However, since FCC will undoubtedly comply with DOJ's request, it takes the issue off the table. The FCC may probably not rule on DISH's motion.. since it would already have been tabled.