On March 19, I blogged about the clever U.S. Government
head-fake "approval" of T-Mobile's acquisition of smaller U.S. carrier
MetroPCS (link to that post: http://mbplrcbd.blogspot.hk/2013/03/exposing-clever-trade-barrier.html).
Seemingly exercising its authority to review the transaction
in the context of “… public interest factors...determining whether to
grant a foreign-affiliated carrier's application…including…national security,
law enforcement issues, foreign policy and trade concerns,” the FCC
approved the deal with an interesting amendment to previous agreements with
T-Mobile which requires the carrier to provide the Departments of Justice and
Homeland Security a list of current vendors and equipment and advance warning
before selecting any new vendor and, related to either or both, to “negotiate
in good faith to resolve any national security, law enforcement or public
safety concerns DOJ or DHS may raise in response to any disclosure…”
Now, on the face of it, this seems reasonable enough,
although I think that most informed stakeholders caught the Government's
anti-China-based telecom vendor wink-and-nod.
If they didn't, however, House Intelligence Chairman Mike
Rogers spewed it out rather plainly in his March 29 Sinophobic spittle-spraying
statements about the concurrent Government review of Japan-based Softbank's
purchase of the majority stake of Sprint. As I blogged that day (http://mbplrcbd.blogspot.hk/2013/03/ten-days-ago-i-posted-on-what-i-called.html),
Rogers claimed that he had secured Sprint and Softbank promises to not deploy
Huawei gear in its U.S. networks, and that he expected the same to be codified
in any Government approval of the deal (industry scuttlebutt has it, by the
way, that certain of the commercial parties that Rogers references were puzzled
by his comment, given that they don't recall having such conversations with him).
While it’s unclear whether anyone has any real visibility
into the Sprint-Softbank deliberations, it’s fair to imagine that the path will
follow the trail blazed by the T-Mobile/MetroPCS model.
Now, while all of this was going on, the U.S. Administration
and Congress were struggling to agree a budget so that a full-fledged Federal
Government furlough might be avoided come the end of March (for more on this,
see my whimsical February 28th post: http://mbplrcbd.blogspot.hk/2013/02/of-furloughs-past-and-future.html).
Tucked inside the 240-page spending bill approved by the
Congress and signed by the President in the waning days of March was a tiny
little paragraph (Section 516) which, riding the wave of cyber-histrionics,
would preclude select Federal Government Agencies from procuring information
and communications technology (ICT) gear from companies "owned, directed
or subsidized" by the Peoples' Republic of China. This little seed
of a potentially disastrous trade war was reportedly tacked on late-in-the-day
by none other than Rep. Frank Wolf (Remember him? See my blog post from April
29, 2012: http://mbplrcbd.blogspot.hk/2012/04/fun-with-facts-featuring-rep-wolf-r-va.html).
After two years of escalating U.S. Government cyber-veiled
China-bashing, the end of March 2013 seems to have defined an inflection point,
at least in terms of holding hostage legitimate commercial entities and
activities in vain attempts to change Chinese Government behavior.
At a March 28 press conference China's Foreign Ministry
Spokesperson Hong Lei responded to a question about Section 516: "The
bill uses cyber security as an excuse to take discriminatory steps against
Chinese companies. It does not help with the mutual trust between China
and the United States and will interfere with bilateral economic and trade
relations. We urge the U.S. to abandon the practice and do more that is
conducive to China-U.S. mutual trust and development of bilateral relations."
But the real heavy-hitters weighed in just a week later.
In an April 4 letter addressed to House and Senate
leadership, The U.S. Chamber of Commerce, Information Technology Industry
Council, Business Software Alliance, and eight other prominent industry and
technology associations communicated American industry's sympathy for the
Government's IT security concerns but further expressed its strong belief that
"geographic-based restrictions are ineffective and promote a false
sense of security." The letter further warned that "Section
516 creates challenges that could undermine U.S.-based companies global
competitiveness," citing specific concerns that other countries might
borrow from the U.S. model and adopt similar restrictions targeting U.S.
companies.
(Aside: Gee, all of that sounds remarkably familiar.
Check out the tail end of this Bloomberg TV interview from last October:
(http://www.bloomberg.com/video/huawei-s-plummer-says-house-report-almost-reckless-wdjt~TtIS6GcjZBX5ANMUA.html); or
note my quote in the more recent January 2013 Reuters article on related
matters: "Blackballing legitimate multinationals based on country
of origin is reckless, both in terms of fostering a dangerously false sense of
cyber-security and in threatening the free and fair global trading system that
the U.S. has championed for the last 60-plus years." (http://www.reuters.com/article/2013/01/07/us-huawei-alamos-idUSBRE90608B20130107)
Things got even more interesting when - a mere day after the
U.S. industry missive to Congress was delivered - The Hill (a
D.C.-based political trade pub) reported that the White House had come out
against Section 516 (I know, I know - they signed the bill and now are opposing
a provision in the bill. Lets not go there right now...). Link
to The Hill's report: http://thehill.com/blogs/hillicon-valley/technology/292153-white-house-criticizes-ban-on-chinese-tech-products,
which includes the following key quotes from a White House spokesperson:
"The undefined terms of this provision will make
implementation challenging."
"It could prove highly disruptive without
significantly enhancing the affected agencies’ cybersecurity. While the
Administration has raised concerns about the cyber threats emanating from
China, resolving this issue requires open dialogue between the U.S. and
China."
(To that latter point: Check out my March 28, 2012 post on this topic: http://mbplrcbd.blogspot.hk/2012/03/mad-about-cyber-security.html).
It would seem that rational thought is breaking out all over
the place.
But, let's not get head-faked again.
Zip back up to the opening paragraphs of this post.
The wink-and-nod FCC provisions attached to the T-Mobile/Metro and,
presumably (not-yet-confirmed), Softbank/Sprint deals are no less
market-distorting, anti-competitive and trade-war incendiary than Section 516
of the budget bill. And, the sentiments from U.S. industry and the White
House expressed in relation to Section 516 are no less relevant to the FCC
provisions.
As long as we're cleaning house, we would be remiss if we
were not to get to all of the nooks and crannies…
This will bear watching.
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