FCC Blesses SoftBank/Sprint Union

Celebrating the Fourth of July, the Commission approves alien take-over of U.S wireless carrier.

As was expected, the FCC has approved SoftBank Corp.’s acquisition of majority control of Sprint Nextel, as well as Sprint’s acquisition of 100% control of WiMAX broadband provider Clearwire.  As is also the FCC’s somewhat inconvenient custom, the Order was released at the end of the day on Friday of a holiday weekend, so that the common folk had to read it during the holiday, even if we were trying to relax on the nearest beach.

The decision contains nothing earth-shaking.  It’s apparent that the FCC has become increasingly uncomfortable with the growing monopoly strength of AT&T and Verizon in the wireless marketplace, so it’ll do anything it reasonably can to help Sprint and T-Mobile become stronger marketplace competitors.  SoftBank is going to dump big bucks into Sprint, and Sprint has agreed to decommission its equipment from Chinese suppliers that some people worry might have subversive back-door software, so to quote a legendary comic character, “What, me worry?”

Antitrust considerations didn't give the Commission heartburn because SoftBank does not operate in the U.S., so there will be no competition-reducing horizontal merger of competitors.

Of interest to our clients who hold Educational Broadband Service (EBS) licenses and lease their spectrum to Clearwire, several EBS entities complained that Clearwire’s EBS spectrum lessors might not be complying with the regulatory requirement that at least 5% of the capacity of an EBS system be reserved for educational uses.  The FCC said that the charges had not been adequately proven, the complaining parties who lease spectrum to Clearwire should hold perhaps their tongues because they had previously certified that they themselves were in compliance, and there was nothing to indicate that Clearwire would not continue to honor its leases.

The impact on Clearwire’s wholesale customers was not of concern to the FCC because Sprint is virtually Clearwire’s only wholesale user now, so Sprint’s owning 100% of Clearwire should not hurt any other significant wholesale customer.

Other parties threw everything but the kitchen sink against the deal, raising whatever beefs they might have with Sprint, Clearwire, or Softbank.  The FCC found these complaints both speculative and, more importantly, outside the scope of this proceeding.  They will be dealt with separately when and if raised in an appropriate context, ideally with more meat on their bones.

Finally, the issue of foreign ownership of a major U.S. carrier proved not to be a significant problem. As it has frequently in recent years, the FCC made the findings necessary to permit foreign control of any U.S. common carrier – such control is permitted as long as the foreigner owners are not from overtly hostile countries (unless, perhaps, the carrier’s facilities are used for critical national security operations).  These days, only broadcasters and aeronautical radio control networks are still up against a stonewall severely limiting foreign ownership.

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