Inline with New Law, Sprint and Softbank Say They Would Not Purchase Equipment from Huawei, and that Existing Equipment would be Phased Out.
Sprint has agreed to stop purchasing IT equipment from Huawei, and has agreed to replace any such equipment that is already in place. The move comes after a law was signed into effect last week and as Sprint gears up to merge with Japan’s Softbank.
According to section 516 (PDF) of last week’s newly signed law, the Departments of Commerce and Justice, as well as NASA and the National Science Foundation, are forbidden from purchasing IT gear that was “produced, manufactured or assembled by one or more entities that are owned, directed or subsidized by the People’s Republic of China.”
The law caused a stir in China, who promptly condemned it. Shen Danyang, a spokesman of China’s Ministry of Commerce, the provisions in the stopgap “has seriously violated the fair trade rule and damaged China-US mutual trust and bilateral cooperation in high-tech sectors.”
On the home front, Congress has been moving towards cutting China out of the picture, releasing reports and making statements to the media that warn about the chance of espionage and other security risks, naming two companies more than others; Huawei and ZTE Corp.
As news of the purchasing restrictions spread, at least one company gave assurances that they would stop using China-made telecom equipment. While they wait for final approval from the FCC, Sprint and Softbank have told Congress that they would not purchase equipment from Huawei, and that they would phase existing equipment out.
“I have met with SoftBank and Sprint regarding this merger and was assured they would not integrate Huawei in to the Sprint network and would take mitigation efforts to replace Huawei equipment in the Clearwire network,” Representative Mike Rogers, head of the House Intelligence Committee, said in a statement. “I am pleased with their mitigation plans, but will continue to look for opportunities to improve the government’s existing authorities to thoroughly review all the national security aspects of proposed transactions.”
When asked for reaction, Huawei’s Bill Plummer said, “If government approval of the transaction is somehow contingent on an agreement to restrict purchase of equipment from any vendor based on the flag of heritage, then it is a sad day for free and open global trade and it does nothing to secure the network. Everyone is global and every company faces the same cyber challenges.”