Google Joins Talks In Bid To Salvage T-Mobile Merger

from the frankenstein-competition dept

We recently noted that the DOJ seemed to have shifted its thinking and is now likely to approve T-Mobile's highly problematic $26 billion merger with Sprint. Why? As it stands, not only do such telecom mergers almost always result in significant layoffs (despite what T-Mobile is promising employees), the deal would eliminate one of just four major US wireless competitors, dramatically reducing any incentive to compete on price. So T-Mobile lobbyists have launched a hail Mary pass: they're proposing spinning off a part of the company and potentially selling it to a competitor like Dish Network, creating a new fourth carrier.

The problem: Wall Street doesn't believe the assets Dish will obtain (like prepaid brand Boost Mobile) will be enough to craft a fully viable fourth character. There's also a lot of doubt that Dish Network, with a long history of hoovering up valuable spectrum and then doing absolutely nothing with it, would actually be competent enough to pull such a plan off. Enter Google, which has now also been rumored as a possible dance partner in T-Mobile's gambit to salvage the merger:

"Google is in talks to help create a fourth US wireless carrier, even as Sprint and T-Mobile struggle to get their controversial merger cleared by federal and state authorities, The Post has learned. Alan Mulally, a former chief executive at Ford Motor and a current Alphabet director, has recently been in discussions with satellite TV giant Dish Network about a plan to create a fourth US telecom player, sources said.

The idea is for Alphabet-owned Google and Dish to launch a new wireless giant with the help of assets acquired from T-Mobile, which is now under pressure from the Department of Justice to aid such a project in order to get clearance for its $26 billion merger with Sprint, according to sources close to the situation."

Dish CEO Charlie Ergen has long enjoyed a reputation in telecom for being difficult to strike deals with, so there's still no guarantee this proposal sticks together. Google has also been prone toward inconsistency on the telecom front after an executive sea change resulting in the company largely mothballing its Google Fiber expansion. It's also possible that Google isn't actually all that interested, and the leaks to the Post are intentional on T-Mobile's part to sell the idea that there are alternatives to the far simpler approach: blocking the deal outright.

Whichever dance partners we're talking about, the biggest problem will be regulatory oversight of the creation of this new fourth carrier. Ajit Pai has yet to hold any major company accountable on any subject of substance. Building and sustaining a viable fourth competitor will require some stringent oversight and meaningful penalties should the proposal falter, neither of which are exactly Pai's strong suit. At the end of the day, the simplest way to maintain four competitors would be to block the deal outright and force Sprint to explore solutions outside of the merger process.

Filed Under: antitrust, competition, mergers
Companies: dish, google, sprint, t-mobile

Dish To Buy Parts of T-Mobile To Save Sprint Merger, But It's Not Likely To Help

from the ill-communication dept

We recently noted that the DOJ seemed to have shifted its thinking and is now likely to approve T-Mobile's highly problematic $25 billion merger with Sprint. Why? As it stands, the merger would eliminate one of just four major US wireless competitors, dramatically reducing any incentive to compete on price and inevitably resulting in layoffs. So T-Mobile lobbyists have launched a hail Mary pass: they're proposing spinning off a part of the company and potentially selling it to a competitor like Dish Network. This would create a new fourth carrier to (theoretically) help offset any potential competitive harm.

That theory gained traction again with yet more reports stating that Dish would buy about $6 billion in T-Mobile and Sprint assets in an attempt to force this new fourth carrier into existence:

"Dish could announce a deal as soon as this week for assets including wireless spectrum and Sprint’s Boost Mobile brand, said the people, who asked to not be identified because the matter isn’t public. The deal hasn’t been finalized and talks could still fall through, said the people.

The potential divestitures are aimed at appeasing the Justice Department, which wants T-Mobile and Sprint to sell enough assets to ensure that the U.S. maintains at least four viable wireless players.

While this is likely going to be played up by the press and loyal T-Mobile politicians as the perfect "solution" to the reduced competition issue the deal creates, that's not true. The assets Dish is buying (Sprint's prepaid brand Boost Mobile) are largely incongruent with actually building a viable fourth carrier, so while this deal might be great for Dish (which has been hoovering up and squatting on spectrum for years with zero penalty) it's not going to accomplish what T-Mobile and the government are going to claim when DOJ approval is announced this week or next.

Wall Street analyst Craig Moffett put it this way in a research note to investors:

"We’re not sure why that deal is sensible for anyone involved. Dish, remember, already has more spectrum than they know what to do with; what they lack is money and ground facilities, and the deal described on Friday wouldn’t deliver either one. Instead, it would make both problems worse. And while Boost would help provide a baseline revenue stream in return for an upfront purchase price, the fit between Boost and Dish is, at best, superficial.

Yes, Boost serves a budget-conscious consumer, as does Dish Network’s satellite business, but Boost is a mostly urban brand and Dish’s satellite business is an increasingly rural one. And, more urgently, Boost’s distribution poses a huge problem. Historically, Boost was heavily dependent on Walmart for retail gross additions, but they’ve since lost that distribution channel. They would also, presumably, lose distribution through Sprint-branded stores (and even if, as a condition of the deal, they didn’t, does anyone think that Sprint/T-Mobile store employees would direct any volume to a spun-off Boost brand?) That would leave Dish with a brand that has a churn rate as high as 5% per month to be spun off with an inadequate distribution front end, and with no realistic path to replace that front end before the subscriber base was, well, gone."

That's a lengthy way of saying the spin off and sale of assets to Dish isn't going to work, and the end product is not going to be an adequate replacement for technically killing off Sprint. The effort is theatrical, and likely to end with just three major competitors anyway.

The other major problem is regulatory accountability and follow through. Creating and maintaining an entirely new viable fourth carrier while ensuring Dish doesn't just squat on spectrum for later sale is going to require some significant regulatory guard rails and FCC oversight. Who exactly is going to shepard this process, Ajit Pai? The same Ajit Pai that has yet to stand up to any major company on any issue of substance? The same Ajit Pai who didn't think any meaningful conditions were required to protect jobs and consumers from the deal's inevitable impact? The same guy who thinks oversight of predatory natural monopolies isn't necessary? Good luck with that.

At the end of the day Dish's involvement will be sold as an amazing solution to the deal's biggest issues. But in reality the simpler, safer, and saner option remains to just block the deal outright. Just like regulators did when they blocked AT&T from buying T-Mobile in 2011, and when Sprint tried the same thing in 2014. A turd is still a turd, even when you put an adorable little hat on it.

Filed Under: antitrust, competition, doj, fcc, mergers, spectrum, wireless
Companies: dish, sprint, t-mobile

10 State AGs Join Forces, Will Sue To Stop T-Mobile Sprint Merger

from the bigger-ain't-better dept

While the FCC has indicated it's more than eager to approve T-Mobile's $25 billion merger with Sprint (despite an endless list of red flags), other regulators have proven to be a harder sell. The DOJ, for example, seems a bit sheepish on signing off on a deal that will reduce already semi-tepid US wireless competition by 25%. They're correct to worry: US telecom is awash with examples of how such consolidation tends to devastate employment, and results in significantly higher rates for consumers and businesses alike.

Granted with the DOJ now run by former Verizon attorney Bill Barr, it's still very possible the DOJ approves the deal anyway. But even then, the deal is going to have to get past a new coalition of 10 state attorneys general, who say they've joined forces and will file a lawsuit to block the deal whether the DOJ approves it or not. New York Attorney General Letitia James and California Attorney General Xavier Becerra were fairly blunt in a statement announcing the move:

"When it comes to corporate power, bigger isn’t always better,” said Attorney General Letitia James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent."

While everybody is certainly welcome to their own opinions when it comes to tech policy, there's really not much of a debate when it comes to the impact mindless M&As have had on the telecom sector.

Comcast (and it's comically terrible customer service) was born from the mindless sector obsession with growth for growth's sake. This consolidation, especially in wired broadband, has left us with a clearly unhealthy sector with little real competition, resulting in some of the highest prices and slowest speeds in the developed world. There's not a single telecom metric the US isn't mediocre in, and it's a direct reflection of two things: regulatory capture and mindless merger mania. That's now being extended to wireless, where the reduction of overall competitors from four to three will dramatically reduce any incentive to, you know, actually try.

It's also pretty clear that when government tries to "fix" these anti-competitive unions via condition, it rarely works out well. The conditions imposed in these deals are often flimsy and proposed by the companies themselves (usually because they know they don't actually do much). Even then, companies are routinely free to ignore conditions without meaningful penalty, and many bipartisan incarnations of the FCC have simply refused to enforce them anyway. Pre-merger promises (and there's plenty attached to the T-Mobile deal) aren't worth the paper they're printed on, yet US policymakers adore pretending otherwise.

With former Verizon lawyers running both the FCC and DOJ, the chance that this administration imposes and then enforces tough deal conditions is slim to none. That leaves the more simple option: blocking the deal entirely. Some variant of this deal has been blocked twice already (AT&T's attempted T-Mobile acquisition in 2011, and Sprint's attempted merger in 2014), and for obvious reasons. Still, T-Mobile and Sprint executives are hoping that the Trump administration opens the door wide to approval anyway, leaving it (yet again) up to state AGs to actually protect the market and consumers in the face of federal apathy.

Filed Under: antitrust, california, doj, mergers, new york, state ags
Companies: sprint, t-mobile

Why, Exactly, Do We Still Trust Telecom Megamerger 'Synergy' Promises?

from the expensive-groundhog-day dept

America has a very Charlie Brown and Lucy football approach to its relationship with megamergers, especially in telecom. Time after time, major tech and telecom companies promise consumers and employees the earth, sea, and sky if they're allowed to become bigger and more powerful. And time after time these promised "synergies," jobs, and expanded investment promises wind up being empty. In merger after merger (especially in telecom), it's been made repeatedly clear these megadeals only really benefit investors and executives. For everybody else, they're an expensive shitshow.

The primary culprit continues to be the country's waning interest in meaningful antitrust enforcement, Luddite Judges, and the steady lobbyist erosion of antitrust itself. That was proven loudly when the DOJ recently tried to prove the obvious when it challenged AT&T's $86 billion acquisition of Time Warner. The government repeatedly provided economic models showcasing that the megadeal would immediately result in higher prices for consumers and competitors alike. But a lobbyist-dictated narrowing of what constitutes a competitive threat often leaves government lawyers trapped within narrow corridors of economic theory to prove painfully obvious points.

Ultimately, the DOJ's arguments were rejected by US District Court Judge Richard Leon, whose ruling (allowing the merger to proceed without a single condition) has been widely ridiculed for missing the forrest for the trees. At no point did Leon's thinking stumble anywhere near AT&T's obvious plan to use both its domination of "must have" content (like HBO) and the death of net neutrality synergistically to disadvantage competitors. That's not a theory; it's already happening. The DOJ didn't help its case by failing to mention net neutrality even once on trial or appeal, likely because it didn't want to highlight how while it was trying to protect consumers (allegedly), the Trump FCC was busy giving them a giant middle finger.

It didn't take long for AT&T to prove the DOJ's case, not that it apparently mattered. Before the ink was even dry on the deal, AT&T had jacked up the carriage costs of HBO for competitors, forcing companies like Dish Network to drop the channel after arguing they could no longer afford it. AT&T was also quick to jack up prices for its DirecTV satellite customers, including hikes in a bevy of misleading fees. And this week, word leaked out that AT&T will soon be getting rid of its $40 base plan, and replacing it with two new $50 and $70 plans (read: hike prices):

"Current DIRECTV NOW customers will be able to keep their old packages but with a $10 a month price hike starting on their next bill. According to our sources as long as you stay subscribed, you will be able to keep your current DIRECTV NOW package. If you leave, you may not be able to resubscribe to the old DIRECTV NOW packages."

While AT&T tries to soften the blow by including HBO in both new tiers, it's still a price hike. This is technically the second price hike for AT&T's streaming service in the last year, and the price of AT&T's cheapest plan has now jumped $15 in just eight months. AT&T had previously sold HBO standalone to these customers for as little as $5, so given the $15 hike in just eight months, you can probably do the math.

This isn't surprising. And it's precisely what the DOJ and consumer groups predicted. AT&T saddled itself with so much debt from its 2015 DirecTV and 2018 Time Warner mergers that it's now forced to raise rates to claw out from under said debt. The problem (for AT&T): as AT&T jacks up prices it's simply driving more and customers to the exits, making its financial footing even more precarious. Of course, being umbilically tied our intelligence apparatus AT&T's too big to fail, so actual repercussions for AT&T's merger mania will be hard to come by. Customers, taxpayers, and employees are the ones footing the bill.

One of the "fun" things about US merger mania is that once a deal is done, few (including journalists) go back to see if the merger promises materialized. In this case, it's important to point how that AT&T court filings not only laughed off the DOJ's claims that the deal would raise rates, the company repeatedly proclaimed that the merger would result in lower prices for all as competition flourished:

"The evidence overwhelmingly showed that this merger is likely to enhance competition substantially, because it will enable the merged company to reduce prices, offer innovative video products, and compete more effectively against the increasingly powerful, vertically integrated 'FAANG' [Facebook, Apple, Amazon, Netflix, and Google] companies," AT&T stated in a post-trial brief.

"There is no sound evidence from which the court could fairly conclude that retail pay-TV prices are likely to increase," AT&T said in the wake of the trial. The Dallas-based telecom giant insisted that "merger efficiencies will begin exerting downward pressure on consumer prices almost immediately" post merger.

Yet here we are. In telecom, the repetition of this same story is borderline purgatorial. American consumers witnessed the exact same problems in the wake of Comcast's 2011 merger with NBC, and Charter Spectrum's 2016 merger with Time Warner Cable. And we're now happily preparing to do the same thing with the merger of two of just four wireless giants: T-Mobile and Sprint. At some point it begins to feel less like reality and more like some purgatorial comedy where we stumble dumbly through the same exact minefields, gleaning little to no wisdom from either experience or history.

Filed Under: competition, mergers, synergy, telcos
Companies: sprint, t-mobile

Report Claims Trump Pushed For AT&T Time Warner DOJ Lawsuit To Hurt CNN, Help Rupert Murdoch

from the old-boys-club dept

The late 2017 DOJ announcement that it would be suing to stop AT&T's $86 billion merger with Time Warner turned more than a few heads. While the DOJ insisted that the move was driven entirely by an interest in protecting consumers, the decision was utterly discordant with the Trump administration's often facts-optional assault on consumer protections with bipartisan support, ranging from net neutrality to basic environmental protections. And the DOJ's sudden concern about the impact of media consolidation was in stark contrast to Trump's FCC, where demolishing decades-old media consolidation rules has been a top priority.

At the time of the lawsuit, many wondered if some other motivations were really at play. After all, Rupert Murdoch had been pushing Trump for more than a year to scuttle the deal for anti-competitive reasons. Time Warner rejected a News Corp. acquisition offer in 2014, and more recently AT&T rebuffed the company's attempt to buy CNN... twice. Time Warner employees quoted at the time believed Murdoch was the driving motivation for the political pressure to quash the deal:

"According to executives I spoke with, the theory is that Murdoch privately encouraged Trump to scuttle the deal as revenge for Time Warner rejecting Murdoch’s $80 billion takeover offer in 2014. “A direct competitor, who was spurned from buying us, perhaps is trying to influence the judicial process? That’s corruption on top of corruption,” one Time Warner executive told me."

No hard evidence has proven any such connection, though if it were true, it's hard to think anybody involved in such an effort would put of of it in writing.

Another unproven theory generally gained more widespread public acceptance: that Trump had pressured the DOJ to intervene in the deal because of Time Warner-owned CNN's critical coverage of Trump. That obviously raised a lot of First Amendment questions about whether the President was pressing a government agency to help hamstring or otherwise silence a critic.

Trump and the DOJ repeatedly stated that Trump played no role in the the pressure for the suit. And Trump himself repeatedly stated he was "not going to get involved" in the case. Yet a New Yorker piece this week quotes sources who say that promise was never actually adhered to:

"...in the late summer of 2017, a few months before the Justice Department filed suit, Trump ordered Gary Cohn, then the director of the National Economic Council, to pressure the Justice Department to intervene. According to a well-informed source, Trump called Cohn into the Oval Office along with John Kelly, who had just become the chief of staff, and said in exasperation to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked!"

Cohn, a former president of Goldman Sachs, evidently understood that it would be highly improper for a President to use the Justice Department to undermine two of the most powerful companies in the country as punishment for unfavorable news coverage, and as a reward for a competing news organization that boosted him. According to the source, as Cohn walked out of the meeting he told Kelly, “Don’t you fucking dare call the Justice Department. We are not going to do business that way."

Whether that was the end of it isn't clear. I'll note that many consumer advocates I've spoken to over the last few years believe that the DOJ under Makan Delrahim genuinely believed it was doing the right thing in challenging the suit. That of course doesn't mean Trump and Murdoch didn't try hard all the same. The piece also quotes former government insiders like Blair Levin, who ponders whether Murdoch was an architect of Trump's ire toward the deal:

"Blair Levin, the former F.C.C. official, told me, “There may be innocent explanations.” But, he adds, “Trump famously said you’re going to get sick and tired of winning, and that may not be true for the rest of America, but it sure is true of Murdoch.” He says of Murdoch, “He’s an incredibly cunning political player. He leaves no fingerprints. He’s been in the game of influencing government behavior to his benefit longer than most of us have been alive."

Of course hunches, theories, and anonymous sources aren't proof. And it remains possible that the DOJ under Makan Delrahim was just suddenly and genuinely concerned about vertical integration. Still, that flies in the face of everything the Trump administration (and particularly his friend Ajit Pai at the FCC) has stood for as they've worked tirelessly to make it easier for giant companies and broadcasters to merge. And it seems entirely possible that having been rebuffed by AT&T twice, Murdoch hoped the DOJ would win its case and force AT&T to sell off CNN to News Corporation. All under the guise of consumer protection.

If this all really was Murdoch gamesmanship, it ended in a remarkable face plant. The DOJ not only lost its initial case challenging the merger, it recently lost on appeal. In part because decades of lobbying have weakened antitrust, making it harder than ever for DOJ lawyers to make even the most obvious of points (in this case that AT&T would quickly raise its competitors prices for must have content, something that occurred before the ink deal was even dry).

The DOJ also failed because it refused to draw attention to net neutrality. The elimination of net neutrality by the Trump FCC opened the door wide to AT&T abusing its role as network operator to hamstring its competitors, most notably by only applying usage caps and overage fees on users that use competing streaming services. But the DOJ didn't mention net neutrality once during the trial, likely in part because it would have only highlighted the FCC's culpability in making this megamerger even more problematic than it already was.

Congress is still investigating whether politics and personal gain played a starring role in the Trump administration's sudden, uncharacteristic concern about monopoly power. One gets the sneaking suspicion there will be more details forthcoming.

Filed Under: antitrust, doj, donald trump, gary cohn, john kelly, mergers, rupert murdoch
Companies: at&t, cnn, fox, time warner

The Revolving Door Spins Hard: FCC's Clyburn Now Lobbying For T-Mobile

from the pivot-on-a-dime dept

If you hadn't noticed by now, U.S. lobbying restrictions are the legislative and police equivalent of damp, musty cardboard. While there are some basic guidelines in place, they're so filled with loopholes as to be largely useless. One of the bigger problems is the far-too-generous definition of lobbyist we currently employ, which lets lobbyists tap dance around disclosure rules if they just... pretend they're doing something else.

One case in point is Comcast's top lobbyist David Cohen, who routinely lobbies the government, but tap dances around the rules by calling himself the company's Chief Diversity Officer. Lobbying rules updated in 2007 require that if an employee spends more than 20% of their time lobbying in DC, they have to register with the government as a lobbyist. As such, folks like Cohen just call what they're doing something else, usually obfuscating their lobbying under what superficially appear to be more altruistic endeavors that often involve lobbying state and more local officials outside of DC.

Since US rules prevent regulators and Senators from immediately jumping into direct lobbying for the first year or two post-government, they'll often just call themselves "consultants" or "advisors" as they help their new clients lobby the government. Case in point: recently departed FCC Commissioner Mignon Clyburn this week announced that she'd be "advising" T-Mobile as the company tries to gain regulatory approval for its job and competition-eroding megamerger with Sprint:

"I’m advising T-Mobile and Sprint as it seeks to accelerate the creation of an inclusive nationwide 5G network on how to best build a bridge across the digital divide,” Clyburn told Politico.

Clyburn left her post last year, telling media outlets at the time she would “be a better public servant not serving on the FCC."

The move caught the consumer advocacy and activist community by surprise, given Clyburn's support of net neutrality (which T-Mobile opposed), and the solid work she did at the FCC trying to rein in an utterly broken prison telco monopoly. While T-Mobile and Sprint have tried to claim that the merger will somehow speed up America's quest for faster 5G networks (a claim Clyburn's clearly piggybacking on), they themselves have even acknowledged that's not really true.

Let's be real: Clyburn's there to help T-Mobile seal the deal via concessions. Concessions that aren't likely to actually thwart the most harmful impacts of the deal, particularly the 10,000 to 30,000 jobs that are expected to be cut as the combined company streamlines operations and inevitably eliminates redundant retail, support, and middle management positions. And concessions that the FCC probably won't enforce anyway, especially in the wake of the telecom lobby and T-Mobile having successfully convinced the Pai FCC to effectively neuter its oversight authority over the broken telecom sector.

Here in reality, T-Mobile's quest for regulatory approval for its merger hasn't been going particularly well. Every single consumer group has warned that the deal will consolidate an already troubled wireless sector, reducing the number of major wireless carriers from four to three -- dramatically reducing an already muted incentive to actually compete on price. Americans already pay some of the highest prices for wireless and fixed broadband among all developed nations, and the idea that more consolidation and fewer competitors will somehow fix this is simply not supported by factual data or reality:

"“This is not that complicated,” Fight For the Future Executive Director Evan Greer told Motherboard.

“More centralization and less competition isn't good for anyone except wealthy CEOs of telecom companies,” Greer said. “Telecom lobbyists have a long history of pretending that their policy goals are somehow magically aligned with helping the downtrodden, but it's a lie. This merger will mean more expensive, crappier cell phone plans, and hit the people who can least afford it the hardest."

Clyburn may have done some important work while at the FCC, but that doesn't mitigate the fact that revolving door regulation is highly corrosive.

FCC Commissioners have a long proud history of claiming to represent the public (once in a great while even actually doing so!), then shuffling off to lobby for telecom operators who'll actively make the problem (limited competition, high prices, terrible customer service) worse. Former FCC Commissioner Robert McDowell was already on T-Mobile's payroll, telling anybody who'll listen this merger will be "great for America." Former FCC Commissioner Meredith Attwell Baker quickly hopped from the FCC to lobbyist spots in both the wireless sector and at Comcast. Former FCC boss Mike Powell is now the chief of the cable industry's biggest lobbying operation, the NCTA.

Efforts to actually fix the very broken US broadband sector are routinely derailed by revolving door lobbyists. And any efforts to shore up our flimsy lobbying guidelines are quickly derailed by those same dollar per holler influence peddlers. Across countless sectors we're stuck in a catch 22 where meaningful progress is routinely thwarted until public anger finally boils over, and the United States finally acknowledges it has a very real problem that will require more than just routine grumbling to resolve.

Filed Under: fcc, lobbying, mergers, mignon clyburn, revolving door, soft corruption
Companies: sprint, t-mobile

Mystery Lobbying Group Using Huawei Security Hysteria To Target Sprint, T-Mobile Merger

from the ill-communication dept

So a few months back, a group mysteriously calling itself "Protect Amerca's Wireless" popped up on the internet and began attacking the Sprint, T-Mobile merger. The campaign, which has all the usual signs of astroturf, takes particular aim at both companies' use of Huawei network hardware -- gear that the organization insists "could give countries like Saudi Arabia, China, Germany, and Japan direct access to our networks through the use of foreign-made networking equipment and billions of foreign money."

In short, the mystery group is piggybacking on the recent hysteria surrounding Huawei to try and scuttle the merger, which is certainly a problematic merger, but largely for employment and competition reasons.

Like most policy and political influence efforts, the campaign doesn't list its funders on its website, simply insisting it's an organic coalition of a few think tanks and some "foreign policy and national security professionals." I reached out to the group for more details on its financing, and was told (falsely) that the group couldn't tell me who finances it because as a 501(c)(3) it's prohibited by law from doing so.

So we've noted for a while that while some of the criticism of Huawei has been justified, much of it has been manufactured by Huawei competitors like Cisco.

And while recent allegations that Huawei may have tap-danced around Iranian sanctions may or may not be true, the claims that the company routinely spies on Americans for the Chinese government has never been publicly proven. In fact, an 18 month study by the White House in 2012 (the last time this hysteria crested) found no evidence supporting such allegations. Germany just this week stated it wouldn't join the Huawei vilification party until somebody provides, you know, actual evidence.

US press coverage of the Huawei story usually fails to mention any of this. Nor is it mentioned that the United States has routinely been busted doing far worse. The Snowden docs, for example, showed how the NSA broke into Huawei, stole source code, and implanted backdoors, something that seems kind of important in conversational context. It's a solid example of how the US tech press isn't particularly keyed into its own nationalistic myopia. It also exemplifies the States' bad habit (both by government and the press) of pushing the idea that dubious and unethical behavior is only okay when we do it.

I'm still digging into who runs Protect America's Wireless (it's worth at least noting that former Rep. Mike Rogers, now an AT&T consultant, was at the outfit's launch). In the interim, it looks like both Sprint and T-Mobile believe are being told by the government that they'll likely have their competition-eroding merger approved if their owners (Deutsche Telekom and Softbank) are willing to remove all Huawei gear from their network and stop using the supplier moving forward:

"T-Mobile US Inc and Sprint Corp believe their foreign owners’ offer to stop using Huawei Technologies equipment will help with the United States clearing their $26 billion merger deal, sources said, underscoring the lengths to which Washington has gone to shut out the Chinese company."

Having watched the Trump FCC's other efforts to help blacklist Huawei, I'd be willing to bet that one of their only meaningful conditions affixed to their gushing approval of the deal will be promises by T-Mobile and Sprint that they won't use Huawei gear (omitted: the fact that neither currently does). This will help the FCC pretend that it hasn't abdicated its role as watchdog, with national security chatter obfuscating many of the terrible aspects of the deal (like the 30,000 potential job losses or the dramatic reduction in overall competition).

The duo get their unpopular merger, Cisco gets more business thanks to facts-optional protectionism, and consumers get bupkis. See how this game works?

Given all of the legitimately dubious things China routinely does, defending Huawei isn't exactly a hill I'm excited to die on. Still, I've been absolutely fascinated by the selective reasoning and hypocrisy as Huawei is increasingly blacklisted. It's particularly odd since the lax security in the internet of things and consumer network hardware space -- arguably just as big of a threat to national security -- receives only a tiny fraction of the same breathless attention by many of these same folks.

Huawei gets oddly singled out as some kind of unique bogeyman. In reality most major telecom operators, including US operators like AT&T, are every bit as sketchy as the allegations levied at Huawei. Dubious lobbying efforts? Check. Illegal and unethical efforts to screw consumers? Check. Massive corruption scandals? Check. Massive, legally-dubious wholesale domestic spying operations? You betcha. Most major telecom operators are government-pampered natural monopolies that don't have to play by the rules and more often than not win the most lucrative government contracts, thanks to their cozy relationship with intelligence.

Huawei may or may not have actually been involved in spying. Maybe someday somebody will actually provide public evidence proving they do. In the interim, it's pretty clear a sizable chunk of the current Huawei hysteria is being generated by the same companies that don't want to compete with Huawei, a layer of protectionism the press should at least mention in passing during the next round of pearl clutching.

Filed Under: astroturf, mergers, michael rogers, secrecy, transparency
Companies: huawei, protect america's wireless, sprint, t-mobile