Yet there is more to this than innovative platforms, synergies and returns for shareholders. There is the potential for a SoftBank-acquired Sprint cellular network to serve as a convenient transmission path for malware and spyware, courtesy of SoftBank’s Chinese business partners or their government.
If you think that’s overblown, consider this. Last Fall, the House Permanent Select Committee on Intelligence (HPSCI) publicly released a bipartisan report on China’s aggressive cyber-spying efforts. In addition to state-run organizations, the HPSCI report pointed an accusatory finger directly at two of China’s major cellular equipment manufacturers, Huawei and ZTE, saying that both companies served as fronts for China’s cyber-espionage operations. It just so happens that SoftBank has significant business relationships with both companies. Just a click on the SoftBank website shows several Huawei and ZTE handsets SoftBank customers can buy, but their relationship with SoftBank goes far beyond that. Huawei built AXGP, that ultra-fast mobile broadband network SoftBank uses to handle its Tokyo traffic.
You might think that any security risk posed by a merger between SoftBank and Sprint could be mitigated by moving a lot of sensitive data to landlines. Think again. We are now moving into the Mobile Cyber Age. The proliferation of smartphones and tablets means that more of these mobile devices will be used instead of desktops and laptops. It also means that more sensitive data will be moved on to cellular and mobile broadband networks. In one fell swoop, any attempt to protect the nation’s critical infrastructure from cyberattacks could be circumvented if these mobile networks aren’t secured first.
While SoftBank has explicitly stated it would not use Huawei equipment on the Sprint network, the facts are that Huawei equipment already exists on subsidiary networks. There’s no question this merger requires a lot more scrutiny before it can become reality.
Leighton is a retired US Air Force colonel and the founder and president of Cedric Leighton Associates, a strategic risk consultancy.