Dishing the dirt

Dish should think twice before accusing Softbank of dubious Chinese ties in their rivalry for Sprint

May 27, 2013
May 27, 2013

As we’ve already reported, Dish Network has been trying to discredit Japan’s Softbank, its rival bidder for US wireless provider Sprint Nextel. Dish says Softbank’s use of equipment made by Chinese firms Huawei and ZTE in Japan could imperil US national security, even though Softbank has already pledged not to use such equipment in the US.

Dish’s stance is pretty ironic given that US company Clearwire, which Sprint partly owns and is trying to fully acquire, already uses Huawei equipment. While Softbank has promised to pay $1 billion to remove it, Dish has taken that as another opportunity to smear Softbank’s bid, saying in a May 23 statement that Softbank’s removal plan merely “confirm[s] the serious national security risks” of its proposed acquisition. To add to the irony, Dish declines to say what it would do with the Huawei equipment if its bid were to win.

The icing on the cake, though, is that Dish too once worked with a Chinese company with dubious security credentials—a government-run military and aerospace outfit called China Great Wall Industry Corp (GWIC). In 1995, Dish leased a satellite called EchoStar1 to US company EchoStar, which used a GWIC rocket in its launch (at the time, EchoStar and Dish belonged to the same company).

Around the same time it was working with Dish and EchoStar, GWIC was up to some shady stuff. According to a US government investigation (pdf), the Chinese military was stealing US military technology (pdf, p.93) through GWIC’s relationship with several US companies, including through theft of a satellite encryption device (pdf, p.106). And from 1991 to 2007, the US government sanctioned the company five times for threatening national security by allegedly selling missile technology to Pakistan and Iran. It lifted that ban in 2008 after GWIC set up a team to comply with US laws.

To be fair, Dish’s relationship with GWIC was a long time ago, and there is no evidence that it knew of or was involved with GWIC’s technological espionage, even unwittingly. A Dish spokesman dismissed the relationship as irrelevant. “Almost 20 years ago, Dish used a Chinese rocket to successfully launch a satellite, as was common practice among satellite companies at that time,” he told Quartz. “We did so under the supervision and with the approval of the US government, assuring that US interests were protected.”

Still, given this history, Dish should be careful about trying to tar Softbank with guilt by association. Its campaign comes at a critical phase for the Softbank-Sprint deal, as the US Federal Communications Commission and the Committee on Foreign Investment in the US, which reviews deals for national security issues, are preparing to rule on the bid. And Dish’s tactics seem to be gaining traction. Though security worries have hardly been mentioned since the Softbank-Sprint deal announcement last October, a handful of politicians are now voicing concerns about them.

Of course, if Softbank’s bid presents genuine national security dangers, they should be investigated. But politicians and government agencies shouldn’t let themselves be swayed by spurious claims either. And if Dish is going to dish them out, it should be prepared to take them too.

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