SoftBank, a major Japanese telecommunications company, is seeking to acquire America’s third largest telecommunications company, Sprint, for $20 billion. It is possible that a combination of anti-foreign investment politicians, community groups, the Federal Communications Commission (FCC), the Department of Justice (DOJ) and the California Public Utilities Commission (CPUC) will seek to oppose this merger.
The reasons for opposing the merger will largely be driven by outdated 19th century antitrust laws and/or a fear of foreign investments in telecommunications. For example, the independent Chinese telecommunications company, Huawei, is facing overwhelming obstacles to investing in the U.S., largely due to political considerations inspired by anti-China bashing by both political parties. Many congressional leaders are contending that Huawei could misuse its U.S. investments to engage in a broad range of economic espionage.
The National Asian American Coalition (NAAC) does not agree with those who fear foreign investments or those who oppose companies getting larger even if it is in the clear public interest. Based upon our 21st century responsible corporate investment philosophy, we have sent preliminary letters to the antitrust division of the DOJ, the FCC and the CPUC. Our regulatory letters set forth conditions that SoftBank must meet for it to successfully acquire Sprint. The conditions we have set forth could be highly beneficial to Asian Americans and the public.
We have also sent a preliminary letter to Masayoshi Son, the CEO of SoftBank, requesting a pre-Christmas meeting with him to discuss how, with Asian American and other community support, SoftBank’s acquisition of Sprint could be expedited.
Why is the NAAC, which often opposes mergers (including the Comcast/NBC Universal and the United Airlines/Continental Airlines mergers) likely to support this merger?
First, our support is based on the fact that Americans have few telecommunications options today. Almost all telecommunications options are in the hands of a duopoly, AT&T and Verizon. Sprint is a very weak third and underfunded “competitor.”
Second, we believe that greater competition is likely to create lower prices and far more innovative products for consumers.
Third, although AT&T and Verizon have been good corporate citizens, additional competition is likely to make them even better corporate citizens.
Mia Martinez
For example, in 2005, the NAAC (formerly the Mabuhay Alliance) initially opposed Verizon’s acquisition of MCI and SBC’s acquisition of AT&T until both companies committed to very major public interest advances that benefitted Asian Americans and other minorities.
Today, Asian Americans in California are benefitting from the public interest conditions the NAAC helped impose seven years ago. Our conditions included: (a) a $60 million broadband fund for underserved communities; (b) a doubling of the dollar amount of philanthropy to Asian Americans nonprofits; (c) increasing minority and women business contracts to 44% of all contracts (as a result, AT&T and Verizon have the best minority business contract programs in the nation); and (c) annual meetings with the CEOs of AT&T and Verizon.
We are proposing a similar public benefits proposal to SoftBank’s CEO. It will enable SoftBank to more effectively compete for business in California where 60% of new customers are minorities and where Asian Americans are often the leaders in technology.
T-Mobile and MetroPCS
T-Mobile, the fourth largest telecommunications company in the U.S., has filed to acquire MetroPCS, the fifth largest telecommunications company. Although this merger has the potential to create another effective competitor, it also poses problems for low- to moderate-income consumers and many Asian Americans. Both companies primarily compete for low- to moderate-income customers. If a merger is approved, the two competitors will become reduced to one, thereby eliminating an important type of competition.
We are presently exploring the potential to ensure that this T-Mobile merger benefits low- to moderate-income families despite the potential reduction in competition.
Within the next thirty days, our Washington DC regulatory office will seek to set up meetings with the FCC and the antitrust division of the DOJ to discuss the competitive advantages and disadvantages of both mergers. After the election, we will also seek to meet with Republican and Democratic congressional leaders to convey our support for responsible foreign investments.
Hopefully, before the end of the year, we will have met with the CEOs of SoftBank and T-Mobile in joint efforts to develop public interest investment strategies that could expedite both mergers and substantially benefit the Asian American and other underserved communities.
(Faith Bautista & Mia Martinez)
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Faith Bautista is the president and CEO for the National Asian American Coalition. Mia Martinez is the chief deputy for the National Asian American Coalition’s Washington DC regulatory and congressional liaison office.
