WASHINGTON-House Armed Services Committee Chairman Duncan Hunter (R-Calif.) last week unveiled a bill that would require majority U.S. ownership of critical infrastructure deemed essential to national security and a five-year divestiture of foreign-owned infrastructure, legislation with potential implications for German subsidiary T-Mobile USA Inc., future foreign investment in U.S. wireless firms and telecom free trade generally.
The National Defense Critical Infrastructure Protection Act was prompted by the congressional GOP and Democratic outcry over a controversial Dubai Ports World deal now being restructured to put new ownership of six major U.S. ports in American hands instead of those of a state-owned firm in the United Arab Emirates. While the combustible ports issue appears to be calming, the conflagration over the transaction and its national security review here has triggered a ripple effect far beyond the original dispute.
T-Mobile USA, acquired by German telecommunications giant Deutsche Telekom AG five years ago when it was Washington state-based VoiceStream Wireless Corp., did not respond to a request for comment.
“With this legislation, the secretary of defense and the secretary of homeland security would be able to ensure our critical infrastructure, such as ports and energy facilities, is maintained by reliable and trusted American companies,” said Hunter in a statement. “This will reduce exposure to terrorism in some of our most vulnerable facilities. To those who say this is protectionism, I say-America is worth protecting.”
Rep. Jim Saxton (R-N.J.), chairman of the House armed services subcommittee on terrorism, unconventional threats and capabilities and a co-sponsor of the bill, disputed any notion the bill conflicts with a U.S. free trade policy that has produced billions of dollars in foreign contracts for U.S. wireless suppliers.
“The government is responsible for border security and protecting the American people. We cannot and must not pass the buck to the private sector. Those who claim the bill would violate free trade are missing a critical point. This is a national security issue-not an economic issue,” said Saxton.
However, at a press briefing last Tuesday, Hunter seemed to contradict Saxton by saying economic security as well as national security were at the issue in the bill. Hunter did not comment on whether the bill bucks up against the Bush White House’s free trade agenda.
Hunter also sent mixed signals on whether telecommunications infrastructure could become subject to the U.S. ownership and divestiture requirements of the bill.
“I think you’re going to have to look to the secretary of defense and security of homeland security to determine what is critical infrastructure,” said Hunter. On the other hand, he added: “I don’t think they’re going to be closing down any networks. That would be my guess.”
Critical infrastructure is defined as “any system or asset-physical or virtual-that is so vital to the United States that the incapacity or destruction of such system or asset would have a debilitating effect on national security, economic security, or public health and safety.”
Any decision to preclude telecommunications from the definition of critical infrastructure in any future implementation of the Hunter-Saxton bill would be a major departure from Bush administration policy.
The administration’s 2002 report, “National Strategy for Homeland Security,” lists information-telecommunications as one of 13 critical infrastructures in the United States.
“The Sept. 11 attacks revealed the threat terrorism poses to the telecommunications sector’s physical infrastructure,” the report stated. “While it was not a direct target of the attacks, the telecommunications sector suffered significant collateral damage. In the future, certain concentrations of key sector assets themselves could become attractive direct targets for terrorists, particularly with the increase of collocation facilities,” the Bush administration said in 2003.
The Hunter-Saxton bill also seeks to revamp the secret committee that examines foreign investments in U.S companies-including those in the wireless space-to assess national security implications. Indeed, the DT-VoiceStream and other telecom-tech transactions have had to pass muster with the Treasury Department-led Committee on Foreign Investment in the United States.
The proposals create a possibility whereby a foreign buy of a U.S. wireless firm could meet approval of the Federal Communications Commission but still be rejected by CFIUS on security grounds.
