South Dakota tribe moves to hold up Sprint deal - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
Subscriber Content Preview | Request a free trialSearch  


Print  |  Share  |  Reprint

South Dakota tribe moves to hold up Sprint deal

by William McConnell In Washington  |  Published January 17, 2013 at 8:41 AM
A Sioux tribe in South Dakota is asking the Federal Communications Commission to block Sprint Nextel Corp.'s plan to sell a 70% stake to Softbank Corp. for $20 billion unless Sprint makes unused spectrum it controls in the reservation available for wireless communications on the reservation.

The tribe is also asking the FCC to resolve a dispute with Sprint over access fees a tribal telecom company says it is owed by the nationwide carrier.

The utility authority for the Crow Creek Sioux Tribe in central South Dakota has filed a petition to deny the Softbank deal in a bid to get Sprint to turn over spectrum the tribe wants to use for its tribally owned telecommunications carrier, Native American Telecom LLC.

The tribe told the FCC that use of Sprint's spectrum will allow it to expand mobile wireless services, including 911 emergency services, which the tribe said are not widely available on the Crow Creek reservation.

"Sprint holds a very significant amount of spectrum on the Crow Creek reservation but lacks any wireless coverage, resulting in spectrum being warehoused and consumers on the reservation lacking access to services available in the rest of the country," the tribe said in a petition submitted by its chairman, Brandon Sazue. "The commission must require Sprint to work cooperatively with the Crow Creek Sioux Tribe on its request for possible use of unused spectrum."

The petition comes amid a four-year dispute between the tribe and Sprint over the tribe's attempt to charge access fees for landline telephone service Sprint provides on the reservation. According to the tribe, Sprint refused to pay and NAT filed a complaint with the tribe in March 2010 alleging that Sprint was not paying for switched access services Sprint has received from NAT on the reservation.

"Sprint has demonstrated a blatant disregard for the jurisdiction and sovereignty of the Crow Creek Sioux Tribe and its regulatory authority over Sprint's operation on the Crow Creek Reservation," the tribe said.

Efforts to reach Sazue by telephone and e-mail were unsuccessful.

Native American Telecom was formed in 2008 and represents one of the first tribally owned telephone systems recognized by the FCC as part of a federal effort to improve telecommunications services on tribal lands. The NAT's stated goal is to establish advanced telecommunications services on the Crow Creek reservation. Access fees charged to nationwide carriers have helped pay for the expansion of broadband and telephone services on the reservation, computer and Internet services at a tribal library.

"Other carriers are paying NAT, which further demonstrates the improper nature of Sprint's actions," the tribe said in its petition to the FCC.

A Sprint spokesman said the company won't comment the tribe's petition until February. All petitions to deny the merger must be submitted by Jan. 28 and Sprint has until Feb. 12 to respond to them.

The tribe's demand for access fees has been described derisively by some within the industry as "traffic pumping," which is an attempt by a company to drive communications traffic to its lines in order to generate access fees from other carriers.

The tribe insists its demands are entirely legitimate, however, and that as an agent for Native American governments, the U.S. government has an obligation to make sure Sprint pays up.

The tribe argued that the federal government's power to delay merger approvals until the parties have paid any outstanding federal debts extends to money owned to Native American tribes. "Consistent with its fiduciary relationship with the Crow Creek Sioux Tribe, the commission must require Sprint to meet its legal responsibilities on the reservation and pay for services provided by NAT to Sprint," the tribe said.

If the FCC views the tussle over access fees as nothing more than a billing dispute, the disagreement is unlikely to play a role in the merger review. However, the FCC has broad authority to consider factors that affect the public interest during merger reviews, and rolling out telecom services on Native American lands has been a leading goal for more than a decade. In 2000, the FCC issued its first policy on establishing a government-to-government relationship with tribal governments. In 2010, the commission established the Office of Native Affairs and Policy to promote the deployment and adoption of communications services and technology throughout tribal lands and native communities.

Tags: Brandon Sazue | Crow Creek Sioux Tribe | FCC | Federal Communications Commission | NAT | Native American Telecom LLC | Office of Native Affairs and Policy | Softbank Corp. | Sprint Nextel Corp.

Meet the journalists

William McConnell

Assistant Managing Editor: Regulatory & Arbitrage

Movers & Shakers

Launch Movers and shakers slideshow

French mergers and acquisitions lawyer Laurent Faugerolas joined Dechert LLP. For other updates launch today's Movers & shakers slideshow.


Struggling TeleCommunication Systems is sold

After announcing in July that it was exploring strategic alternatives, TeleCommunication Systems Inc. has agreed to sell to Comtech Telecommunications Corp. in a transaction with an enterprise value of $430.8 million. More video