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TheStreet Open House

Softbank's Son Pitches Benefits of T-Mobile Deal

Stocks in this article: CMCSA VZ


Son's speech was praised by some industry analysts. "Son successfully laid out a thesis as to why a stronger Sprint is good for the American economy and (more importantly) the U.S. wireless consumer," Wells Fargo Securities analyst Jennifer M. Fritzsche said in a note to clients. Previously, Fritzsche said that Son's pledge to start a broadband price war in the U.S. should be alarming to Comcast and Verizon.

Son said the benefit for U.S. consumers will be Softbank's ability to use greater scale to deliver dramatically faster broadband speeds and lower prices. Son stressed the enormous capital expenditures necessary to build out a network that can deliver broadband speeds as much as five-times faster than today's demand the kind of scale that Sprint would gain from acquiring T-Mobile.

"The U.S. invented digital technology but it is falling behind," he said, noting that the U.S. ranks 15th in broadband speed.

As an indication that he'll make good on his promise to transform the U.S. broadband market, he cited Softbank's record in Japan, where the company convinced government officials to deregulate the telecom market and subject the government communications monopoly NTT Communication to competition. Before opening NTT to competition, Japan ranked last in terms of broadband speeds and pricing, he said.

In recounting his appeal to Japanese officials, Son's retelling of the story seemed as much a pitch to U.S. officials as it was a history of Japan's telecom policy. Son said he asked what was more important to the Japanese government: protecting NTT's monopoly or turning Japan from a broadband laggard into a leader. Their response, naturally, was to build Japan's capacity. Son then laid down his challenge: "'If that's your answer,'" Son said he told the officials, "'Then deregulate, change the policy.'"

After the sector was open to competition, the endeavor cost Softbank $1 billion a year in buildout expenses and four straight years of losses before the company began breaking even. Today Softbank in Japan offers speeds that are three times higher than the average U.S. speed offered by cable and landline providers such as Comcast and Verizon. As far as pricing goes, broadband services costs and average of 4 cents per megabyte per second. In the U.S., the Mbps rate is 53 cents. "In the U.S. you pay ten times more for much slower speed," he said.

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