Following a week of build up, Sprint and Softbank Chairman Masayoshi Son took to the stage in front of the Washington D.C. Chamber of Commerce in a presentation detailing where the United States is falling behind in terms of broadband service, but decidedly absent of any talk regarding a potential Sprint offer to acquire smaller rival T-Mobile US.
Son used a number of charts and graphs to highlight where the United States ranked among other countries in offering high-speed broadband services, while also pointing out the leadership position of his home country of Japan. In terms of wireless performance, the United States was shown to be far down the list, offering averaged weighted download LTE speeds of 6.5 megabits per second. By comparison, Son’s Softbank operations, which were the only separate company on the chart comparing countries, posted a speed of 21.3 Mbps, while the entirety of Japan was at 11.8 Mbps.
Son added that a significant issue for the U.S. result was that LTE speeds had actually declined 32% since a similar test in early 2013, while Japan’s network speeds increased 66%.
In terms of wireline broadband, Son’s presentation noted Japan was ranked highest in speed and price, though the price part was assumed to mean the least-expensive in delivering services. By comparison, the United States was tied for No. 3 in price and tied for No. 8 in speed.
Son also highlighted the pricing conundrum, showing a chart with the United States posting average revenue per user of $52 during the third quarter of last year, which was well above the $44 posted by Japan and lower levels of other countries across Asia and Western Europe. These numbers were further marked by Son citing a Cisco report showing Japanese wireless consumers used 50% more data services than U.S. consumers at the end of 2013.
In looking to provide an answer to the issues, Son pointed to Sprint’s recently announced Spark program that is claimed to provide download network speeds in excess of 50 Mbps. Son noted that Softbank’s mobile broadband network using similar 2.5 GHz spectrum would provide network speeds in excess of 200 Mbps.
Sprint’s Spark program is expected to cover the country’s 100 largest markets over the next three years, though the carrier has said it plans to deploy 2.5 GHz support on all of the approximately 40,000 cell towers that are part of its Network Vision plans.
Beyond providing a boost for wireless broadband speeds, Son noted the offering would provide a rival for wireline broadband services, which he noted in a slide currently offered two-thirds of consumer a choice of two providers or less. However, Son also said he was in support of Comcast’s current attempt to acquire cable television and broadband provider Time Warner Cable, noting that the deal would improve the scale of its operations, and thus could see a reduction in consumer prices.
That support could also play into any future plans Son may have in attempting to steer a Sprint acquisition of smaller rival T-Mobile US. While Son did not mention T-Mobile US during his presentation, he was very vocal in his thoughts that a deal to purchase the carrier was in the cards.
Appearing on an interview program earlier this week with Charlie Rose, Son said he would like to acquire T-Mobile US, but that no formal agreement has been reached.
“We have to give it a shot,” Son said in response to a question as to whether such a deal can be made. “We would like to make a deal happen. But there are steps, details that we have to work out.”
It appears that the biggest step is in convincing regulators that a combination of the nation’s No. 3 and No. 4 carriers would not harm competition. Following AT&T’s unsuccessful attempt to acquire T-Mobile USA in 2011, regulators indicated that their preference was for the country to have four nationwide operators.
Son is arguing that the current model with two operators controlling a vast majority of the industry’s customers and profits and two smaller carriers barely able to scrape by is not a sustainable model.
“Here comes two little ones not able to fight with enough scale,” Son told Rose. “That’s no god and I think the situation needs to change.”
If a deal between the two were to happen, Son said he would begin an all-out price war against Verizon Wireless and AT&T Mobility in an attempt to gain market share, even if that price war impacted profits.
“I want to be No. 1,” Son said.
Executives from many of Sprint’s rivals have noted that such a deal is inevitable, but that current regulatory leanings would indicate that such a proposal is not likely to be approved in the near term.
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