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SoftBank's Son vows broadband speeds of 200 Mbps, more competition in U.S. market

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WASHINGTON—SoftBank CEO Masayoshi Son said he aims to deliver wireless downlink speeds of 200 Mbps and lower prices to U.S. consumers via Sprint (NYSE:S) to inject more competition in the wired and wireless broadband market. Son made the pitch shortly after saying in an interview that he would like to combine Sprint with T-Mobile US (NYSE:TMUS) to ignite a "massive price war" in the U.S. market, though he said no firm deal has been struck.

In a highly-anticipated speech here at the U.S. Chamber of Commerce, Son lauded the United States as the country that led the world in 20th century telecom infrastructure. But he said the U.S. market is falling behind in the mobile Internet.

Son pointed to a recent report from research firm OpenSignal, which found that LTE speeds in the United States were among the slowest around the world. The firm's latest "State of LTE" report, which was based on data from 6 million OpenSignal LTE users, found that average speeds in the United States clocked in at around 6.5 Mbps, faster only than the Philippines' 5.3 Mbps. Australia provided the fastest average speeds of those countries measured, at 24.5 Mbps. Son's native Japan provided an average of 11.8 Mbps, only one place ahead of the U.S. in LTE, though SoftBank itself was measured at 21.86 Mbps.

OpenSignal pointed out that U.S. LTE speeds were dragged down by some carriers that provided noticeably slower speeds than others--like MetroPCS, which was acquired by T-Mobile last year and only offered LTE services on slivers of 5 MHz spectrum. Moreover, since LTE has been available in the United States for years, a large number of Americans are now weighing down LTE networks in the United States with data traffic.

"How come American people accept the fact that the country is No. 15 for the most important information highway for the next century?" he said. "I think we have to change this."

Citing data from Cisco Systems, Son said that the average Japanese subscriber uses 1.5 GB per month and the average U.S. user consumes 1 GB per month. However, he said average revenue per user in the U.S. is $52 compared to $30 in Japan. "It's not the case that American consumers pay more because American consumers use more data," he said. "That's not the truth. American consumers use less but pay more."

However, the Organization for Economic Cooperation and Development (OECD) found in its "Communications Outlook 2013" that U.S. pricing was cheaper than Japanese pricing for handsets and smartphones in 10 out of the 11 "baskets" or service bundles it studied.

Son also said that, according to a December 2013 FCC report, 2 percent of Americans have no access to broadband, 28 percent of Americans live in areas with access to only one broadband provider, 37 percent live in areas with access to two providers and 33 percent live in areas with access to three or more providers. Son also noted a continuing digital divide in the U.S., citing a Pew Research Center survey that found 87 percent of people with $50,000 or more in income have broadband access, but only 42 percent of those making less than $10,000 per year do.

Son vowed to change the status quo with Sprint Spark, the carrier's tri-band LTE service. Spark combines transmissions over Sprint's 800 MHz, 1.9 GHz and 2.5 GHz LTE spectrum via carrier aggregation, technology Sprint has said will deliver 50-60 Mbps speeds. Sprint offers the technology in parts of 14 markets today, and plans to bring the technology to the top 100 U.S. markets within three years. Moreover, Sprint CEO Dan Hesse said in December that said Sprint could eventually offer real-world speeds of 150-180 Mbps via Spark.

It's worth noting though that Sprint currently provides the nation's slowest LTE network. According to a recent RootMetrics report that looked at U.S. mobile networks in the second half of 2013, Sprint ranked last in terms of speed among the four Tier 1 carriers.

Son acknowledged that today wireless networks are not substitutes for wired broadband. However, he said Sprint plans to change that. "I want to change the situation of the United States," he said.

Son said he would like to provide 200 Mbps wireless speeds, compared to cable speeds that top out today at around 36 Mbps. "We have the technology," he said. "We have to deploy many towers, many cells. It requires a lot of capex, scale and money. But I'd like to give it a shot. I'd like to provide an alternative to the monopolistic and oligopolistic situation."

Some analysts have speculated that Son's argument is geared toward easing regulators' opposition to a merger of Sprint and T-Mobile. Son framed it as his duty, just as SoftBank brought competition in fixed and mobile broadband to NTT DoCoMo and KDDI in Japan.

"I have an obligation as owner of one player in the States to provide a solution, not criticize the situation," he said. "I take it as part of my responsibility."

Son said in the United States speeds need to increase and prices need to fall. "That's the only two things we have to solve. Let's increase the speed. Reduce the price--by competition. Not pseudo competition, real competition," he said, adding, "Let's change it. It's not complicated. It's a simple thing."

AT&T (NYSE:T) had a sharp reply to Son's speech. "If Mr. Son is having a bad experience with U.S. wireless, it must be because he's using Sprint," Jim Cicconi, AT&T's senior executive vice president for external and legislative affairs, said jokingly in an emailed statement to Reuters.

Maurice Stucke, a law professor at the University of Tennessee, told Bloomberg that even if a deal between Sprint and T-Mobile were to spark competition in the cable market, removing one of four Tier 1 wireless carriers from the market will not be overlooked by antitrust regulators at the Department of Justice. "He has to overcome the presumption that this merger is anticompetitive," said Stucke, a former DOJ lawyer. "You can't argue we should allow this market to be more concentrated in order to better compete in a separate market."

For more:
- see this Reuters article
- see this Bloomberg article

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