Entner: A Japanese reality check for Sprint and SoftBank

Roger Entner Recon Analytics

Roger Entner

When I first became a wireless analyst, Japan was portrayed as an almost mythical wireless wonderland where everything was perfect and so much better than the unenlightened and backward countries not enjoying the mobile data and mobile handset miracles from the land of the rising sun. NTT DoCoMo was the most visible prophet of the Japanese way of wireless and it put its money mouth was. It invested in several wireless carriers around the world. Somehow, the Japanese reality did not catch on with the consumers in the various countries and a few years later NTT DoCoMo realized $10 billion in write offs when sold its ownership stakes in all but two countries (India and Malaysia).

Now, Japan is again being portrayed to us as a land where wireless magic is reality. But is this really the case?

For the longest time, the Japanese mobile industry insisted that if it wasn't developed in Japan, it was not suitable for Japanese consumers. Japan was the epitome of a Galapagos market, where local players compete against each other without contact to the outside world. That led Japan to be very late to the smartphone revolution. While well over 50 percent of U.S. consumers have smartphones and more than 90 percent of new devices are smartphones, only 37 percent of devices in Japan are smartphones. Also, to Japan's great chagrin, these smartphones are based on American technology from Apple and Google because the domestic technology is still solidly rooted in the past.

The greatness of Japan's wireless networks is also generally touted. NTT DoCoMo, the largest carrier in Japan--a country roughly the size of Montana--hopes to get its 4G LTE network to 70 percent population coverage by March 2015. Meanwhile, back in the U.S., three of the four nationwide carriers have already reached that threshold in a country whose land area is ten times larger and almost three times more populous than Japan. Indeed, Verizon Wireless covers 90 percent plus of the U.S. population while T-Mobile USA's effort to cover more than 200 million Americans with 4G LTE took a mere six months. When we adjust wireless capital expenditures to expand and improve wireless network for population density, Japan is in fifth place, lagging significantly behind Canada, the United States, and Australia.

When we look at prices, a similarly stark picture emerges. Consumers who want to use an iPhone on Softbank's network have to pay at least $65.34. For that, consumers get a 7 GB data bucket that is throttled beyond 7 GB to 2G speeds and free in-network calling between 1:00 am and 9:00 pm. If Softbank customers want to make calls to their friends on another carrier's network or between 9:00 pm and 1:00 am, they have to pay $0.20 for every 30 seconds. If we assume an American calling pattern of 900 total minutes, this translates into at least 300 toll minutes, which adds another $120 to the monthly bill. The final monthly price tag is an extortionate $185.34. For American consumers, this would feel like Stone Age plan structures and price gouging. Interestingly enough, Softbank's American subsidiary, Sprint, provides this all for $80. I am not sure how Sprint, or for that matter any American wireless customer, would feel when confronted with Japanese plans and prices.

When we actually use facts to compare the wireless markets and the wellbeing of the consumers in Japan and the United States, the numbers show that the United States offers broader services, lower pries, and better values than the supposed promised land of Japan.

Roger Entner is the Founder and Analyst at Recon Analytics. He received an Honorary Doctor of Science from Heriot-Watt University. Recon Analytics specializes in fact-based research and the analysis of disparate data sources to provide unprecedented insights into the world of telecommunications. Follow Roger on Twitter @rogerentner.

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