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 The feisty entrepreneur is lobbying skeptical Washington officials
to let him buy a second U.S. mobile operator, saying he would help
to break up a cozy U.S. wireless oligopoly.
Son says he is an outsider who stirred up a price battle that
benefited consumers after he took over Vodafone's failing Japanese
operation eight years ago.
So it must be galling to hear regulators in Tokyo chide his SoftBank
Corp <9984.T>, along with NTT DoCoMo <9437.T>, Japan's mobile
industry leader, and No.2 KDDI Corp <9433.T>, for lack of
competition in the domestic smartphone market.
"You could say the mobile market is an oligopoly of the three big
companies," Communications Minister Yoshitaka Shindo said at a
regular news conference this month.
His ministry is preparing long-term proposals to bring lower prices
and faster services, including fostering growth of mobile virtual
network operators (MVNOs), cut-rate providers that lease network
access from the big carriers.
The sniping will not help Son's plans to acquire T-Mobile US Inc <TMUS.N>.
He wants to combine the No. 4 U.S. mobile carrier with No. 3 Sprint
Corp <S.N>, which SoftBank bought last July for $21.6 billion.
Together, he argues, they would have the heft to take on dominant
carriers AT&T Inc <T.N> and Verizon <VZ.N>, which he derides as a
complacent duopoly.
But top U.S. regulators, including Federal Communications Commission
Chairman Tom Wheeler and U.S. antitrust chief William Baer, have
pointed to T-Mobile's success since U.S. authorities in 2011
rejected a merger between AT&T and T-Mobile on the grounds that the
market needed at least four major players to be competitive.
Not one to give up easily, Son has hired a former FCC chief counsel
to help with Washington relations and started a public push for his
case, in advertisements around the U.S. capital and presentations to
stakeholders.
Son told an audience of industry officials at the U.S. Chamber of
Commerce in Washington last month that he had brought a "price war"
to Japan when he entered the mobile market.
"I'd like to bring that to the States," he said. "American consumers
use less data traffic, but pay more."
YOUR OLIGOPOLY OR MINE?
These days in Japan, however, the rare new plans and services that
pull smartphone prices lower are no longer tending to come from
SoftBank.
It was DoCoMo that a year-and-a-half ago broke with the big
carriers' standard practice of requiring smartphone users to pay for
a minimum volume of 7 gigabytes of monthly data traffic — even
though barely one-in-10 ever use that much. It offered a 3 GB
service for 1,000 yen less than the standard plans' 5,700 yen
($55.56), which KDDI and SoftBank did not match.
Retailers such as supermarket operator Aeon Co Ltd <8267.T> and
electronics chain BIC Camera Inc <3048.T> have also jumped into the
market with cut-rate MVNO services over the past month.
"SoftBank used to be a competition driver," said a communications
ministry official, who spoke on condition of anonymity. "But now
it's completely spoiled by the three-company oligopoly."
In October 2006, when Son elbowed his way into the mobile phone
business, he had already made a name for himself by bringing
cut-throat price competition to Japanese fixed-line Internet
services.
With his 1.75 trillion yen ($17 billion) Vodafone Japan purchase — at the time Japan's biggest non-financial acquisition — and a
promise from Steve Jobs for exclusive Japanese rights to the iPhone,
he steadily captured market share from rivals.
[to top of second column] |
He introduced a cut-rate 980 yen-a-month ($9.55) plan, while
pledging to match any rivals' price reduction within 24 hours.
Eight years later all three operators are enjoying strong
profits, with SoftBank and KDDI setting records, and they have come
under pressure to cut prices as the government tries to prod the
economy into a sustainable recovery.
The communications ministry cites data suggesting Tokyo's smartphone
rates are among the world's highest.
For 1.6 gigabytes (GB) a month — enough to view about 7.5 hours of
streaming video or more than 10,000 home pages — only New York and
Duesseldorf were more expensive, 2012 data from seven major cities
shows. For light users at 500 megabytes (MB), Tokyo was most
expensive.
The main reason is the 7 GB minimum in most smartphone plans, a
legacy of unlimited data plans once standard with cheaper
Internet-connected feature phones.
"It's like always being served a 7 kg (15 lb) steak whatever
restaurant you go to," said Japan Communications Inc <9424.T>
Executive Vice President Naohisa Fukuda, one of a small but growing
number of Japanese MVNOs.
SoftBank's regulatory division head, Mitsunobu Yoshino, argues that
these costs are offset by aggressive marketing campaigns, including
cash rebates that often exceed the price of the smartphone.
"Even for existing customers we offer trade-ins and student
discounts, and this doesn't show up in the communications ministry's
data," he said.
These incentives weigh on Japanese carriers' average revenue per
user, a standard industry measure which has been trending flat to
slightly lower in recent years, while the top U.S. mobile carriers
have seen steady rises.
Regulators are not convinced.
The aggressive marketing campaigns simply distort the market, they
say, offering a windfall to a limited group of consumers willing and
able to change carriers frequently, while making it more difficult
for MVNOs to enter the market.
SoftBank's sensitivity towards the criticism at home was evident
during a courtesy call by a company executive to the communications
ministry this year, according to a person present at the meeting.
SoftBank and the ministry declined to comment on the meeting, but
the source who was present said the executive told officials: "If
the communications ministry goes around saying things like there's
no competition in Japan's mobile phone market, people overseas may
actually believe that."
($1 = 102.5700 Japanese yen)
(Additional reporting by Alina Selyukh in Washington;
writing by
Edmund Klamann; editing by Alex Richardson)
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