Sprint President Masayoshi Son?s wobbly arguments

Masayoshi Son is the richest person in Japan. On March 11, the billionaire president of Japanese communications giant SoftBank and Sprint, told a crowd at the U.S. Chamber of Commerce in Washington, that if U.S. regulators let him buy T-Mobile, they’d be doing the United States a favor. He said that the U.S. lags behind the world in wireless Internet speeds, and that with a massive share of the mobile market, he’d make big changes.

But, many saw his remarks as an attempt to win support from skeptical U.S. antitrust officials for a potential Sprint acquisition of T-Mobile. Analysts at CWA took a critical look at some of Son’s points.

Son Said: US download speeds for LTE rank 15 out of 16 nations in the world, according to OpenSignal.

Fact Check: Son’s comment does not take into account penetration rates for LTE use. Half of the world’s 4G LTE customers are in the US, where about a third of mobile devices are on LTE networks. By the end of 2013, 20 percent of U.S. connections were expected to be on LTE networks, compared with only 2 percent in the EU. Speed comparisons to other countries are skewed because fewer people are on those networks per capita.

Son Said: U.S. wireless broadband speeds are falling behind the rest of the world.

Fact Check: “The U.S. enjoys world leading mobile broadband speeds. In 2012, the average mobile data connection speed for North America was 2.6 Mbps, the fastest in the world, nearly twice that available in Western Europe, and over five times the global average.” Source: CTIA – The Wireless Association, Nov. 13, 2013. Verizon and AT&T have near-nationwide LTE coverage, with Sprint and T-Mobile improving their geographic coverage currently.

Son Said: He claims that SoftBank, the parent company of Sprint, transformed and dramatically improved broadband service in Japan.

Fact Check: Son ignores the key role of public policy in facilitating these improvements. Japan’s government provided tax incentives, subsidies and loans to broadband providers to build out fiber to nearly all in Japan. Source: ITIF, Explaining International Broadband Leadership, Appendix D: Japan, 2008. Moreover, SoftBank built its wireline business using the incumbent carrier NTT’s infrastructure at a government-mandated steep discount.

Son Said: US consumers pay more to use less wireless data than counterparts in Japan.

Fact Check: “Prices in the U.S. keep dropping. Data prices have plummeted 93% over the past five years to only $0.03 per megabyte, and usage has skyrocketed.” Source: CTIA – The Wireless Association, November 2013.

Son Said: Son said a new, stronger mobile broadband provider would provide more competition to service provided by cable companies like Comcast and Time Warner Cable, which have announced a proposed merger.

Fact Check: Today, mobile broadband cannot deliver the speed and reliability of wired high-speed broadband.

Son Said: Sprint has technology in the laboratory to deliver up to 200 Mbps/second of wireless data, and simply needs scale to deliver this technology.

Fact Check: A merger of Sprint and T-Mobile would not possibly result in delivery of this type of data speed in the near-term. As Son noted, it would require massive investments in infrastructure, which would take time to build out. The cost would likely be passed on to consumers in the form of higher prices.

For more fact checking of Son’s critique of the U.S. mobile broadband market and a potential Sprint/T-Mobile merger, see the following:

Forbes, “SoftBank's CEO Wants U.S. Mobile Industry to Follow Japan's Lead. Um, No Thanks,” Larry Downes, March 10, 2014.

Progressive Policy Institute: “Shaping the Digital Age: A Progressive Broadband Agenda,” Ev Ehrlich, July 2013.

AEI, “The European Union’s Broadband Challenge,” By Roslyn Layton, February 2014.

RealClearMarkets, “Don't Buy the Hype About Lagging U.S. Broadband,” By Roslyn Layton, February 19, 2014.

Daily Caller, “Is the U.S. really lagging behind in broadband speeds? Probably not,” By Zack Christenson, February 28, 2014.

CTIA FCC filing (The Wireless Association®, Nov. 13, 2013)

Explaining International Broadband Leadership, Appendix D: Japan, (ITIF, May, 2008)