THE BLOG

Softbank's Pitch to Regulators Paints False Picture of U.S. Wireless

03/10/2014 07:37 pm ET | Updated May 10, 2014

Masayoshi Son, the Japanese telecom magnate whose Softbank company acquired Sprint last year, is trying to justify acquiring T-Mobile by painting a specter of a second-rate American wireless market with the claims that consumers have terrible service and are paying too much. His claims are simply fanciful, but even if they were true there is no reason to believe allowing Softbank to extinguish competition would make it any better. No one believes for a second that the Department of Justice or the Federal Communications Commission will fall for such an obvious sleight of hand.

The U.S. is no wireless also ran. When it comes to deploying next generation wireless broadband, the U.S. is clearly the world leader, an inconvenient fact for Mr. Son. Even more embarrassing, American consumers are faring far better than their Japanese counterparts. The U.S. alone accounts for half of the world's 4G LTE connections with Japan a distant second at 21 percent.

LTE networks in the United States reach more than 95 percent of consumers and every one of the four national competitors reaches at least 200 million consumers by itself. In Japan, by comparison, the top provider says it won't even reach 70 percent of the population with LTE until next year. The U.S. does even better when compared to Europe, where only about one in four consumers have access to LTE service and only about 2 percent of mobile devices are now connected to 4G service. In the past year alone, the number of U.S. mobile devices with 4G service has nearly doubled from 33.1 million to 62.5 million.

American consumers also benefit from rising speeds and falling prices. The cost of voice minutes, texts, and data have all fallen steadily in the U.S. even as network speeds and capabilities have gone up. Data prices paid by American consumers, for example, are down more than 90 percent from six years ago and usage is skyrocketing. And, U.S. consumers have the second fastest download speeds in the world at 2.5 Mbps. Only Canada does better. Japanese wireless is good in this area at 2.0 Mbps, but not quite as good as America.

As to making American wireless even better, Son's big idea of the moment seems to boil down to bigger is better. But allowing Softbank to take out T-Mobile won't make life better for consumers. German-owned T-Mobile is widely viewed as a spitfire of competitiveness that has spent the last year demonstrating it can successfully prod the larger companies to make price cuts and innovate their pricing plans.

Softbank's ongoing expansion strategy in the U.S. is a disappointing step down from last year when Son said Sprint could successfully challenge and perhaps overtake AT&T and Verizon by upgrading its network. Back then, Son pledged to compete by building America's best network. Today, Son suggests that neither his company nor T-Mobile are big enough to slug it out in the marketplace on their own and the only solution is to extinguish the rivalry that has benefitted consumers.

Such a combination might make business sense to Son, but for regulators who would have to approve a deal the relevant question is whether it would help or hurt consumers. Based on the public record, there is little current evidence that a transaction would make consumers better off. Indeed, T-Mobile's recent success seems to give the lie to Son's rationale.

Although smaller than Sprint, T-Mobile is luring customers from its rivals with a net gain of 4.4 million subscribers last year. Perhaps more significant is the fact that it has reshaped the marketplace with a range of new options for consumers and forced rival companies to respond in kind. It's hard to see why taking this feisty competitor out of the market would boost consumers' fortunes -- and it might well make them worse by squelching T-Mobile's competitive creativity.

The purpose of the U.S. antitrust laws is to protect competition and not competitors. That is a simple lesson Mr. Son should consider before he tries to justify an anticompetitive deal with a smokescreen of mischaracterizations and false statements about the state of the U.S. wireless broadband market.