Softbank's Son Discusses Ambitions for Sprint, Web Growth, U.S. Rank

 
 
By Michelle Maisto  |  Posted 2014-03-13
 
 
 

Softbank's Son Discusses Ambitions for Sprint, Web Growth, U.S. Rank


Masayoshi Son, CEO and chairman of Softbank and now chairman of the Sprint Corp., is on a campaign to change hearts and minds about the potential of a Sprint merger with T-Mobile. Son recently taped a show with Charlie Rose, and on March 11 gave a speech before the U.S. Chamber of Commerce in Washington, D.C.

In his speech, Son—without ever mentioning T-Mobile—painted a compelling picture of how Sprint, with greater scale, could help to boost America, and Americans, and make it again a leader, in a key area where we're faltering. And how he's just the man to lead this effort.

He talked about how he convinced the Japanese government to deregulate the wireless industry; how improvements he made to the wireless situation in Japan can be replicated in the United States; how U.S. customers use less data than Japanese customers but pay more for it; how U.S. connectivity speeds have fallen behind; and the debt that he personally feels to America, which presented him with opportunities during a time in his life when he felt he had none.

John Roos, who for four years was the U.S. ambassador to Japan, gave Son a warm and humanizing welcome—a necessary thing for a man who in headlines is often reduced to two words: Japanese billionaire.

As his speech took place on the third anniversary of Japan's devastating 9.0 earthquake, tsunami and nuclear disaster, Roos talked about how moved he was by Son's response at the time. Son personally donated $100 million to the relief efforts, along with "his salary for the rest of his career," and additionally funded a three-week exchange program for 300 high school students from the disaster areas to attend the University of California, Berkeley—Son's alma mater.

"Masa, if you don't know him, is one of those rare and inspiring people that want to change the world for the better, but he actually makes it happen," Roos added. "Though I'm not sure Masa ever sleeps, I do know that he dreams big and he translates those dreams into relentless action."

Below are 10 excerpts from Son's speech. If it's possible for anyone to sway regulators and consumer opinion toward thinking a merger between the nation's third- and fourth-largest carriers isn't a terrible idea—as many people now think it is—Son may be the rare person for the task.

1. There's money in the Internet.

While the overall GDP of the United States is growing at a rate around 4.6 percent, the Internet segment is growing at around 35 percent per year. The United States' Internet GDP alone is bigger than the GDP of the entire country of Switzerland, said Son. And while PC-based Internet initiated the momentum, the mobile Internet will continue it forward.

"Mobile broadband alone is going to bring $1 trillion of additional scale … and this mobile broadband is going to add 1 million jobs, new jobs, for the American workforce," said Son. "This is the opportunity that is so bright, so great, that we should not miss it."

2. The United States is falling behind. 

Long Term Evolution (LTE) is the future, said Son. It's the "next-generation highway" on which everything will run. However, in a study by Open Signal that ranked the LTE situations of 16 nations, the United States ranked 15, just ahead of the Philippines.

"As I said in the first part of my presentation, the U.S. has been number one on every infrastructure for the past 100 years. For electricity, for the automobile, for airlines, for televisions. For all of these important infrastructures, the U.S.A. has been number one in the world," said Son. "How can the American people accept the fact that it is number 15 for the most important highway, the information highway, for the next century? I think we have to change this."

3. Americans need to remember the sky is blue.

In Japan, Internet speeds improved by 66 percent in one year; in the United States, they're getting worse, said Son.

Softbank's Son Discusses Ambitions for Sprint, Web Growth, U.S. Rank


"I went to China a few months ago, and I though, 'Oh, in Beijing it is a cloudy day today.' But it was not cloudy because of the actual weather. The air is polluted. Chinese people already know that. But if you live in Beijing every day, it's almost like an everyday phenomenon … You forget how the sky was blue. So, if you live in the States with the mobile phone … many of you have already experienced that windmill signal [turning]. You don't see that in Japan anymore. But you see that windmill symbol on your smartphone page all the time [in the United States]. That's not a good environment. It's like living in Beijing air. You have to remember the blue sky, okay?"

4. Americans are paying more for less.

"Even though the U.S. is number 15 in the connectivity speed, the price is number two in the world. Only right after Canada," said Son. He added that people often respond to this statistic by saying that Americans use a lot more data than consumers elsewhere, so he decided to check the facts.

"The Japanese actually use 50 percent more per person. Fifty percent more data on the smartphone. Fifty percent more! … and Americans pay 1.7 times more than Japanese."

So, mobile Internet speeds are slowing down, and the prices are going up, Son said.

"Everywhere else, every other country, the price is going down because of the competition. There's only one country in the major market … [where] price continues to go up, and it is the United States."

5. The digital divide needs to be closed.

"There's a digital divide based on the wealth, the richness of each household by income level. If you are poorer, you have less connectivity. That's a fact. … Mobile is a substitute for that gap. … But there is still a gap. There is still a digital divide. Not only the income and education, but geographically there is a digital divide. [In Texas] more than 30 percent of households have no availability to access broadband. It's not available. Even if you want to pay, it's not available."

Additionally, in poorer areas in the United States, home and schools have more limited access to broadband infrastructure.

"Electricity is available for every household. Highways—the street is available for [everyone]. But in the 21st century, the most important infrastructure is not available to everybody," Son continued. "There is a digital divide. The U.S. has been the inventor of the Internet technology, but it's falling behind."  

6. Son banged the table and instigated change.

Back when Japan had the most expensive wireless data in the world, Son said he had a meeting with the prime minister of Japan, the CEO of NTT—which was owned by the government and had a vast majority of the market share—other ministers and the CEOs of some private sector companies. Son asked the prime minister whether he wanted to save Japan or save NTT.

"I banged the table. 'Give me your answer! I don't need any explanation or any logic, just give me one answer, which is more important? The country or this company?"

The prime minister said Japan, and Son answered that it was necessary, then, to deregulate.

"He said, 'Okay, let's change the regulation. Let's free up Japan. Let's bring the competition.' And that's the moment Japanese history got changed."

7. Passion changed Japan.

No one wanted to take on the government. Eventually—after reviving Softbank, which lost 99 percent of its stock price during the "net bubble crash"—Son decided he would take on NTT and acquired Vodafone Japan for $20 billion.

"That's a crazy, crazy thing for Japan, but I had a vision: We have to create the network, Japan should be the number-one network in speed of connectivity, the price should be competitive. … Japan changed drastically from the most expensive and slowest country into the lowest price and highest speed. So one crazy passion and focus [and deep] concentration could bring a change in the country," said Son.

Softbank Son Discusses Ambitions for Sprint, Web Growth, U.S. Rank


"Vodafone Japan was a small company and falling down, but I put all my effort and rough a price war, a network war. So we could not change all the customers, but NTT Docomo's customers and KDDI's customers also benefit, because they had to react to our price war that I brought."

8. Son wants to do for Sprint what he did for Vodafone Japan.       

"Sprint happened to have the same spectrum, 2.5GHz. That is exactly the same frequency spectrum as we have in Japan. That's one of the reasons I decided to invest in Sprint, because we have the same spectrum. We can bring the same technology, 8x8 MIMO antenna, which makes this signal propagate longer distances with a big pipe of data streaming." 

9. Son wants to offer an alternative to Comcast, Time Warner.

One-third of households in the United States only have access to one fixed-line broadband provider, while the other two-thirds have two companies to choose from—a duopoly, said Son.

"I'd like to volunteer that we would like to be an alternative. … The cable that you are getting on average in the States is 50M bps. I'd like to provide up to 200M bps, 10 times the speed. … It requires a lot of scale and money and so on. But I'd like to give it a shot. I'd like to provide an alternative to the monopolistic or oligopolistic situation that two-thirds of the American households can get access to only one or two providers. I'd like to be a third alternative with 10 times the speed and lower the price, and change the U.S. situation as I did in Japan."

10. He's not putting down Sprint's competitors, he's rooting for the U.S.

History proves, said Son, the country with the best technology wins. When Spain had the fastest ships, it was winning; England took over with the steam engine, and then America became the world leader with electricity, the automobiles and airplanes. There's no question what the next most important technology is and whether the United States can again lead in this space.

"I'm here not to depress you, not to criticize you. Yes we can. We have the issue of only two things: low speed, high price. Those are the only two things. It's not complicated. … Let's increase the speed, let's be number one in the world. Let's reduce the price by competition, not a pseudo-competition, the real competition. Pseudo-competition is not the solution. We don't need government money. We don't need taxpayers' money. [By] changing the market situation, bringing the real fight, I think we get a solution."

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