The other shoe has dropped. A series of news reports leaking out of Japan and Germany indicate that Deutsche Telekom has reached at least a tentative agreement to sell most of T-Mobile US to the Softbank and merge it with Sprint.
This likely explains the appearance of Masayoshi Son, the billionaire owner of Japanese telecommunications company Softbank and chairman of Sprint, at the Code Conference May 27 to 29. Son used the conference as a platform to launch his public relations campaign that appears to be aimed at gaining public support for his merger quest.
Why a PR campaign? Probably because a proposal by Sprint and Softbank earlier in 2014 to buy out T-Mobile was rebuffed by the U.S. Department of Justice and the Federal Communications Commission, which indicated that it was unlikely that such a merger would win regulatory approval.
This should be no surprise to Son. It wasn't that long ago that AT&T attempted to buy T-Mobile and only to pay Deutsche Telekom billions of dollars in breakup fees and spectrum when it was forced to withdraw its buyout offer in November 2011.
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The reason: reducing the top-four carriers to three carriers was seen by both the Justice Department and the FCC as bad for competition. Since then, T-Mobile has been the very definition of competition and, in the process, has forced its larger rivals to lower prices, eliminate some contracts and be more responsive to customer needs.
The obvious next question is how adding Softbank as the third carrier in a three-carrier wireless universe would help competition. The answer is by reducing the number of national carriers to three, you'd be more likely to end up in a situation like the one that exists in Canada.
For those of you who don't live in Canada, the wireless situation is unhappy, at best. A Canadian technology executive told me that the lack of competition there is resulting in high wireless service prices and contracts that are restrictive and have terms far worse than in the United States or Europe. The executive, who asked not to be identified because her company does business with Canadian wireless carriers, said that she envies U.S. and European wireless services because of their features and low prices.
Other Canadians echo those sentiments. Retired insurance executive Adele Williams said that it almost seems as if the wireless carriers agree among themselves to maintain prices and wireless plans at the same levels. Williams recited prices that are far higher than even the most expensive U.S. carriers for relatively low levels of service.
Lest you think that this is a version of "Blame Canada," from the cartoon series "South Park," it's not. In fact, the situation in Canada is frequently cited as a reason not to allow a reduction in the number of U.S. carriers in testimony at the FCC.
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