Internet connectivity in the United States is pretty far behind large portions of the planet, and people feel the impact of slow—or even no—Internet access most every day. But SoftBank Corp. President Masayoshi Son may just have a solution to the problem, and it's one that actually underscores recent moves the company's making pretty nicely: put some fresh investment in wireless broadband.
Son was recently spotted trying to drum up some support for the idea of a merger between SoftBank's Sprint and recent gainer T-Mobile (News - Alert), and that actually represents a nice parallel for the idea of improving the state of wireless broadband in the United States. Son acknowledges that wireless broadband in its current state is really no match for faster, landline-based alternatives like cable or DSL, but with some investment, it just might be.
Son—Sprint (News - Alert)'s chairman—notes that wireless broadband is of much poorer quality than in other countries, and those who have it pay more than the equivalent abroad. While the idea of a Sprint/T-Mobile merger was less than heartily received by regulators, Son's move to reframe the argument as a boost to wireless broadband in the United States may give it a little extra help. With Sprint and T-Mobile merged, Son notes, the combined company would then have the necessary scale to more effectively compete with top-two firms Verizon (News - Alert) and AT&T, the operators who have most of the industry's cash flow. Under Son's plan, however, the company would use price cuts to gain market share, generating a better shot at long term profitability. This strategy was previously seen working—and working well, by all reports—for SoftBank itself in Japan.
Son's plan essentially calls for turning the current landscape from two titans and two also-rans into a three-way titan battle, which in turn should spawn what Son describes as “a more massive price war, a technology war,” thanks to the market's new state as a “three-heavyweight fight.” Given that the United States lags behind Japan and South Korea—indeed, the U.S ranks number 15 out of a 16-country list in terms of Internet services—yet shows use that's very much on the rise, with about 200 million mobile broadband users using 1.2 gigabytes (that number up from 690 megabytes last year on average). Interestingly, despite the clear lag in speed, the United States has the largest number of mobile broadband users, but some of the slowest speeds.
On a certain level, this plan makes sense. Perhaps the biggest problem the United States faces in terms of improving broadband speed is related to sheer geography. Yes, other countries have much faster Internet access but these are countries that compare closely to certain states in the United States. Japan, for example, is slightly smaller than the state of Montana, by some reports. South Korea has been compared size-wise to New Jersey. The regulatory background doesn't help—some places have just one provider if any—but the geography is certainly a hindrance. But wireless Internet access does have a help there; instead of laying cable all over the country, using a wireless signal allows for more rapid establishment of a better network. That's an improvement all around, but the technology does have to improve accordingly, a development Son likely hopes to achieve.
Son may have the right idea here, but it's an idea that will need a lot of work to be really feasible. The Sprint/T-Mobile merger might make that feasibility happen, but only time will tell just how far it goes.