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Could Sprint's SoftBank deal be a boon to U.S. wireless customers?

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October 15, 2012

SoftBank's 70 percent stake gives Sprint a much-needed infusion of cash (Cash image: Shutt...

SoftBank's 70 percent stake gives Sprint a much-needed infusion of cash (Cash image: Shutterstock)

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The U.S. wireless industry: so good for AT&T and Verizon, yet so bad for everyone else. In some respects, it's the world's leading market. Its LTE rollout has been aggressive and expansive, and it gets the hottest devices first. For customers, though, things aren't always so rosy. The two carriers' virtual duopoly keeps prices high and new policies unfair. The sole hope for increased competition may lie with Sprint. For US$20.1 billion, Japan's SoftBank today acquired a 70 percent stake in the carrier. Though the move could be seen as a sign of desperation for the (distant) third-place Sprint, it could also ultimately invigorate competition and swing some of the power back to customers.

The Duopoly

Verizon and AT&T play a game where the cards are stacked in their favor
Verizon and AT&T play a game where the cards are stacked in their favor

Verizon and AT&T are great at making money, but not so great at putting their customers first. Unlimited data plans are long gone, and customers who thought they were grandfathered into them see throttled download speeds that effectively create caps. When Apple added iMessage, which lets Apple customers send messages to each other without a texting plan, AT&T dropped all SMS plans other than its pricey unlimited one. In order to use Apple's FaceTime over cellular, AT&T requires the adoption of its new shared data plans – plans which appear to mostly benefit the carrier's bottom lines.

Despite the rapid rollout of LTE in the U.S., the New York Times reports on a study by the GSM Association, which says that U.S. LTE prices are a price gouge. U.S. customers pay, on average, $7.50 per gigabyte of LTE data. The same average for European customers is a mere $2.50/GB.

The reason for the LTE disparity – and all of these other customer hostile-policies – is a lack of competition. Verizon and AT&T control the market, with Sprint and T-Mobile sitting far behind. With their superior LTE and hotter devices, there's no urgent need to please customers with pricing and other policies. Wireless spectrum is a finite resource, so there's no opportunity for an upstart company to jump into the fray and mix things up.

A New Hope

Sprint CEO Dan Hesse may have a lot to smile about (Photo: JBTaylor|Flickr)
Sprint CEO Dan Hesse may have a lot to smile about (Photo: JBTaylor|Flickr)

Putting Sprint on steroids may be the only hope for greater competition. The SoftBank majority acquisition does just that.

As CNET reports, the two companies have a lot in common. They share a third-place underdog mentality (SoftBank trails Japanese leaders KDDI and NTT Docomo). SoftBank – like today's Sprint under CEO Dan Hesse – also places a high value on customer satisfaction. Both carriers have invested heavily in the iPhone. SoftBank even uses the same LTE variation, TD-LTE, that will soon be utilized by Sprint's partner – and possible acquisition target – Clearwire.

Most importantly, though, SoftBank brings money. Sprint's LTE network sorely trails Verizon's and AT&T's, and it will require billions to complete. When was the last time a hot new smartphone was exclusive to Sprint? You have to go all the way back to 2010, with the launch of the HTC EVO 4G. Once Verizon's and AT&T's LTE networks launched the following year, the WiMax-enabled smartphone family lost its luster. SoftBank's cash – combined with an improved LTE network – could help Sprint to land the hottest devices again.

It's possible that SoftBank's shot in the arm won't be enough to dramatically change the market. There's also the prospect that a stronger Sprint would eventually abandon its customer-centric focus, and effectively become another Verizon or AT&T (though Hesse's presence should reduce that possibility in the near term). But the deal does offer customers hope.

What do you think? The merger won't be completed until 2013, but how do you see things five years from now? Will this shake things up, or is the Verizon-AT&T duopoly too big to even flinch? Let us know in those comments.

Source: Sprint

About the Author
Will Shanklin Will Shanklin is Gizmag's Mobile Tech Editor, and has been part of the team since 2012. Will has a Master's degree from U.C. Irvine and a Bachelor's from West Virginia University. He currently lives in New Mexico with his wife, Jessica.
  All articles by Will Shanklin
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3 Comments

I hope it goes through okay. I would like Sprint to upgrade their network, lower data rates so that I would actually want to sign up for a data plan or just offer a smart phone without a data plan. All providers require a data plan with a smart phone but there are a lot of people who dont need them because all of the smart phones that I know of have Wi-Fi. When are you not around a Wi-Fi hotspot these days? Yeah it may not be as fast but for me it's not important. I have been a Verizon customer for over 9 years and have not had a problem with their service but their customer support and lack of phone/plan options has gotten a lot worse and I' looking to switch. I think there needs to be a company that offers what you want and not what they think you need. I think if a company had more options then the customers would be there to support it. I just dont like paying for things I'm not using, like cable TV, I don't watch all of the channels I get so why can't I drop them and not pay for them? Anyway, that is just me complaining.

MG48
16th October, 2012 @ 10:21 am PDT

The USA gets the hottest phones first? Ha! Look at all the phones that have been released here with disabled or even completely removed functions and features that are in the European and Asian versions.

Sprint and Verizon won't allow CDMA phones with RUIM cards to be used in North America. Unlike with unlocked GSM phones you can't have several CDMA phones and swap one card amongst them - like is possible with a RUIM card in Europe and Asia.

Then there are the phones with two or more card slots and the ability to be used on different networks, with auto or manual switching as the user roams. Why such phones exist is in some places it's less expensive to pay for multiple accounts than it is to pay super high roaming charges.

What I want in my next Android phone is a SAMOLED II Plus screen, slider five row keyboard, stereo speakers (like my old LG ENV2 had), 1 gig RAM, dual core CPU, at least 16gig internal storage and the ability to use SDXC cards. It should also have HDMI and composite or S-Video output capability and USB OTG support. The battery should be removable so charged backups can be swapped in and higher capacity ones could be used.

Such a phone should also come in a version without the keyboard for those who like gerfingerpokin the screen all the time.

I'm looking at the Motorola Photon Q as an upgrade from my Epic 4G. The Photon is the first 4G capable slider (and only LTE one) from sprint since the Epic. The Photon is pretty much an upgraded Droid 4. But there's a couple of things against the Photon, the battery is not removable and the screen is LCD instead of an LED like the Epic.

Gregg Eshelman
16th October, 2012 @ 12:46 pm PDT

How about buy a phone and get unlimited everything for $19.00 a month?

Republic Wireless is doing this in a somewhat painful beta program.

It uses Wi-Fi if there is one and Sprint if not.

It's a geek thing now but if it works with a few tweaks, the "duopoly" may well fade into the same sunset that cable and satellite TV seems to be heading for.

MikeFromHC
17th October, 2012 @ 03:47 pm PDT
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