SoftBank’s investment in Sprint may have been a bad bet on consolidation

The Wall Street Journal reported today that Masayoshi Son continues to lobby both the U.S. business community and regulators aggressively to convince them that further consolidation among mobile carriers would be good for competition. The chairman of SoftBank and Sprint maintains that the market is effectively a duopoly controlled by Verizon and AT&T, resulting in relatively high prices and less-than-satisfactory service. Sprint needs scale to build mobile broadband networks that can compete with the two top dogs, Son claims, implying that a tie-up with T-Mobile would spur competition and ultimately benefit consumers.

Son is right that Verizon and AT&T continue to dominate the market, and Sprint certainly faces some big challenges if it is to develop a world-class LTE network that would help even the playing field. But regulators are clearly doubtful that any merger between the two smaller tier-one carriers would be a good thing for consumers, and I believe T-Mobile’s recent series of successfully disruptive moves has proven that a lesser carrier can be a formidable challenger. Son’s persistence indicates SoftBank’s investment in Sprint may have been based on an assumption of a merger between the two U.S. operators. If that’s the case, it may prove to be a costly mistake.

Relevant Analyst
Colin Gibbs

Colin Gibbs

Mobile Curator Gigaom Network

Do you want to speak with Colin Gibbs about this topic?

Learn More
You must be logged in to post a comment.
No Comments Subscribers to comment
Explore Related Topics

Latest Research

Latest Webinars

Want to conduct your own Webinar?
Learn More

Learn about our services or Contact us: Email / 800-906-8098