| TOKYO, April 24
TOKYO, April 24 For Japanese billionaire
Masayoshi Son, who wants to build the world's largest mobile
Internet company, criticism of his operations from regulators in
his home market could not come at a worse time.
The feisty entrepreneur is lobbying sceptical Washington
officials to let him buy a second U.S. mobile operator, saying
he would help to break up a cozy U.S. wireless oligopoly.
Son says he is an outsider who stirred up a price battle
that benefited consumers after he took over Vodafone's failing
Japanese operation eight years ago.
So it must be galling to hear regulators in Tokyo chide his
SoftBank Corp, along with NTT DoCoMo, Japan's
mobile industry leader, and No.2 KDDI Corp, for lack of
competition in the domestic smartphone market.
"You could say the mobile market is an oligopoly of the
three big companies," Communications Minister Yoshitaka Shindo
said at a regular news conference this month.
His ministry is preparing long-term proposals to bring lower
prices and faster services, including fostering growth of mobile
virtual network operators (MVNOs), cut-rate providers that lease
network access from the big carriers.
The sniping will not help Son's plans to acquire T-Mobile US
He wants to combine the No. 4 U.S. mobile carrier with No. 3
Sprint Corp, which SoftBank bought last July for $21.6
billion. Together, he argues, they would have the heft to take
on dominant carriers AT&T Inc and Verizon, which he
derides as a complacent duopoly.
But top U.S. regulators, including Federal Communications
Commission Chairman Tom Wheeler and U.S. antitrust chief William
Baer, have pointed to T-Mobile's success since U.S. authorities
in 2011 rejected a merger between AT&T and T-Mobile on the
grounds that the market needed at least four major players to be
Not one to give up easily, Son has hired a former FCC chief
counsel to help with Washington relations and started a public
push for his case, in advertisements around the U.S. capital and
presentations to stakeholders.
Son told an audience of industry officials at the U.S.
Chamber of Commerce in Washington last month that he had brought
a "price war" to Japan when he entered the mobile market.
"I'd like to bring that to the States," he said. "American
consumers use less data traffic, but pay more."
YOUR OLIGOPOLY OR MINE?
These days in Japan, however, the rare new plans and
services that pull smartphone prices lower are no longer tending
to come from SoftBank.
It was DoCoMo that a year-and-a-half ago broke with the big
carriers' standard practice of requiring smartphone users to pay
for a minimum volume of 7 gigabytes of monthly data traffic -
even though barely one-in-10 ever use that much. It offered a 3
GB service for 1,000 yen less than the standard plans' 5,700 yen
($55.56), which KDDI and SoftBank did not match.
Retailers such as supermarket operator Aeon Co Ltd
and electronics chain BIC Camera Inc have also jumped
into the market with cut-rate MVNO services over the past month.
"SoftBank used to be a competition driver," said a
communications ministry official, who spoke on condition of
anonymity. "But now it's completely spoiled by the three-company
In October 2006, when Son elbowed his way into the mobile
phone business, he had already made a name for himself by
bringing cut-throat price competition to Japanese fixed-line
With his 1.75 trillion yen ($17 billion) Vodafone Japan
purchase - at the time Japan's biggest non-financial acquisition
- and a promise from Steve Jobs for exclusive Japanese rights to
the iPhone, he steadily captured market share from rivals.
He introduced a cut-rate 980 yen-a-month ($9.55) plan, while
pledging to match any rivals' price reduction within 24 hours.
Eight years later all three operators are enjoying strong
profits, with SoftBank and KDDI setting records, and they have
come under pressure to cut prices as the government tries to
prod the economy into a sustainable recovery.
The communications ministry cites data suggesting Tokyo's
smartphone rates are among the world's highest.
For 1.6 gigabytes (GB) a month - enough to view about 7.5
hours of streaming video or more than 10,000 home pages - only
New York and Duesseldorf were more expensive, 2012 data from
seven major cities shows. For light users at 500 megabytes (MB),
Tokyo was most expensive.
The main reason is the 7 GB minimum in most smartphone
plans, a legacy of unlimited data plans once standard with
cheaper Internet-connected feature phones.
"It's like always being served a 7 kg (15 lb) steak whatever
restaurant you go to," said Japan Communications Inc
Executive Vice President Naohisa Fukuda, one of a small but
growing number of Japanese MVNOs.
SoftBank's regulatory division head, Mitsunobu Yoshino,
argues that these costs are offset by aggressive marketing
campaigns, including cash rebates that often exceed the price of
"Even for existing customers we offer trade-ins and student
discounts, and this doesn't show up in the communications
ministry's data," he said.
These incentives weigh on Japanese carriers' average revenue
per user, a standard industry measure which has been trending
flat to slightly lower in recent years, while the top U.S.
mobile carriers have seen steady rises.
Regulators are not convinced.
The aggressive marketing campaigns simply distort the
market, they say, offering a windfall to a limited group of
consumers willing and able to change carriers frequently, while
making it more difficult for MVNOs to enter the market.
SoftBank's sensitivity towards the criticism at home was
evident during a courtesy call by a company executive to the
communications ministry this year, according to a person present
at the meeting.
SoftBank and the ministry declined to comment on the
meeting, but the source who was present said the executive told
officials: "If the communications ministry goes around saying
things like there's no competition in Japan's mobile phone
market, people overseas may actually believe that."
($1 = 102.5700 Japanese Yen)
(Additional reporting by Alina Selyukh in Washington; Writing
by Edmund Klamann; Editing by Alex Richardson)