Masayoshi Son. SoftBank, Sprint, Code Conference

Asa Mathat

SoftBank CEO Masayoshi Son

Mobile


Liveblog highlights:

  • The U.S. created the Internet, but its speeds rank 15th out of 16 major countries, ahead of only the Philippines. (Mexico is No. 17, by the way.)
  • The dominant players in wireless and fixed-line communications have returned $100 billion in dividends to shareholders, but have not focused on improving speeds.
  • Masayoshi Son refuses to talk about a possible bid for T-Mobile, but he expressed his admiration for the company and called it disruptive.
  • Neither Sprint nor T-Mobile have sufficient scale to compete nationally.
  • The U.S. became a giant in the 20th century because of infrastructure — highways and electricity. But in the information age, it’s lagging.
  • Son promises to abide by the concept of net neutrality.
  • Addressing speculation about another tech bubble, and whether investor enthusiasm will impact Alibaba’s planned initial stock offering, Son notes that the Chinese company’s valuation will reflect its scale. It’s larger than Amazon and eBay combined.
  • What did Sprint get wrong? One word: WiMax.

Masayoshi Son is a man who knows how to dream big and turn those dreams into realities.

As head of SoftBank, he has made big early bets and also shown a penchant for being able to come from behind — having taken a small player in the Japanese wireless market and turned it into a serious player through aggressive, bold moves.

In acquiring control of No. 3 U.S. carrier Sprint, though, Son faces one of his toughest tasks. The clearest option — and Son’s clear preference — would be to merge with rival T-Mobile to gain the bulk needed to better take on AT&T and Verizon.

Regulators, though, have taken a dim view of that. However, Son is clearly not giving up, recently making the rounds in Washington to argue why his approach would be good for competition. He continued that in his appearance onstage at the Code Conference on Wednesday.

He pointed out that the U.S. has some of the slowest Internet in the developed world at a time where the incumbents in the wireless and wireline broadband business are returning more than $100 billion in dividends to shareholders.

“We need scale,” he says, while refusing to talk about T-Mobile specifically. At the same time, he said he admires T-Mobile US CEO John Legere and what the company has done on the pricing front. Without a deal, though, he said Sprint and T-Mobile will continue to lose money.

Meanwhile, while saying he needed to be careful what he said about Alibaba given that it has filed to go public, Son nonetheless sang the praises of the Chinese e-commerce giant. He noted Alibaba last year had more revenue and profit than eBay and Amazon combined.

Oh, and there are lots of countries it could expand to. Maybe even the U.S. someday.

But, he said, throwing a nod to securities law, investors will have to make up their own minds.



Ina Fried May 28, 201411:46 am

Son notes that the U.S. invented the Internet, but our speeds are 15th out of 16 major countries, ahead only of the Philippines. (Mexico is 17th, by the way.)

Ina Fried May 28, 201411:47 am

“The Chinese wake up every day and see the air and say, ‘This is a good morning.’ People from outside look and see the Beijing air, and see that it is terrible.”

Americans, he says, are satisfied with their Internet speeds because they don’t know any better.

Ina Fried May 28, 201411:48 am

Walt asks Masa Son who his U.S. Internet provider is.

“Comcast,” he says, but he doesn’t know how much he pays each month.

Ina Fried May 28, 201411:50 am

Son notes that he was the one who looked at Japan and saw NTT with 99 percent share, with the most expensive Internet and low quality. (He’s laying the groundwork for why he should be able to do what he wants with Sprint here…)

Pete Mall May 28, 201411:50 am

Ina Fried May 28, 201411:51 am

Son said he looked at what was going on in Japan in broadband and said, “This is bullshit.” 

Ina Fried May 28, 201411:52 am

His service was a quarter the price of NTT and 10 times the speed they were offering at the time. (This is fixed broadband, not wireless, he’s talking at the moment.)

Ina Fried May 28, 201411:54 am

The big three – the duopolists in wireless and the monopolist in fixed line — have returned $100 billion dividend to shareholders. “That’s the luxury they have,” he says. But he says they have not focused on improving speed and yet they are doing nothing illegal.

Ina Fried May 28, 201411:54 am

On to Sprint, Walt notes that he can barely get an LTE signal in most place.

“I totally agree. I’ve only owned the company for six months. It takes a few years.”

Ina Fried May 28, 201411:55 am

But he says they already have the technology. That’s a step above where things were when he entered Japanese wireless market.

I only had anger, he said.

“Sometimes anger helps. It’s a source of energy.”

Pete Mall May 28, 201411:55 am

Ina Fried May 28, 201411:56 am

As for buying T-Mobile: “We need scale,” he says, while refusing to talk about T-Mobile specifically.

Walt notes that T-Mobile has been pretty disruptive.

“I strongly admire them,” he said. “I strongly admire the price disruption”

Ina Fried May 28, 201411:58 am

But, he says, both Sprint and T-Mobile are losing money.

How long can you sustain that, Son asks.

This is not a three-month game. This is a five year, 10 year game.
Ina Fried May 28, 201411:58 am

How will combining two money losers work out?

“Neither one of them has a sufficient network today,” Son says, nor sufficient spectrum holdings and other assets.

Ina Fried May 28, 201411:59 am

He makes the expected argument, saying you need a nationwide network whether you have a few customers or a lot.

Ina Fried May 28, 201411:59 am

Amusing as Son continues to try to talk about the need for scale without specifically naming T-Mobile as the only realistic option for a deal.

Pete Mall May 28, 201412:02 pm

Ina Fried May 28, 201412:02 pm

On desire to offer fixed wireless broadband, Son says that consumers care whether they get Facebook, Netflix and other services, not what type of pipes are used. Rivals AT&T and Verizon, he notes, can offer quadruple play — TV, home phone, Internet and wireless. Meanwhile Sprint and T-Mobile (even if they were allowed to merge) would only be able to offer one.

Ina Fried May 28, 201412:03 pm

In Japan, Son noted it was easier to become a competitor in fixed broadband. In the U.S., he says, there is no dark fiber or copper just waiting for a rival.

Plus, there’s all the governmental issues.

“The regulation in this country is wrong.”

Ina Fried May 28, 201412:04 pm

The US became a giant in twentieth century because of infrastructure — highways and electricity. In the information age, though, US infrastructure is lagging, Son says.

Ina Fried May 28, 201412:05 pm

Son: “I would provide network neutrality.”

Ina Fried May 28, 201412:07 pm

Is it a bubble? In 2000, people’s instincts about the Internet was right, but overshot. This time I wouldn’t call it a bubble.

Whatever price Alibaba gets, I wouldn’t characterize it as a bubble because they are delivering real value.

Son notes he has to be careful what he says because Alibaba in a quiet period. Walt notes that quiet isn’t Son’s strong suit.
Which he then illustrated: “All you know Amazon. All you know eBay. Both are great companies. If you just look at the past year, the value of the e-commerce transactions over their platforms, Amazon and eBay added together, Alibaba did more. The combined profit of eBay and Amazon, Alibaba also surpassed.”

Pete Mall May 28, 201412:08 pm

Ina Fried May 28, 201412:09 pm

But, he says, investors have to make up their own minds. A small effort to avoid alienating a whole different three-letter U.S. government agency — the SEC, in this case.

Ina Fried May 28, 201412:09 pm

Alibaba is not a me-too company and could deliver value even in developed markets such as the United States. “There are many other countries around the world that Alibaba can contribute to” quickly.

Ina Fried May 28, 201412:10 pm

Audience question time. What did Sprint do wrong?

“WiMax was the wrong technology. Period.”

Ina Fried May 28, 201412:11 pm

Do you still have a 500 year plan?

Son: 300 years. Also, not a plan, more like a vision.

Ina Fried May 28, 201412:14 pm

What’s your relationship with John Legere?

I highly admire John Legere.



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