In explaining why he wanted to fight back against the market dominance of AT&T and Verizon Wireless, Masayoshi Son took it down to a personal level as he ended his speech to the Competitive Carriers Association (CCA) Global Expo 2014, March 25, in San Antonio, Texas.
He said he was born in a poor, rural village in Japan. “It was not easy for me,” Son said. “However, any kid, whether born rich or poor in an urban or rural area, should have equal opportunity to succeed.”
Son questioned whether the United States market is indeed competitive and allows opportunities in rural areas. Instead, he warned the members of CCA, which are mostly rural wireless carriers, that they are threatened by the expansion of what he called the AT&T/Verizon wireless duopoly.
As proof of that duopoly Son said that AT&T’s and Verizon’s combined subscribership share of the market has grown from 56 percent in 2008 to 73 percent in 2013. Additionally, the two carriers’ share of the enterprise market grew from 51 percent in 2008 to 80 percent in 2013. The AT&T/Verizon Wireless share of the industry’s total profit also grew from 67 percent to 84 percent in the last five years.
The wireless duopoly limits rural carriers’ ability to build out LTE high-speed networks, according to Son, as well as their access to LTE devices.
“Users require state-of-the-art handsets,” Son said. “Access to LTE handsets makes a huge difference between service offerings of AT&T/Verizon versus that of the rural carriers. AT&T has 48 LTE models and Verizon Wireless has 29 devices, while rural carriers have access to only nine models.”
Son committed Softbank and Sprint to support the rural and regional carriers and their access to LTE devices and LTE investment. He said the carrier can provide that support because its service area is complementary and not competitive to that of rural carriers.
“In the case of Sprint and T-Mobile, we are focused on the urban areas, while you are in the rural areas. It is a structural partnership. Together we can compete with the duopoly,” he said.
Clearinghouse Key to Roaming Agreements
CCA has developed a central data hub as a clearinghouse for its members to complete simple, commercially sustainable, individually negotiated, reciprocal roaming agreements with Sprint.
“In the past, to combine those systems we used to have to work one by one using a bilateral data services hub,” Son said. “With this new technology and platform being prepared, multi-lateral cooperation with a data hub as a structure, we can systematically partner with each other.”
Sprint has formed a shared-network alliance with the NetAmerica Alliance, whose members are rural carriers that want to provide LTE service. In the shared network agreement, Sprint will provide wireless service providers with access to 54 megahertz of 800 MHz and 1900 MHz spectrum, access to Sprint’s network and access to the Sprint’s wireless devices. This is the trifecta that solves rural carriers’ data roaming issues, which have blocked them from playing in the 4G wireless space.
The NetAmerica Alliance will provide members with assistance in planning, building and operating their LTE networks in partnership with Sprint. The local network will be built to Sprint Network Vision standards and will deliver services to rural consumers out of a shared Sprint and NetAmerica core for a Tier-1 experience. Additionally, Sprint will contribute ongoing cash payments to the carrier to help cover a percentage of the network build costs.
In return, Sprint customers will have access to NetAmerica Alliance members’ LTE networks, which is expected to improve Sprint’s nationwide coverage.
“We would like to assist the rural carriers with building out LTE systems,” Son said. “You have the spectrum and are building out the network, but without the latest LTE handsets, it is no good. We offer you full support in getting those devices. We would like to help you fight the duopoly with our technology and our spectrum, as well as financially. We need a new technology to fight back.”