Softbank Could Change the Shape of U.S. Mobile Market

Softbank, the Japanese conglomerate mostly unbeknownst outside of that country, has used new ideas disruptive to other companies to build its business, and there are several ways this tactic could be used to disrupt the U.S. mobile market.

By making a "substantial" investment with Softbank, Sprint Nextel seeks to change control of the company. It is possible these discussions could end without a deal, but could also result in 70 percent of the mobile operator and Clearwire being owned by Softbank.

As the second-largest mobile operator in Japan, Softbank, which began in the 1980s, is known for introducing non-homegrown devices (to Japan) and offering more choices, pushing prices lower. As a software distributor and publisher, Softbank has diversified into internet businesses and wired and wireless services, acquiring other carriers and taking risks along the way.

As AT&T and Verizon Wireless dominate the U.S. mobile market, Softbank may, according to analysts, make use of its control over Sprint and Clearwire to introduce greater variance in mobile data plans such as alternate packages with added services.

Phil Marshall of Tolaga Research said, "It's not really anticipating or adequately addressing the innovation that's going on in the mobile broadband market." U.S. carrier business models do not always make use of advances in apps, devices, mobile payments and social networking, and there is more that U.S. mobile operators could do to improve their billing relationships with customers. One example could be personalized content services.

U.S. operators continue to be limited to monthly buckets of bytes, according to Monica Paolini of Senza Fili Consulting. She adds, "Either you have data or you don't... There actually is quite a lot of uniformity across operators." Paolini believes there is certainly room for more options.

Prepaid and postpaid data plans are offered by carriers in Japan and other countries; this includes those which are limited to particular mobile applications or data use at a particular time of day, according to Paolini. Furthermore, targeted plans might attract customers who cannot afford to pay $30 per month for a generic plan to use mobile data.

Paolini states, "There is plenty of room for innovation and disruption, more so than in many other developed markets."

Softbank may even begin to provide services extremely different from those that wireline or wireless service providers have offered in the U.S., working similarly to how it did in Japan, according to Jack Gold of J. Gold Associates.

By combining home and mobile services like gaming and entertainment in addition to straight connectivity, Softbank will be doing something which U.S. operators have never done, or never successfully achieved. Gold adds that the big carriers have often offered only expensive or limited TV services for mobile phones.

Gold also says that the inherent problem lies in the fact that U.S. carriers have not sufficiently provided value-added services, have not been creative in advancing them, and have not priced them attractively. This is the case additionally for cable and DSL (digital subscriber line) carriers who, for example, had the opportunity to provide a video-conferencing service (like Skype) 10 years ago, though none did.

It appears that Softbank may change that pattern. Consumers might welcome a set of services that make mobile simpler, like Softbank selling customized, easy-to-use restaurant maps with a built-in reservation system. "There are other services that do that, but it's very messy," Gold said. (CY) Link