It Gets Worse: An iPhone comparison between SoftBank and T-Mobile

As I write, the Internet is atwitter with merger talks between T-Mobile and Sprint.

In the last couple years, T-Mobile has grown rapidly and competed well by marketing itself as a consumer-friendly, scrappy underdog. It's worked well.

In the same time frame, Sprint was acquired by SoftBank, one of Japan's largest and most successful companies. It's also one of Japan's three mobile carriers (unlike the US's four) and led by Masayoshi Son, an outspoken CEO. Son now acts as the face of Sprint.

SoftBank is in both wired and wireless in Japan, so I thought I'd share some distinctions between those two, and with T-Mobile.

Wired Broadband

SoftBank does indeed get credit for bringing high-speed wired broadband to Japan. The introduction of the Internet to Japan was an awkward thing because NTT, once a state-owned phone monopoly, still charged obscene per-minute connection rates that chilled the development of the Internet back in the dial-up days. So there's not much of an apples-to-apples comparison with the US here.

SoftBank did indeed step in with low rates and blow the DSL market wide open. However, that only happened after Japan's government deemed NTT's copper to be a common resource and opened the lines to competition. Son simply saw the opportunity and capitalized.

Mobile

Japan effectively has 3 carriers nationwide: NTT DoCoMo, au, and SoftBank.

Let me get the easy point out of the way: SoftBank is universally panned for the worst reception, the slowest LTE speeds, and the worst customer service.

The difference between 3 carriers and 4 (as in the US) seems material: it's close enough to oligopoly to grab the attention of the FTC. This matters, and I'll quantify it by my own experience using an iPhone 5 in both countries, on the relevant carriers, in fall of last year. Pricing has not materially changed since then on either carrier.

iPhone 5 on SoftBank, Japan

Device: $0 up front

unlocked devices not allowed; all devices must be on 2-year contract

Lowest usable monthly bill baseline: $80 (White Plan for iPhone and unlimited data packets)

What's included: 7GB LTE data and no talk time

Talk minutes: 10 cents per minute

Total outlay in two years, if you never make calls: $1,920

After the contract, your device will not be unlocked. ETF is a constant $200 in the first year and $100 in the second year.

iPhone 5 on T-Mobile US

Device: $549 or more up front (example here is a current iPhone 5c, 16GB. I paid $649 when moving last year)
BYOD
Lowest usable monthly bill baseline: $30 (prepaid with automatic credit card billing)
What's included: 5GB LTE data and 100 minutes talk time
Talk minutes: 10 cents per minute

Total outlay in two years, if you almost never make calls: $1,269 (1/3rd cheaper)

No contract, no ETF.

The moral of the story

When Son-san talks to American audiences about wired broadband speeds, he may have a leg to stand on, but it's irrelevant to the transaction that's really at hand. SoftBank the mobile carrier implies Japanese precedents for slower speeds, higher prices, purposely incomprehensible plan structures, rigid contracts, and unhappy customers.

That makes SoftBank a profitable and successful company in Japan. It doesn't get much better on other carriers because there are only two more and neither of them is interested in price competition.

Personally, I would expect the profitable and successful SoftBank, not the happy-sunshine-unicorns SoftBank, to take control of one of potentially 3 American mobile carriers.