Tuesday, October 16, 2012

Finally some competition to the wireless duopoly in the US

Japan's SoftBank's 70% stake in Sprint is a game changer for the US wireless market. Verizon and AT&T will for the first time in years face a formidable third competitor. Sprint now needs to move quickly to acquire the remaining shares of Clearwire (using SoftBank's $8bn of new capital infusion) to lock in the spectrum assets.
BTIG: We believe that Clearwire will play a critical role in SoftBank’s plans to aggressively compete with AT&T and Verizon in the United States. Clearwire’s depth of spectrum paired with Sprint’s network and customer scale and SoftBank’s cheap capital will enable the companies to offer faster speeds and more capacity than their rivals. Sprint would be wise to take control of Clearwire as soon as possible in order to protect that differentiation but in recent history Sprint has been slow to act, allowing their peers to poach opportunities.
In addition to this major entrant into the market, competition to wireless carriers is increasingly coming from other sources as well, namely Wi-Fi networks.
WSJ: - The cable guys, homeowners, employers and others have been seeding the U.S. with Wi-Fi hotspots much cheaper to develop than any 4G network. One-third of the data going to the smartphones that carriers put in their customers' hands never even touches the carriers' own networks. It travels over somebody's Wi-Fi network.

One survey of customers in the U.S. and Europe found that 18% of smartphone owners don't even pay for a data plan—they rely on Wi-Fi exclusively. A smartphone is truly a subversive device, especially of the business model of the carriers that have promoted it. Nearly half of respondents in another survey say they use over-the-top apps to bypass their carrier's voice or messaging rates.
This is a positive development for the US wireless users, as increased competition will likely lower prices and  improve service quality.

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