Softbank Knocks On Door Number Two To Get Into The Mobile Arena
By Mike Masnick, Tue Jan 18 00:30:00 GMT 2005

Sensing that the ongoing delay over its request for 3G spectrum is bad news, it looks like Softbank is trying another path to start offering mobile phone service.

Softbank is not known for doing things quietly, and its attempt to get into the mobile phone service business is no exception. Softbank CEO Masayoshi Son announced the company's intentions last summer, and has kept on making noise at fairly constant pace to make sure that no one forgets about his plans -- though, so far, he has stopped short of threatening to set himself on fire.

In making all of this noise, Softbank has also been very clear that it aims to do exactly the same thing it did for the wired broadband market for 3G mobile service: offer it cheap and build marketshare quickly. It's no surprise, then, why NTT DoCoMo and KDDI aren't particularly thrilled about the potential competition. That didn't stop Softbank from tossing $2 billion on the table to KDDI in an offer for its three Tu-Ka units. Tu-Ka is mostly owned by KDDI and offers very inexpensive 2G mobile service in areas of Japan. While KDDI had announced plans to either sell it off or to merge it into its more advanced "au" offerings, Tu-Ka has been fairly successful lately in helping KDDI get around some of the market saturation problem by becoming popular with those who just want cheap and simple mobile phones and service, such as the elderly.

While it's clear that Softbank wants much more than to be offering 2G service to the elderly, the offer makes sense for Softbank on a few different levels. Should Softbank be successful in this bid, it allows Son to put more pressure on the government, noting that Softbank has become (overnight) a serious player in the mobile space, providing service to over 4% of Japan's mobile phone subscribers. It certainly gives the government one fewer excuse as to why it can't grant Softbank 3G spectrum. It also gives Softbank a bit of quick experience in offering mobile phone service -- and a low cost one, at that. In some sense, it might even be seen as being quite similar to an MVNO offering from Softbank, except that it will actually own the network as well. It wouldn't have to build a network, but just take over an already built one.

If KDDI refuses the bid, then Softbank still comes out of the situation in good shape -- keeping its name in the minds of the government, competitors and people around the world, as a player in the mobile space. KDDI, of course, has plenty of reasons to say no to Softbank. Besides the fact that Tu-Ka has been doing well lately, KDDI has very little interest in helping Softbank emerge as a serious competitive threat. The other possible downside is that the government won't look too kindly on this very public push by Softbank to buy its way into the mobile arena. Of course, Softbank hasn't shown much concern about what the government thinks of its plans in the past, so it's unlikely that the company has suddenly started to worry on that front.