Future Forward: SoftBank-Sprint's Plans
There has been some conjecture among analysts about possible courses of action SoftBank-Sprint may pursue in the US market. I have given this thought since before Softbank made the move on Sprint. My thinking was along the lines that Sprint and Clearwire should pursue alliances with SB, KT, and other operators who have advanced the key segments of development needed to implement the first stage of SDWN, Smart Distributed WBB networks, which is relatively simple small cell as part of HetNet. That needs to be done right and then advanced rapidly. SB has needed engineering skills and experience to lead that effort as a global leader. Thy also have a unique approach to building a wireless centered ICT competitor that is of a new mold that plays right into the Cloud 4G ICT environment. The company can help leverage web assets here in the US as well as introduce some of their own unique methods, either through partnerships or acquisitions in the IT/Internet services areas. The line of thinking places much of the current speculation as short-sighted and just short.
Analysts' Speculation #1: That Softbank will Acquire a Cable Company?
Softbank has expressed a need for increased backhaul and access to entertainment franchise and infrastructure. This is obviously a part of the assets that is more prevalent in japan and other parts of APAC. However, there are conflicting priorities to delay or cause there not to be such a need for outright acquisition. The main issues SB is dealing with is proper staging of development of Japanese and US wireless networks in the near term. However, its a matter of time-staging of events, not use a capital restriction.. a matter of priorities. Cable company acquisition at this point is not the best use of capital and management resources. If it were just capital, SB still has about 20 billion in leverage if they were to get as extended as the leading Japanese companies... which Son probably will not come close to doing at this point.
Cable companies have very desirable fiber optic, rights of way, and field support organizations to help implement parts of the ICT future, participatory when combined with the few years out phases of Smart Distributed WBB Networking. However, Sprint and other available fiber and microwave BB capabilities can serve immediate needs when supplemented with leased capacity.
First comes transformation of Sprint's networks and perhaps some play in the extended Wi-Fi arena as part of the HetNet multiple-mode/tiered network. Clearwire will play a role but their big play now looks to be beyond others due to it not having a sufficient market share and momentum. Sprint has good market share and momentum that Softbank can help further energize.
Cable-fiber has play now but it is likely to lose BB share as WBB starts working down the price curve a bit.. Once capacity reaches a threshold, more people will not find a reason enough to hold onto it and its share and ability to hold onto packaging strategies will come under pressure. Cable has already tapered off in subscriber numbers during the past 3-5 quarters.
If the deal were right, something could happen now but it's unlikely because that would cause a bidding war with Verizon, PCS-TM, and AT&T. There may be other deals besides ownership of a cable company. This includes using large amounts of wireless back haul including newly and soon to be released and more cost effective use of microwave Wi-Fi and WiMAX based backhaul, 'Super-WiFi' White Spaces, and GigE. The solution is shaping up as a tool chest of options.
Clearwire is the Rodney Dangerfield of the picture: The WBB utility segment that has potential to grow into a monster resource... something like a super Cloud 4G infrastructure utility – after all, that is part of the rationale for Cloud 4g/ICT services; enabling the BB links with the most demanded OTT, over the top, content and services. It's easy to disrespect Clearwire because they are so financially weak. However, SB-Sprint can make use of them for back-haul as a part of HetNet as well as a very deep wireless broadband pipe to consumers.
When you consider what I said the 'middle tier' of ICT networking ~11 years ago, now called SWDN or Smart HetNet or Smart HNet would become "three to 4 times larger than conventional (dumb) 'cellular' wireless networks", then being a 'WBB utility' is a very nice place to own the choice WBB "4G" spectrum.
Clearwire is still mostly a spectrum holding company. Even though the prospects for SB-Sprint building smarter networks that engage the 2.6GHz extension band spectrum in many interesting ways is on the not too distant horizon, one step at a time is prudent action. Son has a head on his shoulders.
Did Softbank Leave Clearwire Subject to Acquisition on Purpose?
You might ask that if someone else could acquire or forge a partnership equity deal that included a stake in Clearwire, maybe something similar to the way the Softbank acquisition of equity ownership and management of Sprint was constructed, then why hasn't Softbank gone ahead and snapped it as some analysts have suggested?
That is because the very thing that would please Sprint-SB is for there to be more shared responsibility in taking Clearwire's 130MHz of useful spectrum into an accelerated mode of exploitation. Hesse said some time ago, Clearwire's COB Stanton and others have repeated similar, that the spectrum needs multiple players to exploit it. The bandwidth potential is too large for even freshly funded SB-Sprint to make full use due to other needs. If you think Clearwire can do it alone or with meager partners, you are off your rocker. That has been made all the more so since the first rounds of consolidation are taking place outside rather than including Clearwire. They are being marginalized due to their financial weakness and lack of momentum. That is what makes sense for Sprint and Softbank: develop momentum where networks and marketshare can more easily be leveraged to wash over to increased use of the more difficult higher band usage models. In the meantime, as attracted to the plan, partners will help co-develop a best of breed Cloud 4G service mecca.
More speculation on SB-Sprint in our research notes via subscription.