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Online Extra: Why Son Is "Banging the Table"


Softbank (SFTBF) President Masayoshi Son has shaken up the genteel world of Japanese telecommunications with his Yahoo BB high-speed Internet service. Today, some 4.5 million Japanese subscribe to Yahoo BB. And his aggressive pricing has given Japanese consumers some of the lowest prices on earth for ultrafast Internet service.

Now, Son is looking to do the same to the clubby world of Japan's cellular communications. He says he can offer service that will boost competition and force Japan's notoriously expensive mobile operators to reduce their subscription fees. Problem is, he doesn't yet have a license.

So Son is planning an all-out assault to get into the game. He has initiated a lawsuit to force the communications ministry to offer radio spectrum -- needed for cellular service -- to a newcomer such as Softbank. BusinessWeek Asia Editor David Rocks met with Son recently in Tokyo to discuss his plans. Here are edited excerpts from their conversation:

Q: What's your grand strategy here? Why do you want to get into cellular?

A: We'd like to have synergies with our fixed-line voice and data business. We'd like to have a ubiquitous connection to the broadband network. So voice and data and video and games -- everything -- would be all seamlessly connected whenever, wherever, with whomever. If we could add mobile telephony to our current business, we'd offer all kinds of package deals to users.

We can introduce seamless service between fixed line and wireless, so when you're at home or in the office you could buy and sell stock on your desktop PC, but when you're on the street you could continue to buy and sell on your mobile phone.

Q: What effect would you have on the market?

A: For consumers, more competition is better. I can guarantee that cell-phone prices will be lower if we come in. I know what I'm going to price, which is lower than today's price. As soon as we announce a lower price, [rivals] would have to react. Japan's cell-phone prices are still the highest among developed countries.

Q: Why do you oppose the ministry's plan to reallocate portions of the 800-megahertz (MHz) frequency band?

A: Technology-wise, it doesn't make sense. The ministry wants to give 30 MHz each to KDDI (KDDIF) and DoCoMo, only at 800 MHz. We're saying, "Why don't you share it among three players?"

Q: What is the ministry proposing?

A: The ministry is saying, "Why don't you use the 1.7-gigahertz (GHz) band, which is less efficient?" The incumbents will get the more efficient frequency [in the 800-MHz band]. [Some new frequency, in the less-efficient 1.7-GHz band] would be offered within the next year to [the winner of a competition].

Why should the newcomer get only the less-efficient frequency? The infrastructure investment [at 1.7 GHz] is $2 billion to $5 billion more than in 800 MHz. Why should a newcomer have to invest billions more to build its network?

Q: Many European carriers have created strong networks at 1.8 GHz. Why can't you use the similar 1.7-GHz band?

A: The 800-MHz frequency goes through windows and walls much better. So if you use a higher frequency, you need more antenna base stations. The infrastructure investment costs are much higher. Why do you think [KDDI and DoCoMo] are so reluctant to give up 800 MHz? If the Europeans had a choice, they'd 100% go for 800 MHz.

Q: Is your lawsuit trying to get spectrum for yourself, or are you saying there should be a contest in which you'd participate?

A: All I'm saying is it should be a fair and open and transparent process. As long as it's fair, and a contest will be held, if we lose the contest, it's our problem. But today, there's no fair and open and transparent process.

Q: Did you threaten to torch yourself when you were trying to get into the broadband business?

A: [Nods yes, chuckles.] NTT was dragging its feet and tried to delay everything. If the ministry didn't make a move, I was thinking that we'd have to stop our service and cancel our customers.

As a CEO of a public company, that'd be the end of my business life. If my business were over, my life would be over. I thought if that were to happen I'd have to pour gasoline on myself, but I said I'd only do that in the ministry, not on the street, so people would understand why I'd committed suicide. I would send a clear message that the ministry could have saved my life and saved all my customers.

I went to the ministry and talked to the manager who was responsible for overseeing NTT, and I told him, "Why don't you call NTT and tell them to behave?" I said otherwise, I'd make my move. He started asking, "Why here? Why me?" I said, "You're the only guy who might be able to come up with a solution, and if you don't make the move, I'll do what I have to do." He made the call, and the next day NTT changed totally and opened up.

I was banging the table and yelling at them. And for this radio frequency, I've banged on the table and yelled at the minister and all the managers, and they've made all kinds of excuses, and they haven't changed their mind. So I've had to make my move.

Q: But this time your move is a lawsuit rather than a threat to torch yourself.

A: [Laughs.] I'm getting smarter. Why should I kill myself, you know?

Q: Isn't a lawsuit against the government considered business suicide in Japan?

A: It's still business suicide, but it's better than physically killing myself. If I were a little more of a Japanese-style businessman, I'd be quieter and make all kinds of trades with the ministry guys and get retired executives to work for me. In the short run that's more effective. But I don't want to have short-term success and get criticized by history.

Q: You're a powerful, successful figure in Japanese business. Don't you have allies in the government?

A: I don't want to. There are all kinds of proposals that come to me. All kinds of politicians who come to me. But why should I make a dirty trade? I don't want to have success that way.

Q: If you don't get any 800-MHz frequency but were offered some at 1.7 GHz, would you go ahead and build a network at that range?

A: I would set fire to the ministry.

Q: After you got out of jail for torching the ministry, would you build a network at 1.7 GHz?

A: I would continue to fight for the next 100 years. We would think it through. We might still start at whatever other frequency, but the fight would continue.


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