It was expected that Vodafone would shed their assets in Japan, just as it is expected they will shed their portion of Verizon Wireless to the one and only buyer in the USA – Verizon (VZ). It was expected that a private equity firm, specifically Cerberus, would take control and manage the asset.
Softbank is already the number two provider of broadband services in Japan with their Yahoo! branded DSL offering, but they lack the ability to sell mobile voice services. AT&T now owns 100% of Cingular after the acquisition of Bellsouth, Verizon will inevitably purchase Vodafone’s share of Verizon Wireless, and Softbank needed a wholly owned wireless subsidiary.
Why? The purchase becomes compelling when you consider that the wireless capability now turns a dumb pipe broadband provider into a nationwide voice carrier.
Softbank can now offer VoIP services to both existing broadband customers and new Vodafone wireless customers. Then, they can offer number portability between the VoIP service that uses the Softbank broadband connection and a wireless Vodafone connection. The VoIP service also provides current Vodafone customers (all 15 million of them) and new broadband customers a compelling reason to subscribe to Softbank broadband, and not NTT. This is important given the thrashing Softbank has received by NTT’s Hikari FTTH subscriptions.
With a single acquisition, Softbank gave their existing broadband customers a compelling reason to stay with Softbank, a method to extract more ARPU, and a means for capturing new broadband customers who want a single unified voice experience. This was a very smart move by Softbank, especially considering that unlike the USA, no potential competition for this unified voice model exists in Japan today.
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This validates our strong belief that Comcast will buy or merge with a wireless carrier, most likely Sprint (S”), for exactly the same reasons. It also explains why standalone voice companies like Qwest (Q”), T-Mobile, or the local cable franchises will not exist in the long term.
Owning both the wireless and wireline asset prevents the migration of your current wireline customer by offering number portability between the wired and wireless connection. Why would a customer switch to Comcast Voice if Verizon or AT&T could offer you a number that connected to either your ‘home’ phone or your wireless phone.
This is the future of voice, and why it isn’t going to be a commodity like everyone else believes.