What Will Softbank Do?

Federal Communications Commission Chairman Genachowski has said the agency’s review of the deals between Softbank, Sprint and Clearwire was on a schedule “consistent with” its nonbinding 180-day transaction “shot clock,” which runs through May 29, 2013.

The chairman’s comments suggest to analysts at Stifel that he believes the FCC ultimately will approve the Softbank purchase of Sprint, as well as the Sprint acquisition of Clearwire.

That likely would take much of the wind out of Dish Network’s rival bid to buy Clearwire, though aggrieved shareholders might yet file lawsuits that would prolong the uncertainty.

Assuming the analysis of FCC deal approval is correct, the real speculation can begin. Up to this point, there has been some speculation that all the moves and counter moves were tactical, on the part of Sprint and Dish Network.

In that view, Sprint doesn’t really want to buy Clearwire right now, but only wants to block Dish and Clearwire from merging. Others might argue Dish doesn’t really want to buy Clearwire, but only to force Sprint to help Dish build its own network, or raise the equity value of Dish Network overall, before Dish sells its spectrum, or itself, to another firm, such as AT&T.

But assume Softbank really does want to acquire Softbank, and wants to use Sprint as part of a larger plan for U.S. market entry. That is a straightforward assessment with no complicated “real motives” required.

Assume Softbank wants Clearwire’s spectrum to make a big splash, in some disruptive way, when it enters the U.S. market. Assume Softbank stays “in character,” and focuses on software (applications) and low retail prices, as it has done successfully in Japan.

Recall that Clearwire’s primary value is that it owns so much spectrum, and already is a wholesale capacity provider.  So then imagine that Softbank decides to leverage that wholesale value proposition, to enable a Google, Amazon or Apple to create a nationwide LTE Internet access network.

That network still could offer voice and text messaging, if customers really wanted it, using Sprint. But the disruptive angle would be a fast, data-centric mobile network optimized around Internet apps and experiences.

One advantage could be a disruptive pricing scheme, leveraging low retail prices and a simple LTE data access value proposition.