That Softbank Corp (OTCMKTS:SFTBF) (TYO:9984) CEO Masayoshi Son harbours ambitions to acquire T-Mobile US Inc (NYSE:TMUS) is no secret.

And the odds against the plan are formidable – AT&T Inc. (NYSE:T) tried and failed to convince the competitive powers-that-be on its purchase of T-Mobile US Inc (NYSE:TMUS); the FCC appears intractable on its 4-operator model for competitive sanctity; last month, FCC Chairman said he was highly skeptical about the potential deal (though he would maintain an open mind) after meeting Maya Son; and in January this year, the Justice Department parried Son’s feelers with much the same (‘skepticism’) response.

Is the four-carrier model a holy cow?

The indomitable Son has shouted from the rooftops that the present wireless market model, even though it has four players, is not really as competitive as the regulators think because the two largest players – Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) – are so large and dominating that there is little meaningful competition from the other two – Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS).

Son’s point is that the dominance by Verizon Communications Inc. (NYSE:VZ) and AT&T Inc. (NYSE:T) would escalate over time, and that only a larger third player (read: Sprint + T-Mobile) could offer meaningful competition.

BTIG analyst Walter Piecyk wrote April 8, 2014, that FCC Chairman Julius Genachowski,  Chairman Wheeler’s predecessor, did not conclude in his 14th Wireless Competition report that there was effective competition in the wireless industry.

“That determination caused a bit of a stir at the time and in the four years that followed, AT&T Inc. (NYSE:T) and Verizon Communications Inc. (NYSE:VZ)’s market share of subscribers, revenue and EBITDA rose as did their monthly bills and EBITDA margins,” writes Piecyk with charts to support his point, and echoing Son’s apprehensions. “Needless to say, the FCC has continued to be unable to conclude that there is “effective competition” in wireless in subsequent reports,” he adds.

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AT&T and VZ stole a march because Sprint and T-Mobile could not invest

Possibly, Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) could not make adequate investments in their networks because of being the underdogs and pricing followers over many years. This reflected on their margins as shown in the graph below.

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“Over the past five years AT&T and Verizon have individually invested more in their networks that Sprint and T-Mobile combined,” observes Piecyk. “Even today, Sprint offers the slowest LTE speeds in the industry as a result of its under-investment and its narrow use of spectrum. Meanwhile, T-Mobile recently paid $2.03/MHz/POP for the worst of available 700 MHz spectrum because they did not have the capital to adequately compete in the original 700 MHz auction.”

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Alliances such as ‘VZ – Dish’ and ‘Sprint – T Mobile’ could give wired broadband a run for its money

Piecyk observes that the FCC, over the years, has mellowed on its views regarding intermodal competition such as that of wireless LTE against traditional wired broadband. And LTE infrastructure and speeds are now good enough to attack the broadband market.

“We believe Sprint can help that argument by getting some initial markets launched that demonstrate their capabilities in both speeds and market pricing,” writes Piecyk. “If Masa Son can convince regulators that offering competition for broadband is an obvious by-product of gaining scale efficiencies from a merger with T-Mobile, we believe it would aid Sprint’s chances of gaining regulatory approval for a merger with T-Mobile.”

DOJ and the spectrum dilemma

Piecyk points out that the DOJ, on the one hand, wants Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) to get low band spectrum and thereby avoid “foreclosure value,” a term used to describe a tactic by larger operators to corner spectrum and thereby increase the costs for smaller competitors. Yet, on the other hand, the DOJ will stick with its efforts to thwart consolidation so as to maintain the four player model.

“The government can’t have their cake and eat it too. If they think there really needs to be four players in this market on a nationwide basis, they are going to have to put some structural protections to ensure an adequate distribution of spectrum,” T-Mobile CFO Braxton Carter said recently – an interesting remark in this context.

The FCC’s meeting in May

FCC will meet in May and release guidelines on spectrum ownership as well as frame rules for the conduct of the incentive auction of broadcasters’ spectrum. As far as the future of the wireless industry is concerned, this could be a landmark meeting.

“These are critical decisions that will shape the competitive landscape of the wireless industry and either trigger or setup new barriers to consolidation between Sprint Corporation (NYSE:S) and T-Mobile US Inc (NYSE:TMUS) or Verizon Communications Inc. (NYSE:VZ) and DISH Network Corp (NASDAQ:DISH),” says Piecyk.