Saturday, 28 November 2020

Japan’s operators cutting prices at PM’s request

by Harry Baldock, Total Telecom
Thursday 29 October 20

Japanese customers have paid through the nose for telecoms services for many years, but new PM Yoshihide Suga is moving to drive down prices more in line with the rest of the West

On Tuesday, the Japanese Ministry of Internal Affairs and Communications announced plans to reduce the cost of mobile data packages, which the government have previously noted are 40% steeper than similar plans in other Western countries.    Yesterday, the operators begun to take notice, with KDDI and SoftBank both announcing new lower…

On Tuesday, the Japanese Ministry of Internal Affairs and Communications announced plans to reduce the cost of mobile data packages, which the government have previously noted are 40% steeper than similar plans in other Western countries. 
 
Yesterday, the operators begun to take notice, with KDDI and SoftBank both announcing new lower-cost plans for their customers that are more in line with Western averages. However, these discounted plans have received immediate criticism for not affecting the vast majority of the telcos’ customers; the plans are for the companies’ sub-brands (SoftBank's Y! Mobile and KDDI's UQ) that already have low-cost plans and thus will not affect between 80–90% of the telcos’ customers who use their au or SoftBank branded plans. 
 
In a sense, these plans pay lip-service to the requests of PM Suga, allowing him to claim that one of his election promises has been fulfilled, without really addressing the underlying pricing issue in a meaningful way. Whether or not the PM will be satisfied with this remains to be seen.
 
Meanwhile, NTT DoCoMo is seemingly lining up price cuts of its own, saying today during an earnings call that it was weighing its options in response government pressure.
 
NTT DoCoMo is currently undergoing the process of being reabsorbed by NTT in a $40 billion deal announced back at the end of September. The deal is expected to give DoCoMo a more stable financial position from which it could consider further price cuts. The deal is expected to close in November.
 
For the Japanese customers themselves, who currently pay some of the highest mobile fees in the world, any reduction in prices will be welcomed. But one player who is likely to be less excited by this prospective price war is new entrant Rakuten. The disruptive, open RAN-based telco launched 4G services back in April, boasting far cheaper mobile rates than their rivals, even making the initial three million subscriptions free for one year. If the major players do ultimately commit to a significant reduction in plan prices, some of Rakuten’s initial appeal could rapidly dwindle.
 
 
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