Rakuten ratchets up pressure in Japan price war

Rakuten has turned up the heat in Japan's escalating price war with a new plan that includes give free data for light users.

The startup telco unveiled its new prices Thursday, with no charge for users consuming less than 1GB and unlimited data at 2980 yen (US$28.42) per month.

It was responding to discounts announced by established rivals NTT Docomo, SoftBank Corp. and KDDI Corp over the last six weeks.

Chairman and CEO Hiroshi Mikitani told a press briefing that just under half of Rakuten's customers consumed less than 2GB each month and altogether two-thirds used less than 5GB.

On other hand there were some extremely heavy 5G users, with 11% using more than 20GB.

He said the new plan, which requires no registration, works for users at all levels.

"It's one ideal plan for both light users and heavy users. That is what we wanted to do."

Marc Einstein, chief analyst, telecommunications & digital services, at ITR Corporation, said Rakuten needed to respond to its competitors' discounts, but he warned of a "race to the bottom."

The "elephant in the room" now was how the telcos would monetize their 5G investments.

"The operators are going to have to introduce new 5G services quickly and perhaps even consider diversification via M&A," he said. "It might only be a matter of time until mobile services are offered for free as a loss-leader product."

Mikitani acknowledged the new price plans meant break-even for Rakuten's 5G business would change, though he did not elaborate.

But he said he is banking on consumers using more data from emerging 5G services like HD video, as well as their propensity to adopt other Rakuten services at a higher rate.

He said the e-commerce leader was better placed than the mobile operators who were trying to diversify. "We already have perfect adjacent services and businesses – that is one reason why we can provide this aggressive pricing."

Besides returning fire on price, Rakuten will accelerate its 5G rollout. It says its network will reach 96% of the population by the middle of the year – a target originally set for 2026.

More ambitiously, it's planning to deploy low-Earth orbit (LEO) satellites to ensure 100% nationwide coverage.

"None of our competitors will be able to achieve this," Mikitani said, adding he was aiming to start the satellite service by 2023. CTO Tareq Amin said Rakuten was confident in the satellite-to-5G technology "largely because we are going to use low-earth satellites."

He said trials would validate the technology "in the near future. So we're very confident about the technology and its ability to provide ubiquitous coverage in Japan and actually globally."

— Robert Clark, contributing editor, special to Light Reading

Be the first to post a comment regarding this story.
Sign In