SoftBank follows NTT DoCoMo with price cut

Be careful what you wish for.

After repeated jabs from Prime Minister Yoshihide Suga over their high data charges, Japan's operators have over-corrected and could be heading for a price war.

This week Softbank Corp. announced that it would follow NTT DoCoMo in slashing its data prices, with a basic monthly price of ¥2,980 (US$28.77) for 20GB to be introduced in March.

But it will be offered only online and through its Softbank on Line brand, Reuters reports.

It is a significant shift for the operator, which until now had offered discount plans only through its budget brand Ymobile.

NTT DoCoMo, the market leader, unveiled its discount price plan in early December, offering 20GB and free sub-five minute phone calls for ¥2,980 a month.

DoCoMo CEO Motoyuki Li said the new plan was aimed at younger users, "for whom we lag behind rivals," Kyodo News reported.

It is only a matter of time before the number-two mobile operator, KDDI, meets the competition with price cuts of its own. KDDI President Makoto Takahashi has reportedly said it will announce new prices in January.

The price cuts began after repeated prodding from Suga and the publication of a government study in September that found Tokyo had vastly higher mobile fees compared with cities such as New York, London and Seoul.

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But the discounts by KDDI and Softbank unveiled in October were confined to their budget sub-brands, prompting criticism from Minister for Internal Affairs and Communications Ryota Takeda.

DoCoMo had initially considered its own budget brand but had changed its mind after Takeda's remarks, Kyodo said.

The newly aggressive pricing is good for consumers and the economy, but not so much for Rakuten, which entered the market in April with an unlimited data plan also costing ¥2,980 a month.

Marc Einstein, chief analyst for telecom and digital services at ITR Corporation, said he thinks the price cuts show the big operators have dumped their premium pricing strategy and will make adoption much more difficult for the newcomer.

In response, Rakuten, Japan's largest e-commerce player, has massively expanded its offer of free loyalty points for mobile customers.

"It will be very interesting to see how the perceived value of the Rakuten ecosystem plays out, but also raises even more questions about how Rakuten can monetize," Einstein said.

— Robert Clark, contributing editor, special to Light Reading