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BUDGET SMARTPHONES

Budget phones challenge the majors

by Kazuaki Nagata

Staff Writer

Smartphones may be convenient, but there’s one thing about them that bugs many people: their costly monthly data plans.

Seizing this opportunity, noncarrier firms have broken into the market in the past several months with low-cost plans and handsets.

Here are some questions and answers about budget smartphones:

Who are these budget newcomers?

The new entrants come from a variety of industries: a supermarket chain, electronics stores, Internet providers and so on.

Aeon Co., the supermarket giant based in Chiba, released 8,000 budget smartphones in April at its outlets, all of which sold. The chain came out with another phone this month.

Bic Camera Inc. also began selling such smartphones in April in its nationwide electronics store chain.

K-Opticom, an Osaka-based optical cable provider, launched a budget service in June, while Internet provider Biglobe entered the market this month.

How much cheaper are budget smartphones?

Monthly charges range from around ¥2,000 to ¥3,500, including paying off the handset on an installment plan but excluding charges for voice calls.

The three major carriers, Docomo, KDDI’s au and SoftBank, recently announced monthly plans that charge around ¥6,500 to ¥8,000, including voice calls.

Do people really think that smartphones are expensive?

Budget smartphone carriers say they do.

“Before we started selling (budget) smartphones, we sold major carriers’ phones and SIM cards at our stores. So, we directly heard from customers about what they were not happy with, what they thought was inconvenient, and their needs,” said Miho Takahama, a spokeswoman for Aeon, which is aiming its phones at seniors and housewives.

A survey by Tokyo-based MM Research Institute last December found that price was the main reason cellphone users hadn’t upgraded to smartphones.

According to the survey, nonsmartphone users paid ¥3,746 a month on average, compared with ¥6,826 for smartphone users.

“The price is really a big factor, and another thing is that major carriers’ monthly plans are complicated and not easy for many consumers to understand,” said Akihisa Ishizuka, a researcher at MM Research Institute.

Why are budget smartphones being marketed now?

Ishizuka says that before the budget phones took off, budget SIM cards were popular with those trying to save money.

Various noncarriers provide low-cost SIM cards.

But many consumers find it troublesome to buy a SIM card and install it in a smartphone, Ishizuka said.

And it isn’t possible to put just any SIM card into any phone. The major carriers’ phones are only compatible with their own SIM cards.

Docomo users can unlock their phones, but they have to go to a Docomo store and pay ¥3,000 to do it.

So, using budget SIM cards requires getting an unlocked phone, and not many stores sell them.

Since stores like Aeon and Bic Camera have started providing such handsets and selling them along with budget SIM cards, it has become much easier for consumers to use budget SIM cards, which touched off the budget smartphone boom, said Ishizuka.

Who is buying budget smartphones?

A lot of seniors, in Aeon’s case.

According to Aeon, 65 percent of those who bought the budget smartphones released in April were people 50 or older who thought they could afford smartphones if the monthly fee was lower.

Why are the budget phones cheaper?

The trade-off for lower cost is less data usage capacity and slower Internet connection speeds, among other limitations, Ishizuka said.

For instance, many budget smartphones limit the amount of data to 1 GB per month.

This is enough to view a five-minute YouTube video about 95 times or send out around 200,000 300-word emails, according to Japan Communications Inc., a budget SIM card provider.

While major carriers recently introduced new monthly plans, many of their users are still subscribing to plans that cost around ¥7,000 per month for 7 GB. The carriers say that only a handful of their customers use more.

And then there’s the matter of Internet connection speed. Aeon’s first budget smartphone has a maximum download speed of 200 kbps, much slower than the major carriers’ LTE mobile network.

Now, though, many budget SIM card operators started providing the LTE service.

Also, budget smartphones tend to be older handsets, and therefore less costly than the latest models typically sold by the major carriers.

Are there any downsides to budget smartphones?

The 1 GB limit may prove a problem for heavy mobile Internet users if, for instance, they want to watch a lot of movies on their handsets.

If they exceed the limit, the Internet speed drops off significantly unless they pay extra to keep it up.

In one significant respect, there is equality. Network coverage is the same for everyone because the budget SIM card providers rent major carriers’ communication networks.

Ishizuka said making lots of voice calls can run up the bill, especially because the three major carriers recently announced that they will start unlimited voice call services for a flat rate of ¥2,700.

Voice calls through budget smartphones normally cost ¥20 per 30 seconds.

Summing up, a budget smartphone may be the right choice for light Internet users who don’t make a lot of phone calls.

The Weekly FYI appears Tuesdays. Readers are encouraged to send ideas, questions and opinions to hodobu@japantimes.co.jp .

  • Phil Blank

    At the high end point that is still close to US$ 80.00 a month.
    Some shops here in the US have 4 phone family plan for $100.00 unlimited talk and data per-month.

  • Al_Martinez

    What a joke. I just looked at the plan for the Biglobe phone, and the data plan that is comparable to what I have on AU is about the same (and my phone is better). What budget?