Gearing up for a price war in the country’s fixed-line phone market, KDDI Corp. and Japan Telecom Co. both said Wednesday they would introduce a basic monthly fee cheaper than that of industry behemoth NTT Corp., along with a single long-distance rate.
Japan Telecom, recently acquired by Softbank Corp., which is headed by billionaire entrepreneur Masayoshi Son, had unveiled a discount service only last month.
Just a few hours after KDDI announced its new rates Wednesday, Japan Telecom announced further rate cuts so that it could continue to claim to be the cheapest carrier — by a razor thin margin.
The price battle between KDDI and Japan Telecom is expected to deal another blow to NTT Corp., which has been suffering declining revenue from its fixed-line phone business as mobile phones and IP phones spread.
Beginning in February, KDDI will set a single charge of 15 yen per three minutes for domestic long-distance calls. Japan Telecom set its new price at 14.9 yen — 0.1 yen lower than KDDI — beginning in December.
With NTT, straightforward price comparisons are difficult since it offers different rates depending on distance, from 20 yen to 80 yen, with various discount programs available.
KDDI officials said, however, that the simplicity of a single rate for any long-distance call should appeal to consumers.
As for a monthly basic fee, KDDI’s new rate is 1,500 yen, which, when compared with NTT’s highest rate, is 250 yen cheaper.
But Japan Telecom set a new fee of 1,500 yen or cheaper, depending on where a subscriber lives.
KDDI President Tadashi Onodera told a news conference in Tokyo that the carrier is able to offer the discount fixed-line service by using its IP network, which costs less than the traditional network in infrastructure investment and maintenance.
He said his firm had determined prices before Japan Telecom announced its initial discount program last month and denied that KDDI will be dragged into fierce price war.
“We have no intention whatsoever to wage excessive competition by simply cutting prices.”
A spokesman at NTT East, a regional unit of the industry behemoth, said it will study its rivals’ services and consider taking action, but refused to say whether that would include price cuts.
Shinji Moriyuki, a telecom analyst at Daiwa Institute of Research Ltd., said he cannot tell yet how much the companies are ready to commit themselves to the traditional fixed-line market.
He said the carriers appear to be betting their futures on high-speed fiber-optic networks.
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