Rakuten Mobile Inc. rolled out its ultrahigh speed 5G mobile internet service Wednesday at less than half the price offered by Japan’s three mega-carriers.
The company, which only debuted as the fourth mobile communications operator in April, is still far behind the three mobile giants — NTT Docomo Inc., KDDI Corp. and SoftBank Corp.
But the bold price plan could give Rakuten a competitive edge and fuel the momentum toward cheaper phone fees amid pressure from Prime Minister Yoshihide Suga to slash service charges.
The latest pricing plan will allow Rakuten 4G users to get the 5G service at no extra charge.
While pursuing a lower price is important, “we want to be able to provide just one plan that is simple and clear,” said Hiroshi Mikitani, chief of Rakuten Inc., the mobile phone carrier’s parent firm.
“It’s like you are getting a 5G service for free in your current 4G plan.”
The ¥2,980 monthly plan is considerably lower than comparable 5G plans offered by the three other operators, which charge roughly ¥6,500 to ¥7,500. Their prices can be cheaper if users are eligible for certain discount programs, such as family discounts, but even with those Rakuten’s plan is still lower than its competitors.
To attract new users, Rakuten has also been running a campaign where the first 3 million people to sign up will be able to use data and make calls basically free of charge for their first year.
However, 5G coverage is still very limited for now. Rakuten users can for the time being connect to 5G in limited areas of Hokkaido, Saitama, Tokyo, Kanagawa, Osaka and Hyogo prefectures. It plans to begin the service in all 47 prefectures by March next year.
The other three carriers had already launched their 5G networks earlier this year but their coverage areas are also limited and 5G smartphones, which are usually expensive, have yet to become widespread.
Although Rakuten’s market share is still small, its presence is expected to stir up competition in the market.
NTT Docomo, KDDI and SoftBank have not engaged in a direct price battle with Rakuten so far. But with the government pressuring the carriers to lower phone fees, competition is likely to heat up.
On Wednesday, NTT Docomo made a surprise announcement that it will become a 100 percent subsidiary of its parent company, Nippon Telegraph and Telephone Corp. (NTT).
NTT said the deal will beef up NTT Docomo’s competitiveness, enabling the mobile unit to provide cheaper plans.
Rakuten has yet to reveal its number of subscribers but it announced in June that it had received more than 1 million applications for its 4G plan. Initially, Rakuten had planned to fully start its service last fall but had to postpone it to April after it failed to set up base stations as scheduled.