There seems to be no end in sight for the price war among mobile phone carriers, with Rakuten Mobile Inc. unveiling a lower cost plan Friday in an effort to keep its edge over its powerful rivals.

Until now, Rakuten has been offering only one choice on price: unlimited mobile internet for ¥2,980 a month. But the firm now says it will lower the price depending on the amount of data used within the space of a month, saying the fee will even be free for particularly light users.

Starting in April, Rakuten Mobile will charge:

  • ¥2,980 for more than 20 gigabytes
  • ¥1,980 for more than 3GB to 20GB
  • ¥980 for more than 1GB to 3GB
  • Nothing for 1GB or less

“When we came up with our unlimited plan at first, we were rather targeting heavy internet and smartphone users” with a simple offer, said Hiroshi Mikitani, who heads the e-commerce giant Rakuten Inc., which made its foray into the market as a fourth carrier last spring.

But with data showing that more than 60% of smartphone users actually use 5GB or less monthly, Mikitani says he felt the need to cater to light users as well.

“We need to provide a single plan for both heavy and light users. This is Rakuten’s mission.”

By effectively cutting the price, Rakuten will have to acquire more users to make a profit.

Mikitani says he expects the new pricing will attract new users and keep existing subscribers happy, adding that the timing for Rakuten’s mobile carrier business to turn a profit probably remains unchanged.

The past several months have been a tumultuous time for mobile phone carriers, as Prime Minister Yoshihide Suga’s administration has increased pressure on the three mega carriers — NTT Docomo Inc., KDDI Corp. and SoftBank Corp. — to lower monthly smartphone fees.

When Rakuten first unveiled its price plan in March last year, a month before it launched its service, it jolted the industry with its ¥2,980 unlimited data plan. On top of that, it offered the service free of charge for a year to the first 3 million subscribers.

Mikitani touted it as “innovative and shocking” pricing that would give the firm a competitive edge to fight its bigger rivals.

Back then, Rakuten’s pricing strategy was indeed striking.

That was not just because it was significantly cheaper than the three big carriers, but also because of its simplicity — just one plan. That there were no complex package deals involving multiyear contracts and family member discounts, making it hard for users to compare it with other carriers, was something new.

But it seemed Rakuten’s advantage had begun to wane after NTT Docomo effectively initiated a price war in December by announcing its new ¥2,980 plan with 20GB data usage, a move followed by KDDI and SoftBank.

Just in terms of price, Rakuten’s initial plan still has an edge over the three carriers because data usage is unlimited, as opposed to being capped at 20GB. The unlimited data plans of NTT Docomo, KDDI and SoftBank cost around ¥6,600.

But Rakuten’s plan has its own weakness. The firm’s network is still limited compared with its rivals, and KDDI is actually partnering with Rakuten to provide 4G roaming services for Rakuten users.

Unlimited data only applies when subscribers are connected to Rakuten’s own network area. There is a 5GB monthly cap when using KDDI’s network.

Rakuten said the number of applications for its plan exceeded 2.2 million, but its presence in the market is still tiny at a 0.6% share as of September, according to the Internal Affairs and Communications Ministry. NTT Docomo, KDDI and SoftBank accounted for more than 85% of the market, while about 13% was made up of mobile virtual network operators (MVNOs) that borrow networks from the major carriers.

The recent price war has actually prompted some MVNOs to make moves of their own as well.

Optage Inc., which is wholly owned by Kansai Electric Co. and runs the Mineo brand, introduced renewed price plans Wednesday that include 20GB of data for ¥1,750.

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