Wireless communications giant NTT Docomo Inc. launched on Friday a lower-priced mobile service plan for customers using high volumes of data, intensifying a price battle with its two rivals that has been spurred by government pressure.
The company's new discounted monthly "ahamo" plan is priced at ¥2,700 excluding tax and includes 20 gigabytes of data usage — the lowest price among the three major wireless carriers for that amount of data — and unlimited calls of up to five minutes.
NTT Docomo said it had accepted applications from over 1.6 million customers as of late February. To cut costs and lower fees, the company and its two rivals — KDDI Corp., the operator of the au brand, and SoftBank Corp. — only take applications for their new discounted plans online.
KDDI and SoftBank launched similar lower-priced plans earlier this month called "povo" and "LINEMO," respectively, offering 20 Gb of data on 4G and 5G networks for ¥2,480 per month excluding tax.
The two provide free voice calls of up to five minutes for an extra ¥500 per month, with SoftBank offering the option at no extra cost for one year under its current promotional campaign.
SoftBank also provides free use of data for Line Corp.'s messaging app services such as sending photos and video footage.
The monthly charges for the three carriers are now less than half of the average ¥6,877 paid in Japan for a 20-Gb plan as of March last year. That charge was more expensive than similar services offered in major overseas cities such as Paris and London, according to a government survey.
Prime Minister Yoshihide Suga, who took office in September, has repeatedly demanded mobile phone service operators slash their fees, saying that they are higher than those in other countries.
While the lowered charges are expected to benefit smartphone users, they are set to hit the three wireless carriers' profits.
"Their revenues are estimated to fall by a total of ¥200 billion in fiscal 2021 due to the newly introduced lower price plans" said Hideaki Tanaka, a senior analyst at Mitsubishi UFJ Morgan Stanley Securities Co.
"They are trying to offset the negative impact by boosting non-telecommunications sales such as cashless payment services and solution businesses," Tanaka added.
In addition to government pressure to slash fees, price competition is set to further intensify with e-commerce giant Rakuten Inc. entering the market.
In January, Rakuten's mobile phone unit, which launched its wireless services last spring, said it will offer a monthly 20-Gb data plan for ¥1,980 from next Thursday.
Rakuten Mobile Inc. also said it plans to introduce a phased single-fee plan that will be offered for free for up to 1 Gb of data use per month, and charge ¥980 for up to 3 Gb.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.