Rakuten Mobile plans to launch its mobile carrier service in April by offering high-capacity data usage plans for ¥2,980 per month, about half of what the three major carriers (NTT Docomo, SoftBank, and au KDDI) currently charge. This is according to a recent report by the Nikkei. Rakuten’s move is likely to cause other carriers to respond by cutting prices.
Rakuten is making costly upfront investments in infrastructure in a bid to gain marketshare. However, consumers will likely benefit from increased competition.
It is difficult to make a clear comparison between data plans offered by different mobile carriers due to the complexity of the plans and campaign pricing. However, a rough comparison is possible. NTT Docomo currently offers a 60GB a month plan for ¥6,980. Softbank is offering an unlimited data plan for ¥7,480 per month and SoftBank has a 50GB monthly plan for the same amount.
RakutenMobile’s plan to offer a high-usage data plan for ¥2,980 a month would be a shot across the bow for the big carriers. The company is even considering offering an unlimited data plan for that amount.
Rakuten’s clout
With consumers increasingly streaming video on their smartphones, Rakuten Mobile sees a big opportunity in offering an easy-to-understand, low-cost high-use data plan. As a mega e-commerce company that also offers many other services, including fintech and digital content, Rakuten also has an opportunity to include these other services as standard to new subscribers. Some 100 million people currently have a Rakuten-related user ID.
Increasing competition
As discussed in this article (Mobile price plans are set to drop in Japan), the Japanese government came out in the fall of 2018 with a statement saying that cell phone plans in Japan are confusing and overpriced compared to those in many other countries. It urged the major carriers to decouple calling and data plans from handset sales and to decrease the penalty for mid-contract cancellations (which used to average about ¥10,000). The point was to increase competition and bring down prices for consumers.
Delays in launching service last fall and quality issues
Rakuten Mobile originally planned to launch carrier service in October 2019, but was forced to pull back due to delays in the construction of base stations.
Instead, it offered free mobile service to some users in Tokyo, Osaka, and Nagoya as part of a test phase, as it built out base stations. Rakuten Mobile plans to have about 3,400 base stations built by the end of March, primarily in the three cities and to officially start commercial service by mid-April.
It seems that service quality has been in issue during the test phase. Apparently, some users had trouble getting a signal in front of some train stations in central Tokyo and inside some large buildings. Rakuten will have to iron these issues if it is to compete with the big three carriers.
Rakuten Mobile plans to invest 600 billion yen in its mobile phone business by 2025 and to build about 27,000 base stations throughout the country by March 2026. In the meantime, it is leasing out KDDI’s equipment to provide roaming service to subscribers outside Tokyo, Osaka, and Nagoya. For each gigabyte of data that a Rakuten subscriber uses on KDDI’s network, Rakuten will pay ¥465 to KDDI.
Given the infrastructure investment required, Rakuten plans to run its mobile service in the red, at least in the initial phase.
The company is using a technology called “virtualization” to build its communication network in the cloud, which allows software to be installed on a low-cost basis on a general-purpose server, rather than having to use dedicated higher-cost hardware.
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Source: Nikkei newspaper, March 2, 2020