Rakuten made some waves in the Japanese wireless scene when it revealed its intention to launch a mobile plan with unlimited data, at less than half the price of its main rivals.
The e-retailer’s proposed monthly rate of ¥2,980 would comparatively only amount to roughly 1 gigabyte of data per month for a customer at Japan’s three big carriers, or the equivalent of 10 gigabytes with budget mobile companies such as SoftBank’s Y!mobile.
Rakuten’s chairman and CEO Hiroshi Mikitani announced the low price and simple one-size-fits-all plan via video conference during the week. The plan was presented in stark contrast to the three mobile giants which offer subscribers a vast range of plans, all with differing rates and data amounts.
Government pleased with lower-rate option
The Japanese government welcomes Rakuten’s entry into the mobile market. It hopes that its introduction will create more competition among providers to reduce the excessively high wireless rates.
Last year, the government capped contract termination fees at ¥1,000 yen in an attempt to encourage consumers to switch carriers. However, its hopes were impeded when Rakuten postponed the launch of its service.
Following Mikitani’s announcement this week, Chief Cabinet Secretary Yoshihide Suga expressed hope for “real competition” among wireless providers, describing Rakuten’s rates “rather low” even when compared with major players abroad.
Carriers “will probably have to rethink rates when they’re several times as high as Rakuten’s,” an official from the Ministry of Internal Affairs and Communications said.
The government hopes that its introduction will create more competition among providers to reduce the excessively high wireless rates
Is Rakuten in a position to compete with established providers?
The question of whether or not Rakuten can create a more competitive market depends very much on the company’s quality of service.
As it is now, the unlimited data is restricted to the company’s own network, where base stations are concentrated in the Tokyo, Osaka and Nagoya metropolitan areas. Beyond this range, customers will have to use KDDI’s network, with a monthly limit of 2 gigabytes.
“For consumers in Rakuten’s coverage area, there are significant advantages to switching from the major carriers,” said Hideaki Yokota from MM Research Institute. Yokota believes that operation changes within rival companies depend largely on how quickly Rakuten can expand its network.
Main mobile carriers play down Rakuten threat
Japan’s three main carriers, NTT Docomo, KDDI and SoftBank, do indeed seem to be playing the waiting game by keeping an eye on Rakuten’s customer acquisition. The e-commerce company’s initial goal is to target 3 million subscribers – a small number compared to the 40 million subscribed to each of the big names.
In order to make a significant impact, Rakuten needs to add more base stations to its network to be able to provide its customers with a reliable service. During a test in October, some subscribers couldn’t connect to its network at central locations such as train stations in downtown Tokyo.
What do you think of mobile plans in Japan? Would you make the shift to Rakuten’s new network? Let us your thoughts in the comments below.
"Otsumami" - a bite size snack:
Increased competition among businesses can help customers get better services at a lower cost.