Mobile competition and innovation in Japan
Japan’s mobile market place remains an aggressive arena. Maturity in the market, with 3G services accounting for over 90% of the total market going into 2010, has meant that operators are increasingly fighting to retain customer loyalty. This has been plainly admitted by market leader NTT DoCoMo, which, like KDDI, continues to lose market share to third-ranked Softbank Mobile. In order to keep churn rates lowered, therefore, Japanese operators have taken to heavily discounting their tariffs, offering simplified price plans and changing the manner of their handset instalment schemes. In the case of the latter, however, for all operators this has severely impacted revenues that sales of handset units would normally have generated. This has only been exasperated further by the Japanese recession, leading many customers to hold on to their handsets for longer before upgrading.
MVNOs are skipping straight to 3G, with operators such as Japan Communications and Internet Initiative Japan (IIJ) utilising NTT DoCoMo’s 3G network and then launching high-speed mobile data services to compete in the market.
The level of 3G take-up has been encouraged by the operators themselves, which earlier had announced their intentions to migrate all subscribers from 2G to 3G networks as they sought to acquire stronger ARPUs through offering data rich services. By doing this they believed they could top up revenues, which had begun to flag. Sadly, however, efforts made on the part of operators to encourage greater mobile content adoption are not translating positively into ARPUs, exacerbated by heavy tariff discounts and earlier price wars fought between operators to raise their market shares. This does not appear to be showing any signs of abating, but this trend is expected to slow in the coming three to four years, as more and more non-voice data makes its way to the market.
The network operators in Japan have been keen to differentiate themselves as they pursue the acquisition of new subscriptions and encourage the migration of their current subscribers to 3G services. The differentiation efforts include:
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Offering of free voice calls among family members under the same discount account with the same operators; free voice calls among subscribers under the same corporate subscription account with the same operators; introduction of new discount services to cut basic monthly charges by half upon commitment of long-term subscriptions, and introduction of packet flat-rate services;
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Introduction of instalment sales for handsets and mobile phone protection and delivery service;
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Launching of new services such as providing mobile credit payment services, music downloading, video downloading and streaming, news casting, customised information delivery service, web-browsing filtering, location information services and high-speed data transmission;
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Equipping new handsets with various new functions including a TV tuner, radio tuner, music player, video player, contact-less IC (Integrated Circuit) chip capability, GPS (Global Positioning System), enlarged memory capability, compatibility with GSM network or security function;
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Partnering with entities of different industries including retail, manufacturing and financial institutions.
Now that the market is finally at the stage where 3G will soon account for 100% of the market, operators are turning to Super 3G or LTE. NTT DoCoMo, KDDI, Softbank Mobile and eMobile are all due to implement LTE by 2012. The adoption of a single standard, which is likely to become the international standard for next generation mobile phone services, is in line the MIC’s policy to ensure customers can retain their handsets and still switch operators.
See: Japan – Mobile Market – Overview & Statistics
Tagged in: Asia, Japan
