Softbank starts price war in Japan

Japan’s smallest cellular operator, Softbank Mobile, struck the first blow on Tuesday, in what is expected to turn into a full scale price war with the introduction of Mobile Number Portability.

Softbank, which became Japan’s third placed mobile operator through the acquisition of Vodafone Japan in April, appears determined to make up for the shortcomings of the previous owner of the network.

With number portability activated from Tuesday, Softbank has made the first move to attract new subscribers by undercutting rival tariffs and making calls and SMSes between Softbank subscribers free at certain times of day.

Mobile Number Portability (MNP) allows subscribers to take their phone number with them when they move to a different carrier.

Masayoshi Son, president and CEO of Softbank Mobile, said at a press conference Monday night, “nearly 90 per cent of subscribers remain at their carriers because they have family discount and have been there for years. There is no advantage to change carrier.”

Softbank Mobile evidently hopes to play on the reputation of its internet service provider parent, which has become renowned for its aggressive pricing strategies in Japan.

According to the latest figures from Informa Telecoms & Media’s World Cellular Information Service, DoCoMo held 55.54 per cent of the Japanese market at the end of September, followed by KDDI with 28.14 per cent and Softbank with 16.32 per cent.

Softbank said it aims to undercut rival tariffs by Y200 (£0.89) and pledged to respond to reactionary cuts made by market leaders NTT DoCoMo and KDDI within 24 hours. “If they drop prices Y1000, so will we,” Masayoshi said.

According to local press reports, KDDI has suggested that it may meet Softbank’s assault with a similar plan, allowing free calls and cutting call rates. DoCoMo has so far remained quiet on the situation but the company released operating data to the end of September on Tuesday.

DoCoMo’s figures, which show that churn rate has dropped to an all time low over the past 18 months, are indicative of how Japanese consumers have been holding on to wait and see what number portability will bring in terms of attractive price plans.