Japanese telcos voice opposition to NTT's DoCoMo bid

KDDI, Rakuten and Softbank are among 28 companies that have raised concerns about NTT’s $40 billion plan to take full control of its mobile arm DoCoMo.

In an open letter to Ryota Takeda, Japan’s Minister of Internal Affairs and Communications, they warn that DoCoMo becoming a wholly-owned subsidiary of NTT Holding will “hinder the sustainable development” of the telecoms market.

In September, NTT launched a ¥4.25 trillion ($40 billion) offer for the shares in DoCoMo it doesn’t already own. The rationale is pretty obvious: closer cohesion between the fixed and mobile operations will give the group a more capable platform that it can use to launch a richer, more joined-up suite of digital services. This will strengthen its appeal in the face of stiffer competition from innovativve newcomers, like Rakuten, as well as MVNOs and Internet-based comms providers.

As the incumbent player, NTT has historically attracted a greater degree of scrutiny with the aim of ensuring that the dominance it enjoyed in the fixed-line market did not extend to the mobile market. While DoCoMo is still clearly Japan’s largest mobile operator by subscribers, that aim has largely been achieved. According to the most recent figures from the Telecommunications Carriers Association (TCA), DoCoMo’s market share at the end of June stood at 43.9 percent. By comparison, KDDI and Softbank’s market shares stood at 32.3 percent and 23.8 percent respectively.

Furthermore, the Japan Fair Trade Commission (JFTC) does not seem all that concerned by NTT’s plan.

In October, Nikkei quoted JFTC secretary general Shuichi Sugahisa as saying historic concerns about dominance, which date from a report by his agency in 2000 that recommended NTT reduce its stake in DoCoMo, are just that: history.

“Twenty years ago, fixed-line phones predominated, and wireless communications were emphasised as a factor that could promote competition,” Sugahisa said, in the report. “But the situation is different now.”

What’s more, NTT already controls 66.2 percent of DoCoMo, and so when the company being taken over is already majority controlled by the same corporate group, “there should be almost no impact on competition,” he said.

KDDI, Rakuten, Softbank, and allies including Okinawa Telecom, ZIP Telecom, and Colt Technology Services – among others -disagree.

“Strong market power will be created, competitors will be eliminated, fair competition in the telecommunications market will be hindered, and user profits generated through competition will be impaired,” they insisted.

They recommend holding a public consultation involving industry stakeholders and experts. They also called on the Ministry of Internal Affairs and Communications to adopt measures that safeguard competition, and be transparent about how such measures would be enforced.

These requests may yet strike a chord with Japan’s new prime minister, Yoshihide Suga, who has personally campaigned for lower mobile prices. He is also reportedly keen to do away with bundled services that tie customers down to long, expensive contracts.

It’s not clear whether that alleged aversion to integrated services extends to integrated service providers as well.