Rakuten, Inc. on Tuesday officially announced its single pricing plan for the mobile phone service it will start in April.
The 2,980 yen (before tax) monthly plan will apply to all users and offer unlimited data over its network.
Comparing this plan to other mobile carriers' highest data capacity plans, targeting users who watch videos or require using high volumes of data, the price is less than half.
This price could possibly trigger a price-cutting competition among the three major mobile phone companies NTT Docomo, Inc., KDDI Corp.'s au and SoftBank Corp.
Rakuten's mobile phone service will start on April 8. Applications to use the service started being accepted online from Tuesday and at outlets of mobile subsidiary Rakuten Mobile, Inc. on Wednesday.
The company said that the first 3 million customers who sign up will be get a year of service without any monthly fees. However, phone calls are charged at an additional 20 yen per 30 seconds.
"It's an innovative, impactful pricing strategy," said Rakuten Chairman and President Hiroshi Mikitani at a press conference in Tokyo on Tuesday, stressing the plan will be a "bargain" compared to ones by the three major carriers. The unlimited data communications plan will use Rakuten's own communications network.
At around 4 p.m. Tuesday, Rakuten Mobile's website for accepting applications for the new service became difficult to access. Rakuten announced its plan to enter into the mobile phone business in December 2017, emphasizing a "low price." Hence, it seems interest in the new service has been high since.
"Truly, the communication fees are cheap," said a surprised executive of another major mobile phone carrier. Another added, "One all-you-can-use plan is an impressive offering." A source from a major mobile phone company said, "My company is simulating several changes to our pricing plans ahead of Rakuten's announcement."
Rakuten's entry into the market has attracted attention because it has been pointed out that mobile phone charges are high compared to international standards. According to a survey conducted by the Internal Affairs and Communications Ministry in fiscal 2018, when compared with the cheapest plans offered by major mobile phone carriers in six major cities around the world, Tokyo was the second-highest after New York for plans offering 20 gigabytes of data monthly.
In August 2018, Chief Cabinet Secretary Yoshihide Suga raised the issue of mobile phone charges, saying, "There is room for a decrease of about 40%." This led to increased interest in mobile phone fees.
At a press conference on Tuesday, Suga expressed his hope for Rakuten's fee plan, saying: "That's pretty cheap. Competition among carriers will intensify."
However, it remains to be seen whether the move will lead to price cuts soon. This is because Rakuten's "unlimited use" is limited to its own communications network. Currently, Rakuten only has base stations in parts of Tokyo's 23 wards, Osaka, Nagoya, Kobe, as well as Kanagawa and Chiba prefectures.
In many areas, therefore, such as subways and commercial buildings, the Rakuten service will use KDDI Corp.'s network, which is not covered for unlimited use, but allows 2 gigabytes of data per month before the transmission speed slows. This may make some users of Rakuten Mobile feel some inconvenience compared to services offered by the three major carriers.
Rakuten plans to increase its base stations to 27,400 nationwide by the end of March 2026. However, there has been a marked delay in the construction of base stations. The Internal Affairs and Communications Ministry has repeatedly issued Rakuten administrative guidances.
"Price competition hinges on Rakuten's ability to steadily expand its network," said Hideaki Yokota of private research firm MM Research Institute.
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