Carriers in Japan cutting monthly fees raising rate of handsets

[Fire14]

This is what they need to do here in the US

NTT DoCoMo to cut mobile call fees by 30%, hike handset prices

Mobile phone service provider NTT DoCoMo Inc. will cut call charges by an average of 30 percent but raise handset prices to around 60,000 yen per unit under a new plan, informed sources said Tuesday.

The new packaged handset-mobile service plan, starting as early as in November, is likely to be applied to customers buying new DoCoMo handsets, they said.

Officials at KDDI Corp., another mobile phone service provider, said earlier in the day that the company will launch a similar plan, which will see current monthly average charges cut by roughly 1,000 yen, or around 20 percent.

KDDI's new plan is also likely to be applied starting in November to consumers buying new KDDI handsets under its ''au'' brand, they said.

DoCoMo's move is aimed at countering the KDDI plan and attracting customers with the competitive plan.

Japan's mobile phone service providers have long relied on a rebate system in which they pay retailers around 30,000-40,000 yen per handset. This enables retailers to offer consumers new handsets with deep discounts, sometimes even for free. In exchange, consumers sign subscription contracts with the service providers.

The service providers have been able to recover the costs of the rebate system in 18-24 months by passing them on to consumers in the form of higher monthly charges.

The rebate system is believed to have helped service providers to attract new subscribers, who tend to be attracted to the various features of new, advanced handsets.

DoCoMo, as well as KDDI, will use the financial resources freed up by the planned rebate cuts to discount charges for calls and other mobile telecom services, the sources said.

Under the new plan, customers who sign up for DoCoMo's packaged service contracts will be allowed to choose from various plans, including those featuring monthly installments over around two years to spread the costs of the handsets.

As for KDDI, consumers who newly sign up for its packaged handset-mobile service contracts starting in November will be also allowed to choose from various plans, including those featuring a 20 percent reduction in call charges, they said.

Meanwhile, KDDI will retain its current packaged handset-call fee plan featuring free or extremely low-priced handsets, in parallel with the new plan featuring lower communications charges, the KDDI officials said.

Softbank Mobile Corp., the third largest mobile phone service operator after DoCoMo and KDDI, has enjoyed the largest net growth in mobile phone subscriptions among service providers in Japan since its ''White Plan'' discount rate was introduced in January.

The plan combines payments for handsets in monthly installments over two years with a basic monthly rate of 980 yen.

On Sept. 18, a panel advising the Ministry of Internal Affairs and Communications released a report recommending that mobile phone service providers should rethink the old system based on huge rebates and separate handset costs from mobile telecom charges.

Under the system, consumers opting to hold on to handsets for a long period have virtually subsidized the costs of new handsets purchased by users who frequently change cellphones, they said.

This has led to complaints from consumers who tend to keep the same handset, the sources said.

NTT DoCoMo to Cut Mobile Call Fees by 30%, Hike Handset Prices

[Jay2TheRescue]

Sounds good. I'd pay more for a phone to have a lower monthly bill.

-Jay