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Last week brought a slew of new announcements, including news of the JPY11 bn SoftBank/Vodafone joint venture, confirmation that the company formerly known as Vodafone KK will henceforth be known as ‘SoftBank Mobile’ and details on the long-awaited MNP (mobile number portability) implementation. Subscribers can access WWJ’s insight on the first two in today’s Viewpoint (here), but read on below for our take on MNP — possibly the biggest revolution in Japan mobile since i-mode itself.
First, a little history.
Until now, the Big Three cellular carriers (DoCoMo, KDDI/au and Vodafone), as well as the smaller PHS carriers (Willcom, Astel, etc.), have run their networks as independent — and highly competitive — fiefdoms. There has been nothing like number portability or, for that matter, portability of any other service/feature. If you switched carriers, you lost your number.
Moreover, if you churned to a new carrier, you were also obliged to buy a new handset. There are no equivalents of GSM SIM cards in Japan’s 2G PDC technology, and all PDC cell phones were (and are) internally tied to a particular carrier and cannot be reprogrammed. So not only the phone number but also the phone itself is fixed to a specific network. And, while carriers have provided a way for customers who upgrade within the network to swap over address book, settings and some (but not all) mobile content to a new handset, they have pointedly not provided any assistance to swap such data between networks.
At best, switching carriers meant rethumbing all your contacts, numbers, email addresses, and other information into the new handset; at worst, it meant a complete loss. Ouch. By chance, if both your old and new handset could accept removable memory, you could also hope to transfer some of your self-generated content (images, voice memos, etc.), but this happens strictly by chance with, again, no help on offer from carrier or maker.
In the 3G era, the W-CDMA handsets do use UIM cards, the analogue to GSM SIM cards, but the phones are ‘sim-locked’ to the carrier’s network. Also, in the past couple years, carriers have introduced online and in-shop services that allow almost all paid content to be swapped over as well; but, again, only within the network.
Furthermore, in all cases, you couldn’t get a new handset without renewing your contract (if you don’t churn) or without initiating a new contract at a new carrier (if you did decide to switch). In Japan, you can’t buy a handset without a contract, unless you opt for the few, low-tech, also-ran phones that are specifically on offer as prepaid (and even those only work with a specific carrier).
These factors, combined with long-term discounts, family calling plans and other wallet-targeted incentives, make it easy to see why Japanese carriers have long enjoyed some of the world’s lowest churn rates (well, except — recently — for Vodafone, but that’s another story).
With MNP, set to start in November, you’ll finally be able to switch carriers and keep the same number, but some caveats apply (the full details were issued last week in a rare, joint press release from all three carriers; see DoCoMo’s version here).
According to the release, MNP will make it possible for a mobiler both to cancel the current ‘Donor Operator’ contract and initiate the ‘Recipient Operator’ contract within a single visit to the Recipient Operator shop, providing he/she completes an ‘MNP Pre-registration Application’ with the Donor Operator (by phone, by Internet or in person at a Donor Operator shop). The main steps will be:
Further, the press release pointedly mentions that, when canceling a Donor Operator contract and applying for a Recipient Operator contract:
While these instructions are just Rev 1.0 of what is likely to become in practice a fraught and complicated process, a couple of obvious points come immediately to mind.
First, I would be stunned if any carrier failed to develop a special-offer, ‘grab’em & hold’em’ marketing procedure to implement during Step 2 above.
Considering that DoCoMo stands to lose the most (and KDDI, gain the most) from MNP churn, I can see DoCoMo sales shops having a specially trained rep on hand who is authorised to offer a bundle of nifty options to the would-be runner in exchange for staying with daddy. A cheap, new 3G handset? Some free Chaku Uta music (DoCoMo just announced the super-popular 3G content offer after long watching KDDI/au eat its lunch). A free DoCoMo ‘DCMX’ mobile credit card? An early bump up to ’10-year-user’ status on the long-term discount chart?
Next, I can see the losing carrier making determined runners sign a nasty recognizance form that spells out, in big, bold kanji, exactly what they’re going to lose (“Thank you, sir. Please sign here, here and here, and initial above blocks 9, 11, and 21″).
Look at the list of caveats: loss of email address (equivalent to social suicide for your average Shibuya teen), loss of paid-for content (so long, 200-track music collection) and, hitting ‘em where it hurts, good bye to all that stored yen sitting on the FeliCa chip.
Finally, in Japan’s harried commuter/sarariiman/student lifestyle, MNP churning may cost the most precious commodity of all: time. The MNP process press release states, rather too honestly:
“The procedures at the Recipient Operator shop are expected to take no more than a few hours.” (Italics added)
MNP represents, for now, little threat to carriers’ incumbent customer bases. If a determined runner does decide to churn, they will most likely do so because someone else (SoftBank? eAccess?) is offering a far cheaper package and those are the kinds of low-usage, non-3G-data-using, voice-only customers that DoCoMo and KDDI don’t want anyway. Let ‘em flea — there’ll be plenty left to boost ARPU…
Nonetheless, WWJ thinks this situation worth careful watching. SoftBank itself could be the victim if Willcom and IP Mobile start grabbing significant numbers of solid ARPU-generating mobilers by feeding on the low-end of the low-end that SoftBank wants to feed on; Willcom has had solid subscriber growth for the past several months and is generating a lot of momentum in the market. Eventually, Big D and Big K would be forced to react. It’s going to be an interesting year.
– Daniel Scuka
Some sage advise when entering new turf; Stop, Look and Listen.. it’s also good to secure a local guide. Japan is the cradle of mobile civilization – we have been dedicated to this space since 2001 – trust our archives here offer some useful material.
Domestic activities continue to set the pace, and sharp players are looking at global markets. We have hard-earned industry expertise and trusted network of contacts with access to advanced intell. and potential deal flow. Need a lift.. Ok, buckle-up!