Japan Number Portability: The Autumn of Discontent
The hottest topic roiling Tokyo’s hot street this month is MNP – mobile number portability.
Details on pricing, dates and procedures that Japan’s carriers will follow to implement the regulator-mandated programme have been posted on WWJ in several items on this topic, including here, here and here.
Analysts, pundits, bloggers and assorted commentators have all more or less concluded that the net winner will be KDDI/au, while the net loser will be DoCoMo (the jury is still out on Vodafone/SoftBank Mobile). At least some are attributing this pending negative migration to mere probability – as the carrier with the largest customer base, they argue, DoCoMo naturally stands to lose the biggest number of churners – all things being equal.
But this analysis is weak and WWJ thinks KDDI stand to win big (or at least biggish) primarily because more mobilers will wish to join the demonstrably better KDDI/au mobile Internet platform. KDDI offers, among other goodies, a steep student discount on calling, a great line-up of handsets, the world’s best (although not cheapest) mobile music download service – with tracks delivered via a network noticeably faster than DoCoMo’s – and a popular set of social networking services including a geo-coded photo blog provided as part of the ‘Duogate’ joint mobile/PC offering. Eat your heart out, DoCoMo!
However, one of the fundamentally important issues that few have considered relates to content providers on all three major platforms.
When customers grab their number and run, what happens to their carefully cultivated third-party content-provider relationships? What happens to the content services they’ve subscribed to on their old phone? And what measures are carriers taking to ease content providers’ pain after subscribers leave? Haven’t carriers stated long and loudly that mobile Internet success in Japan has stemmed from the creation of open platforms like i-mode, EZweb and Vodafone live, wherein providers can sell services to mobile users (while carriers earn the packet revenues, take a cut of the billing action and otherwise stay out of the way)? Now that it’s crunch time, what are carriers doing to help providers?
With one notable exception, not much, it seems.
In fact, as a major defensive move, carriers are going out of their way to make it as unattractive as possible to switch.
First and foremost, the new MNP programme does not mandate mobile email portability, so when you walk into your current carrier’s shop and tell them you want to fly, the first thing the sales guy will tell you is, you’re going to lose your email address – the one that all your friends have stored in their phones. Is there a faster way for a Shibuya teen to commit social harakiri? If Japan’s mobile internets allowed a common email domain address on all phones (the equivalent of everyone having a Hotmail or Yahoo webmail address), this wouldn’t be a factor. But it is.
Next, he’ll point out that all your content subscriptions are also going to be cut – along with whatever content (ring tones, audio, images, Java, etc.) you’ve downloaded and paid for. Tut, tut! Never mind that, if you are going to switch, it would be in the customers’ and providers’ best interests to enable subscriptions to be transferred, at least for providers that deliver their content to multiple carriers (more on this below).
Granted, the carriers didn’t have much choice on the ministry-mandated MNP issue. So from this point of view, they have also been forced over the past seven or eight business quarters to invest heavily in making their platforms even more attractive and sticky.
David Collier, principal at mobile Flash-content provider Pikkle.com in Tokyo, told me that, “KDDI are going at it by doing a lot of their own first-party social network content; check their whole blog applications/Duogate service. They also invested in Japan’s No. 2 social network and have an ‘avatar API’ for different services.”
DoCoMo and Vodafone have also recently strengthened their carrier-owned and operated mobile data offerings (think Push-Talk, e-wallets and services like “ToruCa” for Big D; and 3D mail, mail art and Vodafone live! Cast for Big Red) in a bid to make their platforms MNP-proof. Given that DoCoMo has, in fact, bet the farm on mobile e-wallets and credit cards, and their churn now is already the world’s lowest, these defensive moves may prove to be pretty savvy.
But these steps fundamentally run counter to the initial i-mode et al philosophy of building open platforms that allow third-party providers to access customers. Carriers then step back, concentrate on building bit pipes, and and eschew owing content. For content providers of any size, it’s hard to compete with any carrier-branded services that are marketed and promoted through all the carrier’s customer-facing channels (shops, street advertising, monthly invoice mailings, on the phone menus themselves, etc.).
One unnamed industry insider (at a content provider wishing not to bite the hand that feeds) told me that, for MNP, “The more customers that switch the better, as this will cause the carriers to think a bit about using content as their only weapon against churn. I hope they are forced to introduce user-defined email addresses soon, too. Why should my phone email only be set to xxx@docomo.ne.jp?”
Ironically, SoftBank, the newest carrier and potentially the most vulnerable to MNP losses, appears to be making the best efforts to enable content portability. Recently, they have been making a huge push to get all content providers who have official sites on one of the other two carriers to make the same site for Vodafone by the end of October.
One content provider told me this week that, after spending months and months to get acceptance for their download service on DoCoMo’s i-mode, and finally launching, “someone from Vodafone called the very next week saying they wanted us to make the site for them right away.”
He continued: “Someone from J-Mobile – the company in charge of the Vodafone live! menu – then came to our office and explained that they wanted to make sure they have all the same official content that is on the other carriers as part of their ‘number portability’ strategy. He told us we could just send them the same proposal we used for KDDI and they would get the acceptance within two weeks.” (My contact also, for obvious reasons, wished to remain anonymous.)
Kudos to SoftBank for boosting provider opportunities, even if only for narrow competitive reasons.
Based on this strategy, I can foresee SoftBank Mobile telling potential in-bound churners that all the content and services they knew and loved on i-mode or EZweb will be easily available on SoftBank, we’ll help you re subscribe, you won’t miss anything, etc. What a nice poke in the eye to DoCoMo and KDDI – and what a nice boost for providers.
Steve Myers, at Theta Music Technology, said that such moves to encourage providers to open sites on all three platforms has helped. “It’s definitely a help to smaller ‘niche-oriented’ CPs like us who have been wanting to get on all three carriers.” (Steve’s excellent Mobile Media Watch newsletter is available here.)
And on top of MNP churn between the Big Three 3G cellular carriers, it’s worth keeping an eye on PHS operator Willcom, who has consistently beat Vodafone for new subscribers every month of the last year with an extremely compelling offer including flat-rate voice within their network.
This fall is shaping up to see a serious remake of carrier market share, through which some of the content providers will gain – and some will lose.
— Daniel Scuka