DoCoMo 3G FOMA May Go Flat Rate
If the report is true, what we’ve been predicting for months is proving correct, with KDDI building up incredible momentum over the last quarter, DoCoMo, despite statements to the contrary has been forced to protect subscriber growth on FOMA. Here it is; the Nikkei has reported that DoCoMo is planning to introduce flat rate data charges “as early as the middle of this year.” Because it’s Saturday, and because it’s the Nikkei, we can’t be sure, so we’ll have to adopt the wire service caveat of “the paper said, without quoting sources.” According to the Nikkei, DoCoMo’s flat-rate the packet data charges on FOMA 3G services first and then move this to HSDPA next year.
Since last summer, in article after article, we’ve been hammering away with the belief that flat packet rates for data have had an air of inevitability, slashing through complex price plans that consumers don’t want to cope with.
The Nikkei has its own agenda; we don’t know if this story is a slip that’s going to lead to a retraction, but if it’s true, well, it’s the story of the month in Japan to say the least, and could have massive implications for the profit models of 3G carriers around the world.
The first things that strikes us about this news is that there is no mention of flat rates for PDC. If the flat charges– with no news on what the rate might be out yet, of course — only apply to W-CDMA, then that’s another story in itself. If the rates do not apply to PDC services, then the move represents a massive, and aggressive attack by DoCoMo to move people onto FOMA. It’s also potentially extremely dangerous, because, while DoCoMo will won’t like to admit it, FOMA and 3G, just easing past 2 million customers, still represents a tiny proportion of the company’s 40+ million base.
What about all those people who have invested hundreds of dollars in swank 505i handsets just last year, only to find that people with FOMA can get a huge range of new features at much higher speeds without worrying about running up $100 bills?
Again, the story is not verified yet, but if DoCoMo is planning to introduce flat rates, the killer blow will have come from KDDI in November, when the company shred its price plans and went flat rate to $40 a month (4,200 yen) on its 1X WIN service.
While KDDI’s monstrous surge of subscribers actually predates the flat rate launch, the move looks to have probably accelerated the flood of subscribers to KDDI over the last four months. Regular Japan wireless watchers will know that KDDI has been taking up to two thirds of all new contracts month in, month out, from last October. The reality has been that that DoCoMo’s number of new net subscribers between April 2003 and the end of this January has fallen to about 1.5 million compared to nearly 2.2 million for KDDI.
A further nail in the coffin came with Vodafone’s Happy Packet cuts, which slashed rates last year. Although Vodafone’s move was extremely defensive in nature with the move attempting to retain customers while the company has stalled in the necessary drive to put out ever-new and ever-better series of handsets, Happy Packet can only have heaped on the pressure.
Last December, as we reported, DoCoMo president Keiji Tachikawa publicly dismissed the introduction of flat rates, and the desirably of number portability and if the Nikkei report is true, the decision comes as a massive about-face
This year, after spending yet more on subsidizing developments on the new FOMA 900i series to bring them up to PDC levels, it is DoCoMo’s primary duty to make sure it does everything it can to protect the growth of FOMA, especially after so many statements that 2004 is the takeoff year for W-CDMA.
— The Editors