Softbank announces ‘price war’ as MNP kicks in

24 Oct 2006

Japanese telecoms group Softbank yesterday heralded the start of a ‘price war’ in the domestic mobile market as Japanese operators braced themselves for the introduction of mobile number portability (MNP), designed to make it easier for users to switch their mobile phone provider, which becomes effective from today. Masayoshi Son, the president and CEO of Softbank is offering customers who switch to his network a range of incentives or discounted package plans in a bid to stir up the already competitive sector. Citing his mission to ‘make mobile prices [in Japan] the lowest in the world’, Son confirmed the industry’s worst fears by announcing his intention to cut profit margins in an already tight market. The Financial Times writes that Son, who previously slashed fees for internet access against NTT, could spark a price war which would wipe up to USD79 billion off the revenue sheets of the country’s cellcos.

Critics of Japan’s MNP plans are sceptical however, saying that it is arguable whether Softbank’s move will provoke mass switching. Japan traditionally has very low churn rates and high levels of customer loyalty. However the UK paper cites a recent survey published by Mitsubishi Research which found that about six in ten people surveyed saw the ability to switch to a cheaper service more easily as a ‘merit’ of number portability. In addition, a further 5% of mobile customers – or about 4.5 million people – are ‘eager’ to switch service provider when the new rules apply.

Japan, SoftBank Corp