'Lifetime' mobile numbers spark price war

Mobile phone users in Japan will now be able to keep the same phone number for life, under a new scheme that came into effect today. The introduction of the mobile number portability system heralds a new period of fiercer competition in Japan's crowded mobile services market, industry watchers believe.

Market minnow Softbank Mobile shocked its larger competitors yesterday by announcing steep price cuts to lure customers to switch to its service. Softbank announced a 70 per cent discount on a new flat rate plan, the Japan Times reported. Under the permanent discount plan, users who sign up during the next three months will get unlimited domestic calls and text messages for $24 per month.

Softbank president, Masayoshi Son, warned competitors that if they respond by cutting their own prices, his company is prepared to bring in further discounts immediately.

The Japanese mobile market is dominated by NTT DoCoMo with a 55 per cent share, while KDDI and Softbank Mobile have 29 per cent and 16 per cent respectively. Softbank Mobile was formed earlier this year when hi-tech investment group Softbank purchased the ailing Vodafone KK operation.

There are almost 95 million mobile phone accounts in use in Japan, which has a population of 127 million. With the market close to saturation, mobile network operators have increasingly focused on poaching subscribers from their competitors. However, the problems associated with changing to a new number have helped keep customers loyal.

During the past few months the number of customers switching to a new service provider has fallen dramatically, the Asahi Shimbun reported today. Subscribers appeared to be waiting to see what special deals operators would offer them to switch when the new portable number scheme came into effect.

"It would be reasonable to guess that a large number of subscribers are taking a wait-and-see stance before the number portability system begins," NTT DoCoMo president Masao Nakamura told the newspaper.

Operators have rolled out various new services and attractive new handsets this month in an attempt to hold onto existing customers and grab new ones from their competitors. In Japan, phones are generally locked permanently to a particular provider, so subscribers can only switch when they buy a new phone. Despite the various incentives on offer, no service provider had revealed major price cuts until Softbank's announcement yesterday.

Critics have claimed that the new number portability scheme does not go far enough in providing freedom of choice, because many subscribers still feel tied to the email address issued by their mobile service provider, which is not currently portable.

In addition, subscribers must pay a charge of approximately $45 each time they switch, although the new service provider will often cover this cost.