Have you noticed that everywhere you go now, you see ads for mobile phones? Over the last month Au, Softbank Mobile and DoCoMo have slowly rolled out aggressive new advertising strategies and more new handset models at once than have ever been seen before. So why the sudden focus on improving their brand image? On October 24, Japan will officially introduce Mobile Number Portability (or MNP as the acronym loving Japanese love to call it.)
What does it all mean?
In the real world, handset makers (Nokia, Motorola, etc) are free to roam the market place because their handsets can be used with any carrier. You can even change carriers without ever changing the handset that you use. In contrast, the Japan carriers (DoCoMo, Au, Softbank) have a stranglehold on the distribution of handsets. The moment you chose the handset that you want, you have no choice about which carrier you want to use as it is only compatible with one. Historically that has meant that if you want the latest NEC handset then you have to sign up with DoCoMo. If you want the latest Sharp handset, you often have to sign up with J-Phone/Vodafone. Accordingly, the Japanese handset makers are much more dependent on the carriers to develop and promote interesting new services that work with their phones. In the pre-MNP days that meant that in order to get your hands on that wonderful LCD equipped Sharp handset, then you had to give up your old DoCoMo or Au phone number (because let’s face it, who uses Vodafone these days.) Although it sounds like a silly system, it is a (perhaps logical) result of the current (slightly less logical) Japanese sales method for mobile phones.
Although the price you pay for your new mobile phone in Japan is rarely more than 10,000 yen, the cost of that handset is quite often 50,000 yen or more. The average subsidy for your mobile in fact ranges from 30,000 to as much as 60,000 yen depending on the size of the production lot. (Which also explains why mobile phones cost $400 or so in the West!). So who pays these generous subsidies to us? None other than the carriers themselves. DoCoMo is happy to subsidize your handset purchase by 30,000 yen or more, because they assume you will use it for at least 5 months (at an average bill of 6,000 yen per month they can cover their costs). For this reason, they clearly don’t want to make it possible for you to use that treasured phone with Au or Softbank Mobile! To put this in context, NTT DoCoMo is planning to spend over $18 billion USD on handset related subsidies this year. Ouch.
Before the implementation of MNP, there was some debate (mainly promoted by Nokia and a few other foreign handset makers) that Japanese carriers should remove the Sim-lock that prevents you from using the same phone with another carrier. Needless to say (as this would encourage you to sign up with the carrier with the biggest subsidy and then change to the carrier with the cheapest rates a month later) this debate died a quick death.
Even in a post-MNP world, you will not be able to reregister your handset with another carrier; but next time you are seriously considering buying a new handset, you will be able to confidently chose a sexier handset from another company without the fear of losing your phone number. (NB. You will, unfortunately, lose your mobile email address.)
Increasing churn between carriers is a costly excercise for the carriers and so most people in the industry are assuming (= hoping) that MNP will be a non-event. In fact they have good reason to, as it has been a non-event in nearly every other country that has ever introduced the system. Wikipedia has a great chart on its Japanese language MNP page that shows the % of users that actually used MNP in various countries overseas. With the exception of Hong Kong’s 85%, nearly every other country in the world was below 15% (Australia 9%, England 5%, Italy 2%, Korea 1%). What most of these industrial commentators fail to point out is that none of these countries really tried to make it work. Perhaps it was due to the lack of technology “back in the day” but nearly every one of these countries required you to wait between 1-4 weeks (Yes! Weeks!) without a phone number as you transferred carriers. I don’t know about you but that doesn’t sound so attractive to me.
So what is MNP going to be like in Japan? Surprisingly for the MIAC (総務省) , the MNP system in Japan is actually quite user friendly. The entire process is expected to take about 30 minutes and cost you slightly less than 3,000 yen. When you consider that upgrading to a new handset model at your existing provider (機種変更) is likely to take just as long and cost you 3,000 yen, it does appear as though the barriers to MNP taking off are quite low. In fact, you don’t even have to visit your old carrier’s store: The entire process can be completed by telephone from the store where you purchase your new, cooler, phone.
This week’s Nikkei Business (Oct 16) has published an interesting survey on page 147 about expected MNP usage. The author suggests that as little as 2% of existing users are going to use MNP. Stippy.com has its money on this number being more than a little conservative. While we expect the advertising battle to heat up in the next few weeks, here is our favorite commercial so far this Autumn…
Are you on top of all of the latest models being released now? Remember in Japan, a phone is not a tool, it is a toy!