The Ministry of Internal Affairs and Communications (MIC) has announced new rules governing the pricing of data plans for smartphones by all three major carriers within Japan (NTT DoComo, KDDI, Softbank) to take effect in 2016. The move obligates carriers to provide lower cost options for users who use less data over current and next generation mobile networks.
Carriers must submit proposals for their revised pricing plans by the end of 2014 as part of the spectrum allotment scheduled to occur in 2016 for the upcoming “4G” network. Providers must also revise existing data plans for current generation smartphones to provide pricing options for varying tiers of usage by this summer. Current all three carriers have adopted a standard 7GB limit for smartphone data on a monthly basis. The new rules would provide for cheaper 2 or 5GB tiers for low data-use users.
MIC plans to introduce further introduce a rules requiring providers develop and implement a system confirming data usage and corresponding costs by the end of the fiscal year 2014. The system will be used to periodically assess data use amongst subscribers.
Cellphone Internet usage has been a defining feature of the Japanese Internet since the introduction of the “i-mode” service by NTT DoCoMo in 1999. Smartphones usage in Japan is concurrently increasing with increased domestic developer support and content. While the major cellphone companies once offered unlimited data usage, the introduction of LTE brought about the creation of a 7GB data allowance that was quickly standardized amongst the three major carriers. Flexible data plans have only been introduced recently by third party carriers (MVNOs).
The revised rules demonstrates MIC’s authority to demand changes it sees as beneficial for consumers from carriers in exchange for valuable spectrum needed to remain competitive in the marketplace. The ruling also has the potential to spur further competition in the developing growing MVNO market which uses existing infrastructure from larger telecommunications companies to provide service for users.
The market remains confusing for businesses and consumers alike who unable to ascertain where definitive authority lies in telecommunications policy. Spectrum remains one of the key issues for Japan to address as the continued lack of a spectrum auction and management system restricts flexible pricing and mobile network infrastructure development.