New Handsets for Old Customers

The war for customers between Japan's mobile phone operators is heating up. NTT DoCoMo Inc., Japan's biggest mobile phone operator, said new handsets it is introducing will lure back subscribers it lost since new rules made it easier for users to switch wireless carriers.

DoCoMo had a net 60,000 contract cancellations in the five days following the Oct. 24 start of mobile number portability, which allows subscribers to select a new operator without changing their phone number. The company blamed its biggest rival, KDDI Corp., for the cancellations.

"KDDI had a good start because it introduced new handsets earlier," said DoCoMo Chief Financial Officer Masayuki Hirata in an interview. "Our new handsets will appear after KDDI's and our subscriptions will rise from now on."

DoCoMo, whose 56 percent share of the mobile market is narrowing, on Sept. 28 said it would introduce 20 handsets by March. Masao Nakamura, the company's president, in September said he expects annual cancellations to increase by as much as 35 percent to 700,000 for the year ending March 31, 2007. The number of net subscriptions lost since Oct. 24 was "in-line" with that estimate, Hirata said.

KDDI on Sept. 28 introduced 12 new handsets with improved sound quality and designs it called "chic" to draw and keep subscribers. The models started selling in September. With the new handphones, DoCoMo hope to stem the number of subscribers moving on to their rivals, and attract some away from them as well. Whichever operator wins the battle, the biggest winners are ultimately the consumers, as they enjoy the benefits of a price war.

Is it too late for DoCoMo to save their customers from going to KDDI? What more does DoCoMo have to do to win back their customers? Or will KDDI counter with another move of their own?

Tell us what you think.