Mobile Number Portability (MNP) in Japan

Mobile Number Portability (MNP) started in Japan on October 24, 2006

Mobile Number Portability increased competition between mobile operators and forced Vodafone to give up in Japan and sell to SoftBank

On October 24, 2006 Japan’s government regulators order the mobile phone operators to introduce number portability (MNP).

KDDI/AU seems to be the winner in the MNP race

The consensus has emerged in our community that KDDI/AU will probably be the winner when MNP is introduced.

We believe that KDDI/AU is certainly the most successful company globally in the 3G (=UMTS) sector.

Interestingly, KDDI/AU uses the CDMA2000 3G/UMTS standard, which has been excluded from Europe. European telecom manufacturers have mostly abandoned the CDMA2000 standard for 3G/UMTS, as our company has recently studied and analyzed in detail in a project contract for the Government of the European Union, and outlined to the 25 EU Technology Attaches in Japan.

Mobile Number Portability (MNP) in detail

From Oct 24, 2006 Japanese mobile phone operators are required to enable their customers to change mobile phone operator while keeping the same mobile phone number.

Number portability – not email address portability

While GSM countries use SMS for messaging, subscribers in Japan use almost exclusively mobile email and not SMS. (As we have recently explained to the 25 EU technology attaches, mobile email is much more advanced, much more convenient, much cheaper, has much more functionality and is much more open than SMS, which is generally used outside Japan). However, mobile email addresses in Japan are of the format [user selected artificial name]@[name of mobile operator], and therefore specific to the operator. Government does not require mobile email portability.

Mobile digital rights management (mobile-DRM)

for content in Japan is relatively strict and in general music, JAVA applications and other digital content, and many other services are not portable between mobile operators.

The process of changing from one operator to another has been made very smooth for consumers. The termination fee is generally YEN 2000 (about US$ 17) and is refunded by the operator welcoming a moving subscriber, at least during temporary MNP campaigns.

Impact of MNP sector by sector:

Mobile operators

The consensus is that KDDI/AU will be the winner in attracting subscribers both from DoCoMo and SoftBank – and correspondingly KDDI’s share price has increased recently substantially, while DoCoMo’s share price has fallen over the last two years, as shown in our JCOMM report.

Mobile operators: Vodafone KK

MNP was without doubt the major direct reason which forced Vodafone to give up in Japan, and sell Vodafone KK (Vodafone’s operating company in Japan) to SoftBank. Read here for a detailed explanation why Vodafone gave up in Japan and sold to SoftBank.

Masayoshi Son has of course won many battles in his life, and we expect Son’s SoftBank-Mobile to be a “wild card” in the MNP game. One of Son’s strategies recently is to partner with famous brands including SHARP/AQUO, and iPod. For example SoftBank has announced an iPod phone in cooperation with Apple Computer, and recently offered a discounted mobile phone/iPod package when a subscriber purchases a 2 year subscription.

Handset makers

In Japan mobile phone handsets are locked to the mobile operator. It is not possible in Japan to use the mobile phone of one operator on a different network. Increased churn due to MNP therefore is good news for handset manufacturers, and we expect handset sales to increase.

Mobile content

Our recent Mobile Payment and Keitai Credit report also covers mobile content and mobile commerce, and shows that mobile commerce has recently exceeded mobile content. Generally, we expect a negative impact of MNP on mobile content (not mobile commerce). The reason is that many mobile content subscriptions are “dormant”. For example, mobile music in Japan is sold in monthly subscriptions. Our mobile music report estimates in detail the ratio of mobile music consumers in Japan pay for, and the (substantially smaller) amount of mobile music actually downloaded. We have deduced this ratio by detailed analysis of Japanese mobile music industry data. When a subscriber changes from one mobile operator to another, the content subscription does not move along to the new operator, but the subscriber has to actively subscribe fresh again. We expect that subscribers will at this point take the opportunity not to freshly subscribe to those content programs where they were “dormant” subscribers, i.e. those where they paid US$ 3 or US$ 5 per month without actually downloading any content. This negative effect may be balanced by a smaller amount of additional purchases of music and content, which has expired due to digital content management conditions, which do not allow purchased content to be moved to a different handset (although the mobile phone number is the same).

Japan telecommunications industry report

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