Japanese ‘virtual operators’ offer low-cost phones

Japanese ‘virtual operators’ offer low-cost phones
An employee of a Bic Camera store in Chiyoda Ward, Tokyo, shows one of the company’s low-cost smartphones.

Major retailers, large-scale home appliance chains and other companies outside the circle of conventional mobile phone carriers have begun selling low-cost smartphones that offer consumers both lower hardware prices and service fees.

The range of services available for low-cost smartphones remains limited, but the market newcomers are targeting consumers who want smartphones to be more convenient, while service fees at NTT Docomo Inc. and other major carriers have remained high.

Market observers are keen to see whether the low-cost handsets will trigger rate cuts throughout the entire smartphone service market.

On April 4, Aeon Co. made 8,000 low-cost smartphones available for sale. The price of the phone, including telephone service and hardware, starts at ¥2,980 (S$36.48) a month.

Bic Camera Inc. began selling low-cost smartphones on April 18, starting with a limited lot of 1,000 handsets, with monthly fees starting at ¥2,830.

A 58-year-old woman visiting the low-cost smartphone sales corner at a Tokyo Bic Camera branch remarked happily, "Low-cost smartphones are very reasonable in terms of service fees, too."

Both of the companies have nearly sold out of the low-cost devices. Concerning additional releases of the handsets, both companies said that they will give consideration to future sales after hearing opinions from their users.

Smartphones at major mobile phone carriers typically require ¥7,000 to ¥8,000 in monthly service fees, in addition to the price of the hardware. The price difference is significant.

Aeon and Bic Camera connect customers who purchase the low-cost phones with mobile virtual network operators (MVNOs). MVNOs are telecommunications companies that do not possess their own transmission lines, instead leasing those of NTT Docomo and other major carriers.

MVNOs do not have to shoulder the capital investment burden involved in owning lines and other facilities. Thanks to a policy of the Internal Affairs and Communications Ministry, they are able to use the major carriers' facilities for low fees.

MVNOs can thus offer smartphone services at low monthly rates.

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