Japan's Rakuten Inc launches cheap smartphone service

[October 29, 2014]  TOKYO (Reuters) - Japanese e-commerce giant Rakuten Inc said it will offer a cut-rate smartphone service for about a third of the monthly fees charged by the country's three dominant operators, adding to increasing price competition in the sector.

Japan's smartphone services for light users are particularly expensive compared with other developed markets, prompting Rakuten and other firms such as retail giant Aeon and Internet Initiative Japan to offer new services by pairing with or becoming mobile virtual network operators (MVNOs).

Rakuten's new MVNO service will offer a combined voice and basic data plan for an average monthly fee of 2,200 yen ($20), excluding the cost of the phone.

That compares with about 6,500 yen a month for a basic voice and data plan at all three of Japan's leading wireless carriers - NTT DoCoMo Inc, KDDI Corp's au and SoftBank Corp. Unlike Rakuten's basic plan, however, users can make as many calls as they want.

Aeon said in March its basic voice and data plan would cost 2,980 yen per month, including the cost of the phone for a two-year contract.

MVNOs, which rent access to other companies' networks, currently account for about 5 percent of the mobile market, according to a government report.

(Reporting by Teppei Kasai; Editing by Edwina Gibbs)

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