Rakuten Unveils Aggressive Mobile Pricing in Japan

(Bloomberg) -- The delayed launch of Rakuten Inc.’s mobile network in Japan was made official on Tuesday in Tokyo, with the online retail giant announcing price plans far below those of the incumbent leaders.

Originally planned to begin operations in October, Rakuten pushed back its network rollout to April 8, using the interim to run trials with a limited group of users. The company’s sales pitch to mobile subscribers will be price: a single plan offering unlimited monthly data will cost 2,980 yen (about $28), less than half the comparable tariffs from rivals SoftBank Corp., KDDI Corp. and NTT Docomo Inc.

As Japan’s premier online retailer, Rakuten has millions of habitual users of its services, many enticed by the company’s long-running loyalty points program. Rakuten ranks as the country’s most popular Mobile Virtual Network Operator, according to a study last year. It also offers Rakuten Pay for contactless mobile payments. The company already has much of the auxiliary infrastructure and operations that mobile carriers set up after getting their network off the ground.

To lure subscribers from rivals, Rakuten is offering its service for free in the first year for as many as 3 million users. The unlimited data usage will be confined to Tokyo, Osaka and Nagoya areas where the company has installed its own wireless equipment. Outside these regions, KDDI will carry the traffic and data usage will be capped at 2 gigabytes.

Rakuten’s plan is to roll out 4G services starting next month and then upgrade to fifth-generation networking in the summer. The company currently has 3,490 base stations and plans to expand coverage to all of Japan by March next year. For complete geographical coverage, Rakuten is partnering with satellite communications services provider AST, taking a 20% stake in the Texas-based company.

“This is a start of the project to make Rakuten Mobile a service you can connect to wherever you go in the world using a satellite,” Rakuten founder and Chief Executive Officer Hiroshi Mikitani said at a briefing in Tokyo on Tuesday.

(Corrects AST’s headquarters in the fifth paragraph)

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

To contact the editors responsible for this story: Peter Elstrom at pelstrom@bloomberg.net, Vlad Savov, Colum Murphy

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