TOKYO -- Market-leading Japanese mobile carrier NTT Docomo will lower charges by up to 40% starting this June under plans announced Monday, answering the government's call for cheaper service plans.
The industry has room for reductions of about 40%, Chief Cabinet Secretary Yoshihide Suga said last August. Docomo responded in October by saying it would cut fees between roughly 20% and 40%, to "return" as much as 400 billion yen ($3.57 billion) to customers a year.
The new rate schedules reflect this. Docomo will offer lower rates on contracts geared toward light and heavy data users. A light plan capped at 1 gigabyte of data will cost 2,980 yen a month for a single line -- roughly 30% less than current contracts.
A family plan covering three or more lines will offer rates starting at 1,980 yen a month, down about 40%. And a 30 GB plan for heavy data users will cost around 30% less at 6,980 yen a month.
Docomo expects to lose up to 400 billion yen in revenue due to the discounts, cutting profit in the current fiscal year ending March 2020. It sees operating profit returning to 990 billion yen, the level it estimates for last fiscal year, in fiscal 2023. The carrier is staking out a long-term goal of capturing more subscribers.
The new plans could heat up the price competition between Docomo, KDDI and SoftBank. Second-ranked KDDI already offers conditional plans that set monthly rates at 1,980 yen, but only for a year. Docomo's new plans carry no time limits.
Docomo's new fees are "great as the opening salvo," a source close to the government said.
"From now the competition begins," the source said. Rakuten will launch its own mobile service in October.
Docomo will roll out the plans ahead of a harder government crackdown on deals that pair discounted handsets with higher monthly rates. Starting as soon as autumn, the government will bar carriers from offering discounts on handset-service bundles.
The idea is to completely separate service fees from phones and further encourage lowering monthly rates. Docomo will stop taking new applications for current plans in late May. But the ban is seen leading to higher handset prices, burdening customers who frequently upgrade to newer phones.
Docomo will later reveal how much it will subsidize device purchases under the coming ban. "We are not saying there will be absolutely no device assistance, but the proportion will be diminished," Docomo President Kazuhiro Yoshizawa told reporters Monday.