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June 25, 2007 10:07 pm

Japanese call for handset portability

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An independent committee charged by the Japanese government with shaking up the country’s mobile sector is to call for an increase in competition that would allow consumers to keep the same handset even if they change carrier.

Tadao Saito, chairman of the telecommunications ministry’s mobile business study group, said that handset portability “would be our target”.

Mr Saito, speaking ahead of the release on Monday of the committee’s draft report, said the change would be in the interests of “consumer choice”, although it would be expensive for carriers.

He said introducing handset portability immediately would be technically impossible, because carriers had different technological systems, but it could be done in “maybe two or three years”.

The move, which analysts said was likely to be accepted by the ministry and imposed on telecoms companies, highlights the government’s determination to press on with radical change in the mobile market, which it regards as unfair to many consumers.

But some analysts are sceptical about the proposals. Makio Inui, telecoms analyst at UBS, said: “This committee is not in touch at all with what consumers really want.” Some think much of the cost, which would lie mainly in new handset development, might be passed on to consumers.

The proposal for handset portability comes shortly after the October introduction of number portability, which boosted defections from one carrier to another by allowing customers to keep their number.

However, consumers still have the bother and, frequently, extra cost of changing to a new handset with unfamiliar features. Every handset model is offered exclusively by each carrier, and consumers frequently say the headache of puzzling out how a new phone works puts them off switching.

Mr Inui of UBS was sceptical that handset portability would prompt much switching. He argued that, for technical reasons, carriers could only comply with handset portability by introducing clunkier “hybrid” phones that would be sold alongside the carriers’ existing sleek, elegant models. He said these hybrid phones would also have to ditch many of the gadgets that attract Japanese consumers, to make room for the different systems used by different carriers. Therefore, most consumers would continue to buy phones incompatible with handset portability. He added that the odds would be stacked further against hybrid phones because of carriers’ self-fulfilling prophecy that the models would not draw in customers.

For this reason carriers would continue to subsidise conventional handsets as loss-leaders, but charge consumers close to manufacturing cost for hybrid phones.

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