Japanese carriers losing out on handset subsidies

In the fierce world of wireless competition, companies fight tooth-and-nail for customers in a desperate attempt to raise ARPU (Average Revenue Per User). Customers are naturally looking for the best deal, and with multiple carriers selling the same or similar handsets, the consumer's decision carries a lot of weight. The same problem that exists here in the States is even more prevalent in Japan where the country's largest carrier, NTT DoCoMo, attempts to pack cell phones with such features as bar code scanners, TV receivers and gaming devices. All those goodies cause manufacturing costs to soar in excess of $600, requiring the carrier to discount the handset heavily to prevent customers from getting spooked at the store. Sounds like a steal, right? Not so much. All these subsidies end up costing the companies around $16 billion a year which in turn leads to higher plan prices to recoup the blown revenue from the devices. All in all, it's a vicious circle -- but hey, at least it's a technology-laden one.

[Via textually.org]

[Wobbly Posted May 31st 2007 11:30AM]

but doesn't all that mass purchasing/production of all that uber-tech drive the cost down? i bet they're inflating their costs to excuse rate hikes. even so, I'd put my carrier through bankrupcy if it meant i could get a slice of some of the goodness they get over there

[(Unverified) Posted May 31st 2007 12:01PM]

So that's the secret to Japan selling all those high-tech phones at super-low prices while we get crappy phones that cost more.

Still, I'm waiting for KDDI Mobile to show its full potential. It could end up being a competitor to Helio (tech-wise; I don't particularly like MySpace) if KDDI plays their cards right.

[kalleboo Posted May 31st 2007 4:27PM]

Here in Sweden the operators have largely stopped giving away free phones - instead it's essentially a payment plan where your monthly fee is $15 higher for the first however many months until you've paid off the phone. I really like this approach, as it means those of us who buy unlocked phones don't help subsidize the cheapskate's phones.