Japanese online and mobile commerce, content and services company Rakuten has launched an MVNO (Mobile Virtual Network Operator) service in Japan, offering low cost smartphone plans.
Rakuten’s service offers a limited voice and data option for JPY 2,200 ($20) per month service excluding handset fees.
The new service follows Rakuten's various investments in mobile services including its early 2014 $900m acquisition of voice and messaging app Viber.
New regulations will help boost the opportunity for MVNOs in Japan from 2015 when all operators must offer users the option of buying unlocked devices. This will make it easier for existing mobile customers to switch to another operator or MVNO.
Rakuten’s MVNO service is aimed at price-conscious customers, rather than on mobile content or commerce.
Rakuten hopes to drive smartphone adoption among the still significant number of Japanese feature phone users. By boosting smartphone adoption, Rakuten will expand the market for its portfolio of content and services.
Japanese smartphone adoption has been slowed by relatively high pricing for smartphones and data plans, and also by the strong capabilities of the existing advanced Japanese feature phone handsets. Rakuten aims to remove the first barrier.
Smartphone penetration in Japan has grown dramatically over the past few years reaching 58% of the population at the end of 2013. Driving more consumers from feature phones to smartphones will increase the audience for Rakuten’s broad portfolio of services.
The Japanese MVNO market is growing rapidly creating opportunities for new entrants like Rakuten. Excluding wholly owned mobile operator branded subsidiaries, MVNO subscriptions in Japan grew 46% in 2013 to reach 7.3m subscriptions, more than 5% of the total mobile market.
Rakuten’s wider strategy is focused on building an ecosystem of mobile and online content, commerce and communications services. The MVNO launch is another offer in its portfolio which includes:
Mobile is a key part of this ecosystem strategy. To increase synergy, Rakuten is planning to unify its Viber messaging app with Rakuten user IDs to integrate its services. Viber reports it has over 400m users, more than the population of Japan. Rakuten's launch of an MVNO is a clear indication of how mobile is central to Rakuten’s strategic plans.