TOKYO-Beginning in July, Japanese users of prepaid cellular phones will be required to show identification when purchasing a handset due to a regulation introduced following a series of crimes using prepaid phones.
Urged by the government, cellular carriers decided to implement the regulation on prepaid phones, which are easy to get without any complex paperwork. Some market watchers said such regulation may curb expansion of the prepaid phone market, but some carriers have found new marketing opportunities in the regulation.
Prepaid phone service is relatively new to Japan. In October 1998, Tu-Ka Phone Kansai, a Tu-Ka group carrier, launched Japan’s first prepaid service targeting foreigners staying in Japan. Due to its flexibility and ease of use, the service has expanded not only among foreigners, but also among Japanese business people, kids and the elderly.
As of the end of March, Japan had 390,000 prepaid customers.
But the government intervened in the steadily expanding market after a series of crimes occurred. In April, a kidnapper in Yokohama City, southern Tokyo, demanded a ransom from the victim’s father while talking to him on a prepaid cellular phone. Similar crimes that also involved prepaid phones followed. Because no user registration is necessary to purchase a prepaid phone, it was difficult for police to identify the criminals.
Upon the Ministry of Posts and Telecommunications’ request, 30 cellular carriers submitted their basic suggestions about how to stop prepaid crime. An industry association is working out specific preventive measures, but it is said carriers probably will require prepaid phone buyers to register a name, address and telephone number and show identification, such as a driver’s license or a health-insurance certificate.
Prepaid marketing efforts
The prepaid phone market in Japan has been expanding ever since cellular carriers began gearing up their marketing efforts.
The Tu-Ka Group has been emphasizing its prepaid phone business. As of the end of April, the carrier group had 300,000 subscribers with its Pretty Service, launched in May 1999.
At the moment, Pretty Service users can talk on a prepaid phone without the paperwork generally necessary for an ordinary cellular phone, once they purchase a phone designed for the prepaid service and a prepaid card.
The cellular phone costs $47, and two kinds of prepaid cards costing $28 and $47 are available. To start using a prepaid phone, users need to input the ID number printed on the card.
Tu-Ka Group’s service is remarkable in that users can transition their Tu-Ka cellular phones into prepaid phones once they pay a $10 dealing fee. Users bring their phones to a Tu-Ka retail store, where a terminal’s function is changed.
Many of Tu-Ka phone’s original cellular services are available for prepaid users. Tu-Ka offers a prepaid message service and soon will start providing Sky Melody Service, a call receive music service, for prepaid phone users.
NTT DoCoMo launched its prepaid service in May 1999. At the end of April 2000, DoCoMo had 59,000 subscribers for its prepaid service called Pre-Call. NTT DoCoMo’s prepaid terminals cost $64 to $280, and the Pre-Call card costs about $3.
A remarkable feature of NTT DoCoMo’s Pre-Call service allows users to make overseas calls to 200 destinations. A one-minute call to the United States costs $1.41 during the daytime on weekdays and 89 cents at night and on weekends.
The carrier is also offering a dual-functional terminal with both PHS and cellular functions called Docchimo for prepaid services. Docchimo users can transmit data at a speed of 64 kilobits per second on PHS mode, while receiving full cellular services on cellular mode.
Prepaid phone services are offered without monthly basic fees. Instead, prepaid communications charges are higher than ordinary cellular services.
Tu-Ka charges 47 cents per 30 seconds. NTT DoCoMo charges 9 cents for six seconds during the daytime on weekdays. In comparison, NTT DoCoMo charges 10 yen for 16 seconds to 22.5 seconds for ordinary cellular phone users.
Finding a breakthrough in tapping new users, cellular phone carriers have been gearing up their effort to expand the prepaid business.
Although cellular phone service is popular and the number of subscribers has been rapidly increasing, the expansion rate for cellular subscribers has been slowing down as the number is reaching its saturation limit. It is said that 80 million wireless phone users, or 67 percent of the total Japanese population, is the ceiling point in Japan. At the end of May, Japan had a total of 52 million cellular phone subscribers and 5.8 million PHS users.
Under these circumstances, all the cellular carriers now must provide new, attractive services for users rather than just basic communications networks and lower communications rates. Prepaid might become one new differentiating service.
Market watchers said tighter regulation on prepaid services may discourage users from purchasing prepaid phones. But one carrier said the new registration system could bring a new business opportunity if carriers use the customers’ information for further marketing efforts.
How to effectively use the new registration system seems to be the key for carriers’ success.
