Handset subsidies in Japan

Number portability will be introduced in Japan this fall. Before that change happens, some operators are frantically trying to build up a user-base by offering more commissions to retailers and subsidizing handsets to a greater extent.

However, KDDI au chose not to go that way. The company is not planning to increase the subsidies it pays to handset makers, because it is already paying one of the highest commissions. Instead, KDDI is confident that its new price plans and services will keep users from churning.

Bloomberg provided an insight on how much of subsidies are paid by big carriers in Japan:

• KDDI pays about 38,000 yen (USD330) to retailers for every handset sold (the company expects total costs of handset subsidies to climb 2.9% to 457bn yen (USD3.979bn) this fiscal year (2005) “as phone sales may go up by 510,000 units to 12.1m”).
• DoCoMo raised its forecast for subsidies paid to retailers per handset by 1,000 yen to 35,000 yen (USD305) in October 2005.
• Vodafone also raised commissions but refused to provide figures.