A senior minister of Japan’s Ministry of Internal Affairs and Communications (MIC) caused an uproar last week, when he said that the ministry supported the unlocking of SIM cards.
Unlocking SIM cards would enable a mobile user to take their existing SIM with them to a new service provider. Currently, SIMs are locked to a particular handset and service provider. This practice enables Japan’s mobile providers – NTT DoCoMo, KDDI and Softbank Mobile – to sell handsets at a discount. Handset losses are recouped through monthly fees and other service charges.
In a blog, Masamitsu Naito, senior vice minister for communications at the MIC, said that unlocking SIMs would encourage operators, including MVNOs, to more actively compete, thus leading to lower tariffs.
He also said that removing SIM locks would encourage new entrants in the mobile service platform business area.
The news had huge repercussions for Softbank Mobile, the third-largest operator by customer numbers, whose stock price fell 4% on fears that unlocked SIMs would end its exclusive sales rights to Apple’s iPhone.
The concern goes that most iPhone consumers, if given a choice, would move from Softbank Mobile to DoCoMo because of the latter’s wider and better 3G network coverage.
Softbank President, Masayoshi Son, lashed out on Twitter, saying that SIM card unlocking could drive up handset prices by 40,000 yen ($431.20) per unit.
Then Communications Minister Kazuhiro Haraguchi intervened, saying the ministry had no plans to end SIM card locking.
The imbroglio could end up being no more than a public relations embarrassment for the MIC which publicly at least continues to be seen as an advocate for consumers and lower tariffs.
As with all things, there are winners and losers. Softbank Mobile is not the only party that could find itself on the wrong side in the event of any SIM unlocking.
Credit Suisse notes that the proposal would also “jeopardize the future of Japan’s mobile phone makers” that “are likely to be crowded out by overseas makers, and in particular Apple.”
“iPhone, which currently commands a subscriber share in Japan of just 2%, could sharply expand its influence, while the number of users of smartphones other than the iPhone could also increase,” it said.
“In short, we could see a structure where such unfair policy results in domestic telecoms carriers expanding profits at the expense of handset makers’ future.”