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Mon, Oct 30, 2006 - Page 10 News List

Japan's Softbank faces customer deluge

GIVING AWAY THE FARM?The mobile phone company is offering free calls and instant messaging between subscribers and lower monthly fees, in some cases by 70 percent

AP AND AFP , TOKYO

Japanese mobile phone carrier Softbank Mobile Corp, which slashed its prices last week to undercut rivals, said it had to stop taking new applications yesterday because it was flooded by new customers wanting to switch to its service.

It is a bitter victory for Softbank, which had rolled out the aggressive price cuts in a last-ditch effort to score on last Tuesday's arrival in Japan of number portability -- a system that lets people keep the same numbers when they switch carriers.

It is expected to bring big changes to Japan's mobile phone market.

Softbank, which bought British carrier Vodafone's mobile business in Japan earlier this year and is run by technology mogul Masayoshi Son, had been looking for ways to catch up with larger competitors like NTT DoCoMo and KDDI Corp.

Softbank stopped accepting new customers shortly after noon yesterday when its computer system couldn't handle the load, the company said in a news release. It apologized to customers and promised to resume taking switch-over business when it readies the system for increased volume.

The company did not say how many customers had tried to enroll.

It was the second time in two days that Softbank had to suspend taking switch-over customers.

On Saturday, it suspended applications for fear the huge number would paralyze its computer system, Kyodo News agency reported.

The system was temporarily resumed yesterday before being shut down again, Kyodo said.

The new fee system unveiled by Softbank features free calls and instant messages between subscribers, and lowers basic monthly fees, in some cases by 70 percent.

Softbank will also underprice any bargain offer by competitors within 24 hours, ensuring that its monthly service charges will always be ¥200 (US$1.69) cheaper than those of its rivals.

On Friday, NTT DoCoMo warned that increasingly cut-throat competition in Japan's cellphone market would leave a big dent in its profits this year as its first-half earnings dropped 19.6 percent to ¥309.82 billion from a year earlier

With recent changes to industry rules making it easier for customers to change mobile operators, NTT DoCoMo warned that conditions were likely to get even tougher and forecast a steep fall in earnings this year.

Company president and chief executive Masao Nakamura even accused Softbank of misleading customers with advertisements suggesting its larger rivals overcharge for their services.

"If you read the fine print in Softbank's advertisement, you will see there are so many conditions attached to their so-called discount deals," Nakamura said on Friday.

Tokyo-based Softbank, which leads Japan as a broadband services provider and owns a 41 percent stake in Yahoo Japan, has been going all-out to shake off the image -- from the carrier's Vodafone days -- that it offers only unfashionable, bulky handsets.

Softbank has promised 15 new handset models in 64 colors by the end of the year, with some phones as thin as a coin.

The phones will come with an easy link to the Yahoo Japan mobile portal, allowing people to access Web-based information for free instead of having to pay content providers.

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