KDDI Corp. announced new mobile phone subscription packages Thursday that will slash calling fees, raise handset prices and possibly alter the alliances among handset manufacturers.

　Starting Nov. 12, subscribers to KDDI's au service will have the option of switching their subscription fees to a minimum of \1,000 a month, instead of \1,800, if they give up their right to buy new mobile phones at discount prices.

　Subscribers who often switch phones will still be able to use KDDI's current subscription plans, which charge higher monthly fees but offer steep discounts on new handsets.

　Some experts say it is too early to project whether the new pricing plans will be bad for the industry, but Yutaka Shimbo, executive director at Japan Research Institute in Tokyo, said scrapping the kickback system will have a "substantial" impact on handset manufacturers and sales agents.

　He said customers may become reluctant to shell out more for new handsets now that they are accustomed to buying them on the cheap.
"In the worst-case scenario, I think some handset makers will be forced to build an alliance (with other companies), withdraw from the industry or become a target for foreign buyout or investment funds," he said.

　If this happens, it could lead to a transfer of Japanese technology to other countries, he said.

　The new subscription plans are KDDI's response to guidance from the Internal Affairs and Communications Ministry that the handset prices and monthly subscription fees charged by cell phone makers and service providers be made more transparent.

　Most service providers today give handset sellers kickbacks, which allows them to acquire and sell handsets at steep discounts.

　At a news conference in Tokyo, KDDI Associate Senior Vice President Makoto Takahashi played down concerns that the new system could spark new alliances among handset makers.

　"We have prepared two packages so that we can avoid a drastic change in handset manufacturers and sales agents," he said. "But I think the number of people who will switch handsets will somewhat decline."

　Giant NTT DoCoMo Inc., the leading mobile phone carrier, is expected to follow suit.

　DoCoMo, which is suffering from a decline in subscriber numbers, reportedly will cut monthly fees by an average of 30 percent and raise handset prices to around \60,000 per unit in November.

　DoCoMo spokesman Masahiko Yamada, however, denied the reports and said, "We are considering various options because it is a common issue in the mobile phone industry."

　Shimbo of JRI went as far as to say that a decline in handset sales could hike unemployment, and that a reduction in monthly fees could lower Japan's core consumer price index.

　"I would not propose the plan if I were one of Japan's policymakers at this time," Shimbo said.

　Meanwhile, Shigeyuki Kishida, chief researcher at Tokyo-based InfoCom Research Inc., an information and communications industry think tank, said that a widely projected decline of about 20 percent in handset sales is unlikely because consumers will still have the choice of sticking to the old plans.

　"I don't think handset sales will decline drastically because the traditional way still remains," he said. "Much will depend on which payment plans the subscribers choose."