NTT DoCoMo Inc, Japan's largest mobile telecoms operator, said on Monday it will stop accepting new pre-paid customers after March 31, a move that could put pressure on rivals to also end prepaid services. DoCoMo's announcement comes in the aftermath of an attempt to legislate a ban on prepaid mobile phones as part of anti-fraud measures. While the proposed ban failed to receive approval in parliament, operators have tightened identification requirements in an attempt to curb criticism.

Pre-paid customers pay in advance for a set amount of call time instead of subscribing to a monthly plan.

The phones, which require minimal identification to purchase and use, are seen as a convenient tool for fraudsters, although they are also used by consumers who do not make enough calls to make it worth paying for a monthly plan.

While some countries such as Italy have a high percentage of users of prepaid services due to their convenience, others such as the United States and Japan have seen relatively low penetration because of the higher cost per minute compared with subscription plans.

Prepaid services have also proved less profitable than operators had hoped, in part because of the low usage rate and high customer turnover.

DoCoMo started its prepaid service in May 1995, but customers have been declining steadily since reaching a peak of 210,000 in March 2001. As of January, only about 80,000 of DoCoMo's 48.1 million customers were prepaid.

KDDI Corp's au business, Japan's second-largest mobile service, had 346,400 prepaid customers at the end of January out of a total of 18.9 million subscribers. KDDI's smaller mobile service, TU-KA, and Vodafone KK, the country's third-largest mobile operator, owned by Vodafone Group Plc, also offer prepaid services but do not disclose customer numbers.

Company officials at KDDI, TU-KA and Vodafone said they have no plans to end their prepaid services.

Copyright Reuters, 2005