KDDI Digital Life explores partnerships for community connectivity services

After launching a digital sub-brand in Japan, called povo, KDDI Digital Life is opening its platform to partners and exploring new connectivity service models as it looks to grow its subscriber base.

In an interview with TM Forum’s Inform, Daisuke Morikawa, Chief Technology Officer at KDDI Digital Life, said that the operator is developing a “community-based connectivity” concept with partners to reach a new generation of young consumers.

KDDI established its Digital Life subsidiary in November 2020 to create a different kind of telco and experiment with digital channels and alternative ways of acquiring customers in the fiercely competitive Japanese market.

It launched povo in March 2021, which is targeted at, but not limited to, the Generation Z (Gen Z) youth segment.

Unlike KDDI’s traditional, full-service brand au and its low-cost brand UQ Mobile, povo has an entirely digital user experience. The service provider does not have physical retail shops and all customer interactions are via the mobile app. It provides eSIMs and verifies customer identity in real time using electronic know your customer (eKYC).

Povo subscribers customize their service in the app by selecting “toppings,” which could be data, voice minutes or entertainment services like sports streaming app DAZN. The intent is to make it easy for users to get what they need, giving them the flexibility to change service toppings as and when they want.

Povo has attracted 1.5 million customers. KDDI’s au mobile service had 68 million customers as of the end of March 2024.

Morikawa said that raising awareness about povo in the market has been difficult because the service provider does not do traditional marketing, such as expensive television commercials. However, it has had some success with social media influencers promoting the service.

“Customers need to be educated through the digital environment. That is a challenge for us… It takes a little time for customers to understand what the povo service is like,” he said.

Expanding through partnership

The operator sells directly to consumers and now it is pursuing partnerships to reach more potential customers and grow its business-to-business-to-consumer (B2B2C) platform. For example, Digital Life partners with convenience stores and offer vouchers for coffee or snacks as povo service toppings.

“We’re focusing on how to make the povo app more smoothly integrated in customers’ daily life,” he said.

Digital Life sees an opportunity to embed the povo connectivity service into the digital communities that Gen Z consumers belong to. Such communities could be sites dedicated to online gaming, sports or pop idols. For example, a baseball fan club could integrate the connectivity service into its app so that its members use the mobile data service to view games.

In this set up, the povo connectivity would be provided as a white label service and Digital Life handles all the back office and billing support.

Morikawa said both sides can grow their customer bases through innovative partnerships.

“We expose our connectivity to third parties and provide an SDK to them. We call it community-based connectivity…Once we enter this kind of area, and have a good partnership, we can get much more customers and vice versa,” said Morikawa.

Powered by Circles

KDDI Digital Life’s povo service is underpinned by Circles, a Singapore-based startup that provides a billing and charging platform as software as a service (SaaS) that runs in Amazon Web Services. Circles also powers other digital MVNOs, including Circles.Life in Singapore and Onic in Pakistan.

“Their DNA is like an IT company, which means they are practicing agile-based development, iterating some minimum viable product quickly and improving our product based on customers’ voice. This is essential, even for MNOs like KDDI, to get in touch with customers, especially for Gen Z. That’s why we decided to collaborate with Circles,” said Morikawa.

Traditional MNOs do not have that kind of mindset, he added. That is why Digital Life was formed as a separate unit, so that it can “operate more freely” and independently. “It’s easy to move forward, and take some new ideas from IT startup companies,” he said.

Daisuke Morikawa will be speaking at DTW24-Ignite, which takes place 18-20 June in Copenhagen as part of a panel discussion on 'What Partnerships Are Driving New Opportunities?'