A panel of experts commissioned by the communications ministry has issued a report urging the nation’s three mobile phone carriers to reform their rate plans, which put long-term subscribers and people who don’t use much data communication on their smartphones at a disadvantage. The pressure is expected to result in a modest reduction in mobile phone fees. But the reform as called for by the panel is only the first step. Both the government and the carriers should be ready to do more to reduce fees and make rate plans easy to understand for consumers.
The panel was created at the urging of Prime Minister Shinzo Abe, who in September ordered Internal Affairs and Communications Minister Sanae Takaichi to consider ways to reduce the burden of mobile phone bills on households. Abe’s call may have been intended to signal voters ahead of the Upper House election this summer that his administration is doing what it can to make life easier for consumers.
But the requested steps won’t address many other problems that exist under the effective oligopoly of NTT Docomo, KDDI and SoftBank — comparatively high mobile phone charges and the carriers’ high profitability ensured by their rate system. All relevant parties should be aware that much more needs to be done to lower rates across the board and to improve related services.
Currently the carriers typically offer consumers a basic smartphone plan that allows use of 2 gigabytes or more of data communication each month, with the monthly charges coming at between ¥6,000 and ¥7,000. But the volume of data used by consumers who normally use their devices to talk on the phone and exchange email rarely reaches 2 gigabytes a month. Thus this type of rate plan forces these consumers to pay more than they need to. According to a 2014 survey by NTTCom Online Marketing Solutions, 70 percent of smartphone subscribers used less than 1 gigabyte of data each month.
One of the key points of the panel’s report is a call for creating a cheaper rate plan that will cost ¥5,000 or less a month. It has prompted the three carriers to start working out new rate plans that are expected to go into force early this year. Possible new options will include a low-volume plan that limits data communication at 1 gigabyte of data a month, as well as a combination of a fixed fee for telephone calls and a small amount of data communication.
The direction that the operators are taking is welcome, but one cannot erase that impression that their moves are late in coming. It must be pointed out that in some countries in North America and Europe, cheap plans that restrict data communication volume to 1 gigabyte or less per month are already common.
In pushing cheaper rate plans, the communications ministry should strive to ensure that such plans won’t hamper the competition from low-cost smartphone services, which have attracted an increasing number of subscribers but still occupy a small share of the market. Such services are provided by operators that lease frequency bands from the major carriers.
Another prevalent industry practice that the panel urged the carriers to change is the subsidies that enable the sale of handsets at effectively no cost for new subscribers and those switching from the service of other carriers. In their bid to lure customers from rival firms, each of the carriers provides incentives to mobile shops and discounted fees for new subscribers so that the handsets are offered at a fraction of their cost. Since the cost of such subsidies are covered by the usual rates they charge for their services, the practice results in keeping long-term subscribers at a disadvantage — to the benefit of people who frequently switch from one carrier to another. The panel said that the discounts offered solely for new subscribers are “extremely unfair” and should be reformed so that the relatively high burden on long-term subscribers will be reduced.
After the panel issued the report, communications minister Takaichi told the presidents of the three carriers in person to take concrete steps to stop unfair practices and lower mobile phone charges. Her ministry also plans to write a guideline by the end of March under the Telecommunications Business Law to ensure that the carriers are implementing necessary reforms.
The bottom line should be to make sure that the carriers reduce the burden on long-term subscribers in a transparent manner.