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NTT Docomo to follow KDDI in reviewing smartphone contracts after government warnings

Kyodo

Mobile carrier NTT Docomo Inc. said Thursday it plans to review its two-year smartphone contracts by next March, a day after rival KDDI Corp. pledged to change its contracts in response to government warnings.

SoftBank Corp. is considering a similar move.

For customers receiving discounts on monthly fees under the two-year contracts, Japan’s three major carriers have required subscribers to pay penalties if they cancel their contracts prematurely. Customers have also had to pay one month’s worth of fees if they choose to cancel the contracts in the two months following the end of the two-year term.

The top carriers have been using such sales tactics to retain subscribers, but the internal affairs ministry urged the three carriers in June to review their two-year rules.

Also in June, the Japan Fair Trade Commission warned that four-year installment payment plans provided by some carriers pose antitrust problems.

NTT Docomo President Kazuhiro Yoshizawa said at a news conference that the carrier will also allow customers to end their two-year contracts without cancellation fees in the 24th month.

All three carriers “should respond to the issue in the same manner,” Yoshizawa said.

He added his company will maintain cancellation fees for ending contracts prematurely.

KDDI said Wednesday it would revise its two-year and four-year contracts. SoftBank is also considering reviewing its binding smartphone deals, according to people familiar with the matter.

The four-year plans allow customers who agreed to pay for handsets such as iPhones over 48 months to switch to newer phones after two years, and have remaining payments for the older handsets waived as long as they sign new four-year payment plans.

The antitrust watchdog said in its market review report that by discouraging subscribers from changing carriers, such contracts could “effectively deprive consumers of the right to choose” while giving “an impression to consumers that they can purchase devices at half price.”