Business

Japan Cabinet OKs bill forcing firms to separate mobile phone and data costs in bid to lower prices

Kyodo

The Cabinet of Prime Minister Shinzo Abe on Tuesday approved a proposed legal revision to lower fees for mobile phone services amid criticism that domestic carriers charge too much compared to other countries.

The bill to revise the telecommunications business law will next move to the Diet. It would ban carriers from offering plans that cover both the price of the phone itself and connection fees.

Carriers currently place large fees on data usage in exchange for subsidizing device purchases, a model many users say is needlessly complicated. Instead, the companies would need to charge separately for data and devices.

By adding such a requirement, it would become easier for users to compare services, leading to increased competition and lower prices, communications minister Masatoshi Ishida told a news conference following a Cabinet meeting.

Two of the country’s three major carriers, SoftBank Corp. and KDDI Corp., through its au brand, say they already comply with the new rules, while NTT Docomo Inc. has said it plans to do so this spring.

More than 60 percent of Japanese own smartphones, and the number jumps to 84 percent when including tablets and other devices.

Households spent an average of ¥100,250 on mobile fees in 2017, about 3 percent of their overall expenditures, according to the Internal Affairs and Communications Ministry.

From a global perspective, Japan’s mobile fees are relatively high. It costs about ¥7,000 a month to use 20 gigabytes of data in Tokyo, tops among comparable cities including New York, London and Seoul, the ministry’s latest statistics show.

The issue came into the spotlight back in August when Chief Cabinet Secretary Yoshihide Suga made a rare remark on individual companies, saying the three major carriers could reduce their fees by around 40 percent.

A panel of the communications ministry later began discussing a possible legal revision, and in January recommended making changes to the law governing the telecommunications industry.

The proposed revision would put the three companies, which together control nearly 90 percent of the domestic mobile phone market, in direct competition with smaller rivals, which have gained popularity in recent years for their cheaper, no-frills services.

The changes, which Abe’s government hopes to pass during the current Diet session through June, would also ensure that carriers cannot stop users from opting out in the middle of contracts, which often span two or four years.

Other additions include a registration requirement for retailers that would give the government greater oversight, and new penalties for companies that use misleading sales tactics to attract users.