Business

Ministry plan will see Japan's mobile phone carriers slash cancellation fees in fall

Kyodo

The government said Tuesday it will require mobile phone operators this fall to drastically cut cancellation fees for users who quit in the middle of a two-year contract to promote competition and lower the country’s relatively high communication charges.

Under the plan approved by the communications ministry’s panel, major mobile phone operators will be obliged to cut cancellation charges by 90 percent to ¥1,000 or less from the current ¥9,500, enabling users to switch companies more easily.

The new regulations are expected to prompt mobile phone operators to overhaul their price plans, as they will only be able to offer discounts of up to ¥170 on monthly communication fees for users who purchase mobile phones under a two-year contract.

In Japan, many mobile phone users are reluctant to change companies frequently because of the financial burden in canceling the two-year contract introduced by the three major phone companies — NTT Docomo Inc., SoftBank Corp. and KDDI Corp. — under their strategy to retain users.

The Internal Affairs and Communications Ministry aims to spur competition in the industry by having the three companies launch basic fees that are not bound by a specific time frame and helping low-cost smartphone operators attract users.

Budget smartphone operators with subscriptions of less than 1 million will be exempt from the new regulations. Such companies provide low-cost wireless communication services by leasing their network capacity from the major companies.

To introduce the regulations, the ministry will revise an ordinance and introduce it this fall in line with the entry into force of the revised telecommunication law that bans mobile phone operators from offering plans that cover both the price of a mobile phone handset and connection fees in one package.

The ministry also plans to limit discounts on handsets to a maximum of ¥20,000, effectively ending operators’ discounting of mobile device purchases in exchange for relatively high data usage fees, a long-held practice that has been criticized as causing communications fees to remain high.

It will also place a cap on benefits that are offered by the mobile phone companies to long-term subscribers, officials said.

Japan’s three major mobile phone operators have recently been targeted by the government over what are deemed relatively high mobile phone charges compared with other countries.

In addition to the three major mobile phone operators, the regulations will be imposed on e-commerce giant Rakuten Inc., which plans to join the telecommunications market in October.

The government has been aiming to spark greater competition among the wireless carriers after the its top spokesman, Chief Cabinet Secretary Yoshihide Suga, said last August that the carriers have room to cut phone bills by about 40 percent amid criticism that Japan’s carriers charge too much compared with those in other countries.

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