Business / Corporate

Government to warn SoftBank and KDDI over smartphone discount plans

Kyodo, JIJI, Staff Report

The government plans to require mobile carriers KDDI Corp. and SoftBank Corp. to ensure that customers of their new discount plans will have their handsets unlocked for usage on any network immediately, sources close to the matter said Tuesday.

The two companies unveiled the plans last week that allow a 50 percent discount for customers purchasing a handset under certain conditions, including that the users won’t be able to unlock phones for 100 days

The Ministry of Internal Affairs and Communications has judged that the restriction would effectively lock-in subscribers, the sources said.

It will review its guidelines as early as late October to oblige carriers to remove the lock immediately.

KDDI, which operates the brand Au, and SoftBank announced the new plans amid scrutiny over business practices in the industry, especially on smartphone contracts, which were seen by Japanese regulators as stifling fair competition in an already saturated market.

The revised telecommunications law, which will come into force next month, will ban the long-held practice of discounting handsets in exchange for relatively high communications fees under one package. It also limits handset discounts to ¥20,000 to prevent excessive price cuts.

By separating the handset and data usage charges, the government hopes that the nation’s communications fees, among the highest among major economies, will be lowered and also allow customers to choose between carriers more freely.

KDDI, NTT Docomo Inc. and SoftBank currently control nearly 90 percent of the domestic mobile phone market.

On top of the new rules, the communications ministry had hoped that Rakuten Mobile Inc. would shake up the industry as a fourth carrier from October.

But Rakuten has decided to postpone its full-fledged service because it is taking longer to develop its own network infrastructure. For now, Rakuten will only provide a trial service to 5,000 people in Tokyo’s 23 wards, Osaka, Nagoya and Kobe for free between October to March.

Internal Affairs and Communications Minister Sanae Takaichi, who was reappointed to the position after a recent Cabinet reshuffle, has vowed to promote competition to lower mobile charges, urging Rakuten Mobile to start its full-fledged services promptly.

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