The cabinet of Prime Minister Shinzo Abe on Tuesday approved a proposed legal revision to lower fees for mobile phone services amid criticism that Japanese carriers charge too much compared to other countries.
The proposed bill to revise the telecommunications business law would ban carriers from offering plans that cover both the price of the phone itself and connection fees. Japanese carriers currently place high fees on data usage in exchange for subsidizing device purchases, a model many users say is needlessly complicated.
Instead, the companies will need to charge separately for data and devices. By adding the requirement, it will become easier for users to compare services, leading to increased competition and lower prices, communications minister Masatoshi Ishida told a press conference following a cabinet meeting.
Two of the country’s three major carriers, SoftBank Corp and KDDI Corp, which operates the “au” mobile phone service, 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 the Japanese population own smartphones, and the number jumps to 84 percent when including tablets and other devices.
The nation’s households spent an average of 100,250 yen on mobile fees in 2017, about 3 percent of their overall expenditures, according to the Ministry of Internal Affairs and Communications.
From a global perspective, Japan’s mobile fees are relatively high. It costs about 7,000 yen a month to use 20 gigabytes in Tokyo, the most 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 the government’s top spokesman, Chief Cabinet Secretary Yoshihide Suga, made a rare remark on individual companies last summer, 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 will put the three companies, which together control nearly 90 percent of the domestic mobile phone market, in direct competition with smaller rivals such as Rakuten Inc, 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.