MIC pushing for end to smartphone bundling and cut in monthly fees

22 Aug 2018

The Ministry of Internal Affairs and Communications (MIC) in Japan is considering moves to end the practice of mobile network operators (MNOs) bundling the cost of smartphones and force them to cut monthly wireless fees, Reuters reports a senior telecoms ministry source as saying. The country’s MNOs – NTT DOCOMO, KDDI (au) and Softbank Mobile – typically provide phones without upfront charges as part of fixed-term contracts that can cost as much as JPY10,000 (USD90.51) a month. Customers effectively pay for handsets in instalments, but the government believes that the current set-up muddies the cost of handsets and actual access charges creating barriers for entry. The unnamed source told Reuters that the MIC wants the MNOs to charge separately for the phones themselves, which it notes could hit Apple’s iPhone sales as consumers opt for cheaper devices. According to MM Research Institute, sales of iPhones currently account for a third of smartphone sales in Japan. However, last month the US-based manufacturer fell foul of the authorities which argued it was in breach of local antitrust rules by forcing Japanese carriers to offer discounts on iPhones and charge higher monthly fees – a situation the regulator argues gave Apple an advantage over rivals such as Samsung Electronics.

The government’s long-term aim is that cutting monthly access charges for mobile services will help stimulate spending in other parts of the economy, as the Bank of Japan ‘battles’ to reflate the economy. ‘Wireless costs are suppressing other spending,’ the unnamed ministry source is quoted as saying, noting that telecoms costs (as a percentage of household spending) continue to rise, reaching 4.2% in 2017, driven by factors such as high wireless fees.

In response, a spokeswoman for KDDI said the wireless carrier has introduced new service plans that separate out the cost of the handset and has also lowered retail prices. DOCOMO, meanwhile, says it too has cut its fees and ‘continues to consider changes to fees based on the wishes of customers’, while Softbank claimed it ‘continues to examine how to improve services for customers’.