SoftBank, KDDI may still offer handset discounts ‘despite criticism’, paper says

15 Nov 2018

The Mainichi reports that two of Japan’s major mobile network operators (MNOs), SoftBank and KDDI (au), have said they ‘should be able’ to still offer discounts for handsets to subscribers, despite the practice having been widely criticised for keeping overall service fees artificially high. An unnamed SoftBank Corp official is quoted as having told a panel meeting at the communications ministry that it would be ‘over-regulating’ if handset discounts are totally banned, while KDDI reportedly added that handset discounts should be retained to ‘help to meet demand from customers looking for lower-cost cellphones’ on the proviso that they are ‘limited to moderate levels’. For its part, the government maintains that tariff plans that combine handset and service fees are ‘problematic’, as it allows network operators to keep service charges high to generate funds for handset discounts.

The paper notes that – in broad compliance with government calls to change the way plans are set up – Japan’s second and third largest mobile carriers by subscribers introduced new plans under which handset payments and service charges are separated out, but despite this they still continue to offer discounts in certain plans. The Ministry of Internal Affairs and Communications (MIC) recently convened the panel meeting to discuss how to improve the competitive climate in Japan and lower service fees.

As previously reported by CommsUpdate, in August this year the MIC said it was actively considering moves to end the practice of operators bundling the cost of smartphones and force them to cut monthly wireless fees. DOCOMO, KDDI and SoftBank typically provide phones without upfront charges as part of fixed-term contracts that can cost as much as JPY10,000 (USD90.5) a month. Customers effectively pay for handsets in instalments, but the government believes that the set-up muddies the cost of handsets and actual access charges creating barriers for entry. 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 was quoted at the time 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.