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KDDI to change mobile business practices after regulator warning

People form a line outside KDDI Corp.'s outlet in Tokyo's Toshima Ward in 2011, to make reservations for Apple Inc.'s iPhone 4S smartphone. (Kyodo)

TOKYO (Kyodo) -- Mobile carrier KDDI Corp. said Wednesday it plans to end its practices on smartphone contracts seen by Japanese regulators as stifling fair competition in an already saturated market.

The communications ministry had directed KDDI and its two rivals -- NTT Docomo Inc. and SoftBank Corp. -- to stop charging customers for switching to a different provider when their contract matures.

For customers to change carriers after their two-year contract, the three companies currently require them to pay a penalty by canceling the contract before it matures or pay charges for an extra one-month period to end the contract, which is automatically renewed unless users take such procedures.

KDDI also plans to end its four-year installment smartphone payment plan after the fair trade commission warned the contract poses antitrust problems.

The plan allows customers who agreed to pay for handsets such as iPhones over 48 months to switch to newer phones after two years and get remaining payments for the older handsets waived as long as they sign another four-year payment plan.

"We seriously accept suggestions (by authorities)," KDDI President Makoto Takahashi said at a press conference. "I thought we should present the direction (of our policy) quickly."

SoftBank is expected to follow suit, while NTT Docomo is studying its own response, company sources said.

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