Chief Cabinet Secretary Yoshihide Suga has stated there is room for a "40 percent reduction" in mobile phone service fees -- a sign that the government intends to seek a review of mobile phone service carriers' pricing system.
The pricing system is confusing and difficult to understand, and switching carriers is no easy task. Now, smartphones are an everyday item, and the expensive service fees that are draining household budgets should be reduced drastically.
A major reason for the high mobile phone fees is that the market is dominated by just three major carriers -- NTT DoCoMo, KDDI and Softbank -- which together account for 90 percent of sales and make price competition difficult.
If users cannot chose carriers freely, there will be no active competition. But contracts that tie up users for two years or even four years in return for cuts in phone prices or usage fees are blocking free movement of users.
In June, the Ministry of Internal Affairs and Communications asked the three major mobile carriers to rectify the situation. The Fair Trade Commission said in a report that the current situation may infringe on antitrust rules. In response, those companies said they would review their contracts.
However, the changes that were expected seem to have been limited. As for the two-year contracts, automatic renewal as well as expensive penalties for midterm cancellations appear to remain, though the period for cancellation without penalties is likely to become one month longer than the current two months. These changes will probably have little effect in promoting competition.
Chief Cabinet Secretary Suga's remark is a form of complaint against the current situation. The government will let a panel of experts start a full-scale discussion on the reduction of mobile service fees.
Two years ago, the practice of effectively distributing mobile phones free of charge was abolished when the Fair Trade Commission complained about it. Nevertheless, the pricing system in which handset prices and service fees are mixed has not changed, and the overall cost of smartphone usage remains expensive.
Mobile service companies make up for handset discounts with fees from long-term contracts. Their contracts do not reward users who continue to use the same phone or switch to other carriers, though buying a new handset from the same carrier has some merits.
Carriers have the upper hand in designing the contracts because their pricing systems are difficult to understand. But many users must have questions about their expensive phone bills, which significantly eat into their budgets.
If users raise their voices against the current situation, phone companies will surely have to change.