Ministry drafts ban on mobile phone bill discounts tied to new phone purchases

TOKYO -- The Ministry of Internal Affairs and Communications has drafted revisions to the Telecommunications Business Act that would separate the cost of mobile phones from phone bills and ban mobile phone contracts that lock customers in for set periods.

The move is part of an effort to spur competition in Japan's mobile phone industry, where complicated contracts and restrictions are said to hinder competition. The ministry hopes to have the revisions approved by the Cabinet in the near future, and submit them to the current session of the Diet.

In addition to banning discounts tied to purchases of new phones, the draft would bar mobile carriers from presenting conditions that hinder customers from ending their contracts, such as plans locking them in for two years.

There currently exist many plans offering set discounts in communication fees for those who purchase new-model handsets. Not only does this make it difficult to compare the communication fees of each company, people who continue to use old phones are not entitled to such discounts. This has sparked criticism that the system is unfair. It has also been pointed out that discounts offered on condition that people continue contracts for set periods, such as those lasting two or four years, make it difficult for people to switch phone companies.

The drafted revision to the Telecommunications Business Act aims to boost competition in telecommunication fees by separating such fees from the cost of the actual phone, while allowing customers to freely choose mobile phone companies. In line with the proposed change, the ministry will also review guidelines relating to services provided by mobile phone companies.

In addition, from the perspective of protecting users, businesses will be banned from making sales pitches to customers without stating the name of the telecom company or the sales agent and the fact that they are soliciting the customer. This is in response to an increasing number of cases in which users have entered contracts due to a misunderstanding.

In the past people have made various complaints about solicitation, such as "I was told that procedures were necessary to change my optic-fiber line, so I signed the contract without realizing I was being solicited," and, "I got the wrong idea that it was a contract with a major communications company."

In order for the Ministry of Internal Affairs and Communications to remain aware of which sales agents are causing problems, companies offering mobile phone, optic-fiber and other such contracts will be required to register with the ministry in advance.

An expert panel at the ministry began discussing mobile phone charges in October last year. It was pointed that an oligopoly by Japan's top three mobile phone companies -- NTT Docomo, Inc., KDDI Corp., operator of the au brand, and SoftBank Corp. -- had left prices high. The form of contracts, which were complicated and difficult to understand, also posed a problem, some members of the panel pointed out. The body accordingly made an urgent proposal to separate communication fees from the cost of mobile phones.

(Japanese original by Arimasa Mori, Business News Department)