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Editorial: Japan gov't must create competitive market to achieve lower mobile phone fees

Prime Minister Yoshihide Suga has been pressing for Japan's three major carriers NTT Docomo Inc., SoftBank Corp. and KDDI Corp. to significantly reduce mobile phone charges.

    Cell phones are now infrastructure devices essential to people's daily lives, and have become so widespread that an average individual owns at least one of them. Meanwhile, data fees have remained high. Surely, users are dissatisfied with the cost.

    According to research by the Ministry of Internal Affairs and Communications, a 20 gigabyte data plan suitable for using streaming services and other features costs over 8,000 yen ($75.80) a month in Tokyo, which is about three times the price in London. A household consisting of two or more people pays an average of over 100,000 yen (roughly $947) for mobile phone fees per year -- an increase of about 30% in the last 10 years.

    Teleworking has become popular in Japan due to the spread of the novel coronavirus. In a hearing of opinions by the internal affairs ministry, some have complained of rising additional charges as they are using up mobile data due to videoconferencing. Household expenses are increasing in such cases.

    An oligopoly where the three big carriers have about 90% of the domestic market share is what's behind this problem. These carriers tend to avoid competition that depletes their management strength, and aim to secure profits by retaining customers.

    In reality, the operating profit margins of the three major carriers stand at roughly 20% and remarkably surpass the level of leading manufacturers including Toyota Motor Corp. whose margin stands at around 8%. As one of only a few businesses that use limited public radio waves, any excess profits should be returned to users.

    In 2018 when Prime Minister Suga was chief Cabinet secretary, he said "mobile phone charges could be cut by 40%" and set out to prod carriers to reduce their rates. In response, the internal affairs ministry took measures such as basically prohibiting carriers to offer discounts when selling devices and data services as a set to lock customers in for lengthy periods, but the move produced no results.

    Suga is poised to achieve a reduction in mobile phone fees at the initiative of the government. But data prices are not official prices to be decided by the government, and excessive political intervention is essentially undesirable.

    Softbank has started to consider a cheap 20 gigabyte data plan costing 5,000 yen or less a month. There is a danger that a government-set price cut may not last. What users really want is for a quality service to be widely provided at a modest price.

    The internal affairs ministry plans to encourage competition by abolishing charges for switching carriers without changing one's phone number, but this isn't enough. The Japanese government should make thorough efforts to create an environment where low-cost smartphone businesses like Rakuten Inc. that recently entered the market can compete by demonstrating their unique services.

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