Japan to introduce JPY 1,000 cap on mobile contract early exit fees

Thursday 13 June 2019 | 12:24 CET | News

The Japanese government plans to introduce a cap of JPY 1,000 (approximately USD 9.24) on fees for earlier termination of mobile contracts. The currently fee for earlier termination of mobile contracts is JPY 9,500, Nikkei reports. Via this measure, the Japanese government aims to boost competition on the mobile market by making it easier for customers to switch operators. The government is expected to present a sweeping action plan on 13 June to a study group under the Ministry of Internal Affairs and Communications. The revised ministerial ordinance is expected to be issued by autumn.

This measure is in line with the government’s efforts to cut mobile prices and increase competition in a market dominated by NTT Docomo, KDDI and SoftBank. Each of these three operators currently charges JPY 9,500 to cancel 2-year contracts, which has discouraged customers from poprting their number to another network. A survey commissioned by the government shows that over 80 percent of customers believe a JPY 1,000 fee would be reasonable.

The new regulations also include a limit of JPY 2,000 for handset discounts. Up until now, domestic operators offered devices at large discounts, making up for the lost revenue through mobile service fees.  

Japan's Parliament has recently enacted a legal revision aimed at lowering mobile phone fees and stimulating competition in the country’s telecoms market. The reason behind the move is that local operators' rates were found to be higher than in other countries and operators' profit margins are generally higher than firms in other industries. The government and consume rs criticised local operators' practice of discounted mobile device purchases in exchange for relatively high data fees as this practice shadows the prices operators charge.

Market leader NTT Docomo already launched new plans in April that will reduce mobile phone charges by up to 40 percent following the government’s call on operators to cut service fees. It will also separate handsets and service charges. Rivals SoftBank and KDDI say they are already in line with the new rules and that they are also considering lowering fees. Local publication Jiji Press said KDDI will start offering new subscription plans in June, reducing mobile service fees by up to 40 percent. 

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Categories: Mobile & Wireless
Countries: Japan
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