Japan Starts Discussions on Mobile Phone Rate Cuts

August 24, 2018

Tokyo- Japan's Internal Affairs and Communications Ministry asked Thursday a council in charge to start discussing mobile phone rate cuts.

Due to complaints about mobile phone rates higher than those in Europe and the United States and the large profits of major mobile carriers such as NTT Docomo Inc., the information and communications council may advise substantial rate cuts, people familiar with the matter said. The result of its discussions is expected in summer 2019 at the earliest.

"I hope for discussions without prejudging the course of reforms," said communications minister Seiko Noda during a council meeting the same day.

With mobile phones becoming indispensable for daily life and the use of the Internet of Things expanding, data traffic is expected to increase further. Unless mobile phone rates are brought down from the current high levels, users' financial burdens will become so heavy that they will have to reduce spending for other purposes.

According to a survey by the ministry, household spending in Japan last year fell 3.5 pct from 2010 to 2,921,476 yen on average, but expenditures on mobile communications surged 25.4 pct to 100,250 yen.

The combined operating profits at the three major mobile phone carriers--NTT Docomo, KDDI Corp. and Softbank Group Corp. --reached 3.2 trillion yen for the fiscal year that ended in March.

On Tuesday, Chief Cabinet Secretary Yoshihide Suga said in a speech that mobile phone rates could be reduced by about 40 pct. The remark has strengthened pressure for rate cuts.

Objections from mobile phone carriers are anticipated as large investments are needed for the fifth-generation mobile communications system, which is expected to be commercialized in 2020.

At a press conference after the meeting, Takeshi Uchiyamada, chairman of the council, stopped short of mentioning specific matters to be discussed, only saying, "We're going to examine issues broadly."

In order to reduce the financial burdens of users, wider use of low-cost smartphones will be necessary in addition to reviews of sales tactics such as two-year rate plans tying customers to phone carriers, pundits pointed out.

Reducing network usage fees paid by low-cost smartphone service operators to major mobile phone carriers will be another challenge to be tackled, they added.

The council is also expected to consider rules to prevent older people from mistakenly subscribing to costly services at a time when rate plans are becoming increasingly complicated, informed sources said. Jiji Press