Japan FTC Calls for Change to 4-Year Smartphone Plans

June 29, 2018

Tokyo- Japan's Fair Trade Commission on Thursday called for a correction to a practice among mobile phone companies of selling new smartphones on four-year installment payment contracts.

The practice can be problematic in light of the antimonopoly law, because it may reduce the choices of users and result in an inappropriate customer lock-in, the FTC said in a report.

The antimonopoly watchdog plans to urge the industry to correct the practice in cooperation with the Internal Affairs and Communications Ministry.

Among the country's three major mobile phone companies, KDDI Corp. <9433> and Softbank Corp. sell new smartphones, including Apple Inc.'s iPhone handsets, on four-year payment contracts.

Subscribers on the contracts can switch to new models after two years. They will be forgiven any remaining payments for their old smartphones on condition they stay with their carriers and conclude new four-year contracts.

This condition leads many subscribers to stay with the same carriers for a long time, effectively depriving consumers of choices, the report said.

In Japan, mobile phone companies sell handsets mainly on two-year installment payment contracts. The FTC also views as problematic the combination of the two-year contracts with subscriber identity module (SIM) locks that limit the use of handsets to specific carriers. Jiji Press