The current state of the smartphone market, in which unfair sales methods are rampant, is rife with problems. It is necessary to review business practices and have the range of choices available to consumers expanded sufficiently.
The Fair Trade Commission has compiled a report concerning the sale of mobile phones and telecommunications contracts.
With regards to "four-year contract commitment" sales plans under which smartphones are sold on a four-year installment plan, the commission has urged the major cell phone carriers to improve it, saying it "may become problematic under the Antimonopoly Law."
The four-year contract commitment plan has been offered by KDDI Corp., which markets the mobile phone brand "au," and SoftBank Corp. since last summer or later. Under the plan, customers buy a smartphone and commit to a four-year installment contract. If they replace their mobile phones with newer models two years later, the balance left for the cost of the initially bought handsets will be exempted -- meaning that the customers had effectively bought the handsets for half price.
Yet customers cannot enjoy such a benefit if they do not remain under the contract commitment plan. This is a sales method that could narrow down the choices of consumers.
It is considered appropriate for the commission to have concluded that the plan is a problematic act of unfairly corralling users, citing that it may make it difficult for users to shift to other providers.
Undoubtedly the plan can be viewed as convenient for those users who want to change their mobile phones for new and popular models every two years.
Yet it would be disadvantageous for those who use the same handsets for a long period of time or those who want to switch providers. It is problematic that the plan lacks fairness among users.
Promote competition
The four-year contract commitment plan makes it a required condition that users trade their used smartphones in for new ones. Most of the trade-in smartphones are said to be resold abroad or disposed of.
It has also been pointed out that the commitment plan makes it difficult for low-priced, used smartphones to come onto the market, thus leaving users with no choice but to buy new ones. Such a contract that may hinder the development of a used mobile phone market should be corrected.
The commission's report has no legal power. In its report made two years ago, the commission also regarded as problematic what was called a "two-year contract commitment" plan, under which cell phone carriers offer discounts in communications fees to customers on condition that users commit to a two-year contract. Yet there has been no marked improvement seen.
There are many business practices peculiar to major cell phone carriers, such as a "package deal," under which the prices of cell phone handsets are discounted markedly provided that users also sign up for other telecommunications contracts. These practices are also said to be a factor hindering competition.
It is hoped that the commission will continue making efforts to ascertain the real state of affairs of smartphone sales in the days ahead.
As long as the major cell phone carriers do not rectify such problems of their own volition, it will be inevitable for the commission and the Internal Affairs and Communications Ministry to join hands in addressing such problems stringently.
The market share of lower-priced smartphone services is just 10 percent, with the state of oligopoly by the three major cell phone carriers continuing. The telecommunications fees, which the carriers had been urged to lower, may also remain high.
It is important to promote sound competition among major carriers and operators offering lower-priced services so that it leads to a reduction in fees.
(From The Yomiuri Shimbun, July 16, 2018)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
