Despite the government's call to lower mobile phone rates, the fees have not fallen as much as expected.
Mobile phone service providers should be aware that their businesses are very much in the public interest and continue to make serious efforts to reduce the burden on users.
The Internal Affairs and Communications Ministry has presented communications fees for smartphones in six cities around the world as of March for comparison. In the case of a price plan for a large data capacity of 20 gigabytes, Tokyo has the highest at more than 8,000 yen a month. The figure is lower than that of last year, but it remains about three times higher than prices in London.
Some observers say the high cost of communications fees is squeezing many household budgets and pushing down consumer spending.
The number of mobile phone contracts in Japan has reached about 180 million, making it infrastructure that supports people's lives and businesses. Efforts to curb the amounts people pay as much as possible are important.
Mobile phone charges remain high due to the oligopoly of three major companies. These three carriers -- NTT Docomo, Inc., KDDI Corp., which operates the au service, and SoftBank Corp. -- account for about 90% of the total of mobile phone contracts.
The three companies earned about 800 billion yen to 1 trillion yen in consolidated operating profit for the year through March this year. Their profitability rate on sales is nearly 20%, higher than that of ordinary companies. It must be possible for them to lower the fees further.
In August 2018, Chief Cabinet Secretary Yoshihide Suga referred to the mobile phone rates, saying, "There is room for reducing the fees by about 40%." In general, it is not desirable for the government to intervene in the process of private companies determining prices. But it is inevitable when taking into consideration the current state of oligopoly.
The government then considered measures to tackle the issue at its expert panel. Last October, it revised the Telecommunications Business Law to prohibit, in principle, contracts in which users receive discounts by purchasing mobile phone handsets and communications fee plans in combination. The ban came after such a contract structure was criticized for setting communications fees at relatively high levels to supply the financial source for handset price discounts.
To make it easier for users to switch mobile phone carriers, a cap has also been set on penalties for canceling contracts when contracts are terminated during a certain period.
Nevertheless, it is hard to say such measures have promoted competition fully. The key is active participation of new entrants into the industry.
Many budget mobile phone service operators and other companies that have made inroads into the industry are struggling.
One reason for this is that users shun the time and effort as well as the cost involved in switching to other mobile phone carriers. In July, the communications ministry started discussions to lower commission fees that NTT Docomo and other major companies charge for users who switch to other carriers.
Budget service operators provide data transmission services at low prices, but call charges are high. This is because they use major companies' telephone lines and the fees to use the lines appear to be relatively high. The ministry has asked NTT Docomo to cut the fees.
The government is urged to continue to focus on measures to promote competition.
-- The original Japanese article appeared in The Yomiuri Shimbun on July 29, 2020.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
