Japan aims to end smartphone bundles to bring fees down

japan smartphone fees
FILE PHOTO: A man looks at Apple's new iPhone 8 (L) and his iPhone 7 at the Apple Store in Tokyo's Omotesando shopping district, Japan, September 22, 2017. REUTERS/Issei Kato/File Photo

TOKYO (Reuters) – Japan is aiming to force wireless carriers to cut their monthly fees and stop bundling the cost of smartphones with wireless services, a senior telecoms ministry source said on Tuesday, in a move that is likely to hit Apple.

Japan’s top wireless carriers, NTT DoCoMo, KDDI and SoftBank, typically provide phones without upfront charges as part of fixed-term contracts that can cost as much as 10,000 yen ($90.51) a month. Customers effectively pay for handsets in instalments.

The government, which sees these contracts as muddying the cost of handsets and mobile fees and creating barriers for entry, wants carriers to charge separately for phones, the senior telecoms ministry source told Reuters.

An end to bundling could hit dominant player Apple’s iPhone sales as consumers opt for cheaper devices.

iPhones account for one in every two smartphones sold in Japan, according to MM Research Institute, with the device first introduced there by SoftBank CEO Masayoshi Son in 2008.

Apple may have breached antitrust rules by forcing Japanese carriers to offer discounts on iPhones and charge higher monthly fees, the country’s regulators said last month, giving the US firm an advantage over rivals such as Samsung Electronics.

Shares of Japan’s wireless carriers fell by up to 5% earlier in the day, in a steady broader market, after Japan’s Chief Cabinet Secretary Yoshihide Suga was quoted by Kyodo News as saying that they have room to slash wireless fees by 40%.

Japan hopes that by reducing the burden of wireless fees on households it can stimulate spending in other areas as the Bank of Japan battles to reflate the economy.

“Wireless costs are suppressing other spending,” the ministry source said, speaking on condition of anonymity.

Telecoms fees as a percentage of total household spending have continued to rise, government figures show, reaching 4.2% last year, driven by higher wireless costs.

A KDDI spokeswoman said the carrier has created plans that separate the cost of the handset and carrier fees, and has lowered fees for customers.

A DoCoMo spokesman says the firm has cut costs for customers and “continues to consider changes to fees based on the wishes of customers.”

A SoftBank spokeswoman said the carrier continues to examine how to improve services for customers.

Apple was not immediately available to comment outside of US business hours.

($1 = 110.4900 yen)

(Reporting by Sam Nussey and Yoshiyasu Shida; Editing by Himani Sarkar)

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