Japan’s government is again putting pressure on the country’s three major mobile operators to reduce tariffs by ending handset subsidies, calling for the companies to charge separately for phones and connectivity, Reuters reported.
A senior telecoms ministry representative told the news agency the government wants NTT Docomo, KDDI and SoftBank to stop bundling the cost of smartphones with wireless fees, a set-up it believes makes it hard for consumers to assess the price of devices or service.
The government has been putting pressure on operators to cut prices and give customers a wider variety of data plans since late 2015. The Ministry of Internal Affairs and Communications said at the time it was looking to prohibit handset subsidies and urged operators to use the money they save to reduce charges.
KDDI, the country’s second-largest player, introduced a number of new plans in recent months. In the quarter ending 30 June, average revenue per account (ARPA) dipped slightly year-on-year to JPY6,500 ($59), which it attributed to low-cost plan promotions.
In early 2016, market leader NTT Docomo announced it would introduce a plan for low data usage customers. The Share Pack 5 plan is priced JPY6,500 per month, and allows users to select the amount of voice and data to meet their actual usage.
The operators insist they are meeting consumer needs by introducing affordable new plans with lower subsidies for new users.
Atul Goyal, an equity analyst at Jefferies, said in a research note ending bundling is a negative for handset makers as it could adversely impact smartphone sales in Japan for brands including Apple, Sony and Sharp.
He noted, however, the removal of subsidies is likely to reduce churn and help operators’ bottom-line.
Goyal said it was a “strange move” by the government: “The world over, carriers bundle new phones with monthly service plans and then charge the price of smartphone back to customers over the life of a contract (generally a two-year contract).”Subscribe to our daily newsletter Back