Japan Puts Brake on Competition in Reduction of Cellphones’ Prices

Japanese Government decided to set upper limit of reduction to eradicate competition in reduction of Smartphones’ prices, and it is similar to Mobile Terminal Distribution Act that South Korea introduced.

During an interview with Nihon Genzai Shimbun on the 16th, Post and Communications Minister Takaichi Sanae announced that Japanese Government will examine setting up upper limits of reduction of cellphones’ prices so that it can prevent reduction of cellphones’ telecommunication charge and discrimination of users.

Post and Communications Minister Takaichi explained about background of introducing this limit by saying that Japanese Government needs to put brake on competition in excessive reduction of cellphones’ prices. It is planning to legalize upper limit of price reduction and finalize its decision after discussing with experts from Ministry of Internal Affairs and Communications in December.

Japan’s mobile telecommunication businesses are greatly reducing prices of cellphones by targeting customers who periodically move telecommunication businesses and change cellphones. Because of this, Japanese Government is explaining that there is negative effect for people, who had used cellphones for long period of time, having to pay expensive telecommunication charge and bear discount finance. It is planning to put brake on competition in reduction of prices of cellphones so that it can block pass-along of telecommunication charge due to reduction of prices of cellphones.

“If excessive reduction of prices is corrected, it will be easier to provide cheaper rate to people who use lesser data.” said Post and Communications Minister. “We are going to look at our discussions with experts to see which regulation we should use so that it does not conflict with exclusive prohibition.”

Japanese Government is planning to regulate upper limit of discount within a boundary of establishment of new laws or based on guidelines of The Telecommunications Business Act. This means that it will not only include telecommunication businesses, but also distributors in regulations.

While introducing that there is a previous instance in South Korea where there are laws that regulate reduction of prices of cellphones, Nihon Genzai Shimbun said that South Korea achieved consistent results by limiting subsidies from retail stores through Mobile Terminal Distribution Act.

Because it is unprecedented that a government is intervening with setup of public fees and because some are worried that market shares of foreign cellphones such as iPhone and others might increase, people will be divided whether they are for these regulations or not.

Staff Reporter Kwon, Sanghee | [email protected]