Since the beginning of his Administration, Prime Minister Suga has been pushing mobile carriers to lower rates and make cellphone data plans more affordable.
With the announcement of an action plan in October of last year dedicated to “fostering a competitive and fair mobile market,” the Suga Administration has been pressuring Japan’s three major mobile carriers — Softbank, NTT Docomo, and KDDI — to lower the prices of their flagship data plans.
Some Leap – Others Resist
Some were willing to take the leap. In December, NTT Docomo was the first of the “Big Three” to announce a new 20 GB data plan, named “Ahamo” (アハモ), at the low price of ¥2980/month (around USD $29). This was, at the time, a whopping ¥1500 lower than its rival carriers’ new data plans.
Other companies were not so keen. The CEO of KDDI responded with criticism against the Suga Administration, saying that the government had “no authority to decide the prices of phone plans.” While both Softbank and KDDI swiftly announced in November that they would lower prices, they would only do so to their sub-brands: Y! Mobile and UQ Mobile, respectively.
To this, Minister for Internal Affairs and Communications Ryota Takeda responded by stating that he was “incredibly disappointed,” pointing out that it was “meaningless unless mobile carriers lowered prices for their main brands.” KDDI announced earlier this week that they would lower prices for their main brand’s 20GB plan, replacing Docomo to become the cheapest provider at ¥2480/month. In the same press conference, KDDI also announced that they would reassess the prices for their preexisting data plans. (It’s worth noting that Minister Takeda has since called KDDI’s new plan “incredibly confusing”)
Why Are Data Plans So Expensive?
According to a study conducted by the Ministry of Internal Affairs and Communications, Tokyo has some of the most expensive data plans in the world. The study compared the prices of the most commonly purchased data plans from telecommunications companies in Tokyo, New York, London, Paris, Dusseldorf, and Seoul, finding that Tokyo had the most expensive 20GB plan at ¥8642/month. In comparison, all other cities aside from New York had an average of around ¥5000/month, approximately 40% cheaper than Tokyo.
Most seem to agree with the sentiment. In a survey conducted by Nikkei that asked 10,000 people about how they viewed their phone plans, approximately 69% of people stated that the prices were “too high.” 60% also responded that their phone plans were “complicated and hard to understand”, and almost 40% cited the high mobile carrier transfer fees as a major pain point.
While phone plans and payments are complicated and difficult to understand, the reasons why they are so expensive are fairly simple. According to Hosei University Professor Akio Makabe, part of the reason why data plans are expensive lies in the oligopoly that the “Big Three” telecommunications companies have in Japan. Rather than focusing on competitive pricing, the three companies have mutually agreed to focus more on maintaining their own market shares. In addition to this, telecom companies have also mentioned the pricey overhead of installing new 5G infrastructure as a reason why they are reluctant to reduce prices.
Relief On The Horizon?
This oligopoly was originally what put these telecommunications companies into the crosshairs of the government. Even before coming into power, Suga has been outspoken in his criticism of the three telecom companies. He stated during his tenure as Chief Cabinet Secretary in 2019 that “the three mobile carriers should aim to eliminate the oligopoly situation as soon as possible.”
As the pandemic closes in on its 1-year anniversary, we are once again reminded that in 2021, technology is more important than ever. Smartphones, and by extension their data plans, are becoming more of a necessity than a luxury.
Lower data plan prices could help lessen the financial burden on the consumer for what can arguably be considered a basic need. But by no means does this mean that the oligopoly has been eliminated. It has simply been forced to adapt.
