Japan to Cut Mobile Phone Contract Penalties to 1,000 Yen

Politics Economy

Tokyo, June 11 (Jiji Press)--Japan's communications ministry presented a plan Tuesday to lower the ceiling of penalty charges for early termination of two-year mobile phone service contracts to 1,000 yen.

The proposal, submitted to an expert panel set up by the ministry, is aimed at making it easier for users to switch mobile phone carriers, boosting competition and reducing communication fees.

The ministry also proposed limiting discounts on handset prices to 20,000 yen.

The two caps will enter into force in autumn, affecting not only NTT Docomo Inc. <9437> and other carriers, but also major low-cost mobile service providers with over one million subscribers.

Currently, subscribers to the carriers, also including KDDI Corp. <9433> and Softbank Corp. <9434>, must pay a penalty charge of 9,500 yen unless they terminate their two-year contracts during the designated renewal period. The charge has been criticized as too expensive.

[Copyright The Jiji Press, Ltd.]

Jiji Press