May 29, 2020 Request for Review of Sales Method for Mobile Terminals by Installment

  The Ministry of Internal Affairs and Communications (MIC) has today requested NTT Docomo Inc. (headed by Kazuhiro Yoshizawa, President and CEO), KDDI Corporation (Makoto Takahashi, President and Representative Director), Okinawa Cellular Telephone Company (Hideo Yuasa, President and Representative Director), and SoftBank Corp. (Ken Miyauchi, President & CEO) to review their methods for installment payment for mobile terminals.

Currently, a mobile phone operator may offer a program that exempts a user’s remaining installment debt on a terminal purchased (hereafter referred to as “the terminal purchase program”), provided that certain conditions specified by the mobile phone operator are met. However, the mobile phone operator must not require the user’s conclusion of a communication service agreement with the mobile phone company.
The terminal purchase program is not subject to the revised Telecommunications Business Act (Act No. 86 of 1984, hereafter referred to as “Business Act”) if the provision of profits under the terminal purchase program does not require the user’s conclusion of a communications service contract. The said revision of the Business Act took effect in October last year under the Act on Partial Amendments to the Telecommunications Business Act (Act No. 5 of 2019, hereafter referred to as “the Amending Act”). Therefore, the terminal purchase program needs to cover those who have concluded or will conclude a communications service contract (hereafter referred to as “line subscribers”) and those who do not (hereafter referred to as “no-line subscribers”). Furthermore, unreasonable conditions that substantially differentiate line subscribers and no-line subscribers, e.g., conditions to differentiate them in ease of using the terminal purchase program, are not allowed in the provision of profits.
From this point of view, MIC’s Guidelines for the Operation of Article 27-3 of the Telecommunications Business Act, which was established in October last year, clarified the conditions of the use of services. The said guidelines stated that mobile phone operators’ requirements of more general conditions would not fall under mandatory conditions imposed on users. In November of 2019, MIC revised the Guidelines for Ensuring Smooth Distribution and Use of Mobile Terminal Equipment to compel mobile phone operators to take measures, such as the immediate SIM unlocking, for those who comply with certain credit confirmation measures.
Half a year has passed since the enforcement of the revised Business Act, and new terminals are now being sold. Meanwhile, the Working Group (WG) on Verification of Competition Rules pointed out the need for clarifying the differences between line subscribers and non-line subscribers in terms of additional conditions. The WG also pointed out the necessity for informing the public of the fact that non-line subscribers are also covered by the terminal purchase program. In this connection, MIC has today revised the Guidelines for the Operation of Article 27-3 of the Telecommunications Business Act. This revision concretely shows that differentiating line subscribers from non-line subscribers in conditions for providing profits falls under the category of mandatory conditions of the use of services imposed on users. Demanding conditions that make it difficult for non-line subscribers to satisfy conditions for the provision of profits without rational reasons falls under as well.
Therefore, it is necessary to make mobile phone operators thoroughly comply with the rules of the revised Business Act based on the Amending Act and understand the situation and protect the interests of telecommunications service users. Accordingly, MIC has today requested NTT Docomo Inc., KDDI Corporation, Okinawa Cellular Telephone Company, and SoftBank Corp. to report on the related situation of the terminal purchase program and not to make inappropriate advertisements, solicitations, or explanations regarding the terminal purchase program.