Spate of illegal discounts cannot be overlooked

Editorial

12:46 JST, August 5, 2022

Illegal discounts are reportedly widespread in the sale of mobile phones. The Internal Affairs and Communications Ministry and major mobile phone carriers must correct the situation as soon as possible.

According to a ministry panel of experts, it was confirmed that sales agents of NTT Docomo Inc., KDDI Corp., SoftBank Corp. and Rakuten Mobile Inc. have engaged in illegal discounts by giving preferential treatment to combined sales of smartphone devices and communication contracts.

The revised Telecommunications Business Law, which went into effect in 2019, stipulates that discounts on smartphone handsets sold in combination with communication contracts can be up to ¥20,000 before tax, and mobile phone carriers are not allowed to reject the sales of the handsets alone.

However, according to the panel, some sales agents offered discounts of more than ¥20,000 in combined sales of smartphone devices and communication contracts, while others refused to sell the handsets to customers who wished to buy handsets alone, saying they were “out of stock.”

The cases cited are clear violations of laws and regulations and cannot be overlooked.

It is necessary to provide consumers with information in an easy-to-understand manner, for example, by indicating together the details of discounts for the combined sales and for individual handsets.

The revised law is designed to completely separate handset prices from communication charges, and to prevent mobile phone carriers from adding discounts on handsets to their communication charges.

After that, at the request of the government to lower their communication charges, major carriers have lowered their charges through such measures as launching new service plans with reduced fees.

On the other hand, there has been a resurgence in low-priced handset sales at prices such as ¥1, which have not been seen for a while. The communications ministry needs to step up its monitoring to ensure that excessive discounts and competition for customers will not lead to another rise in communication charges.

Behind the intense competition is the practice of transactions between major mobile phone carriers and their sales agents. Even though agents carry signs such as Docomo Shop, most of them are run by firms with no capital ties to these major companies.

Major mobile phone carriers evaluate their sales agents based on business performance, such as the number of contracts, and increase or decrease commissions and other items they pay the agents. It is said that major carriers attach importance to customers who switch from other companies. As a result, sales agents may be under pressure to get such communication contracts even by offering illegal discounts.

Major carriers must not only urge their sales agents to thoroughly comply with laws and regulations, but also fundamentally review how to evaluate them.

The panel said the increasing practice of consumers reselling discounted handsets at high prices is problematic. Widespread moves for discounts and a growing secondhand market are likely to be factors behind this.

Reselling could deprive people who really need a mobile phone of the opportunity to buy one. The panel made some recommendations, including limiting the number of mobile phones sold to one person to one unit when selling at a discount. It is hoped that such measures will be implemented as soon as possible.

(From The Yomiuri Shimbun, Aug. 5, 2022)