SoftBank Corp said Friday it will from next week, stop signing up its mobile phone users to two-year contracts that discount monthly communication fees but impose a hefty penalty for canceling early.
The major mobile phone operator will start offering similarly discounted rate plans from Sept. 13 that do not include cancellation charges or contract terms. Currently, the two-year contract, which the company will stop selling next Thursday, imposes a cancellation fee of 9,500 yen ($88.8).
The move by SoftBank is in response to a new government regulation starting in October that requires mobile phone operators to drastically cut cancellation fees on two-year contracts to 1,000 yen or less.
The new regulation is aimed at spurring competition in the industry by having the country's three major phone companies -- SoftBank, NTT Docomo Inc and KDDI Corp -- launch basic fees that are not bound by a specific timeframe and helping low-cost smartphone operators attract users.
SoftBank introduced the new rate plans after it reckoned the cheap cancellation fees would not deter users from quitting mid-contract.
Under the company's existing two-year contract, users are allowed to quit without penalty provided they do so within three months after two years have passed since joining the plan, which automatically renews if no action is taken.
For customers who are not currently tied to a two-year contract, they will be able to shift to the new rate plans and receive the discounts without any contract term, SoftBank said.
The company is also set to announce what it plans to do about two-year contract plans currently offered by its low-price brand Y!mobile.
KDDI has said it will keep offering a two-year contract plan with a cancellation charge of 1,000 yen, while NTT Docomo has not indicated how it plans to deal with the government's new regulation.© KYODO