Japanese mobile communication market is controlled by almost 3 mobile communication career giants in Japan, which are AU by KDDI, DOCOMO by NTT, SOFTBANK. In Japan, applicants make a mobile contract under the unreasonable commercial rule that generates one-sided advantages to these communication companies.

One of the strong contract rules that they require applicants to accept is a 2-year contract. Lately, the Ministry of Internal Affairs and Communications has embarked on cutting deeply into the unjustifiable compulsory contract term.

In this article, I want to explain the system of 2-year contract set by these 3 mobile communication careers.

What is 2-year contract

There are various definitions to 2 year-contract of mobile communication. But, in this article, I define a 2-year contract like the one that makes you turn a loss if canceling it halfway during the contract period.

The system of 2-year contract

Every mobile communication giants set a contract rule that if an applicant cancels the contract during the 2-year contract period, cancellation fee forcibly generate.

For example, if you make a contract in January 2017, your cancellation timing is in February 2019. Cancellation fee should generate until January 2019.

Moreover, cancellation possible period is just 1 month in February. If you want to cancel your contract, you must do it February because contract renewal is done automatically from the next month after the cancellation period by the company’s system.

The timing that cancellation fee doesn’t generate is only one month after your contract is expired.

The mobile career doesn’t let you buy a mobile device except for its own shop

As you know, “SIM card” is set to every smartphone device. All the information and ID number that identifies the applicants is installed into this “SIM card”. Each mobile career recognizes the users with this “SIM card” and provides the communication services to them.

The mobile phone devices sold by the Japanese mobile careers are locked up not to work with other mobile career’s SIM card. This is “SIM LOCK”.

For example, if you want to make a contract with NTT DoCoMo, you need to buy a mobile phone device at a DoCoMo shop (NTT) as well.
Even if you have the same type of smartphone, it is basically impossible to communicate with a smartphone you bought at NTT DoCoMo shop with Soft Bank’s SIM card.

Sim lock term is different depending on the mobile career but it is about between 3 months to 6 months. After the sim lock term, the mobile phone can be unlocked at an agency shop.

This is a Japanese mobile career’s unique system to build an entry barrier to refuse new entry company in the mobile communication market. Even the government can’t stick the knife into vested interests of 3 big mobile career giants.

You need to pay for a mobile device in installments for 2 years

When you newly make a contract to mobile communication company, you need to buy a smartphone there. But you have to pay for the mobile device in installments for 2 years. Moreover, it will discount the same price as a monthly installment payment for the mobile device, which means monthly installment payment is perfectly covered with the discount rate. This system provides a free smartphone to the users substantially.

For example, if you want your mobile device costing 80,000 yen to completely cover with this discount system, you need to keep paying 3,300 yen per month for 2 years. To the 3,300 yen monthly installment payment, the same amount of discount will generate automatically. If you keep contracting with a certain mobile career for two years, your mobile device you bought from the mobile career shop is finally for free.

The point to be noted is when you cancel the contract and mobile model change.

Even When you cancel the contract and mobile model change, you have to keep paying in installments for the mobile device but the discounting system stops at the same time.

In short, if you cancel the contract after you used it for 1 year, you need to pay 39,600 yen (3300 yen per month) which was originally covered with the discount system. This is a trap that makes you turn a loss if you cancel the contract during the contract period. What a dirty business it is!

Emphasize benefit before the contract, mousetrap applicants after the contract

Docomo, AU, SoftBank, whatever mobile career show the stance to emphasize benefit to customers by discounting largely for the very first contract. However, these companies surely hide their strategies to firmly grasp their profit from the users behind it if the users want to make the most of the provided discount system. So the users have to estimate these factors beforehand.

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