Japan is forcing carriers to end smartphone bundling in a move that could hurt Apple

The government of Japan wants wireless carriers to stop bundling the cost of smartphones into fixed-term monthly service fees in a move that could hurt Apple’s iPhone.

Japan’s Chief Cabinet Secretary Yoshihide Suga was quoted by Kyodo News as saying that wireless carriers have room to slash wireless fees by 40 percent.

“Wireless costs are suppressing other spending,” a source said.

US carriers have killed long-term contracts and no longer offer phone subsidies so customers can spread the full cost of the hardware over 12 or 24 months with installment payments.

But in Japan, as Reuters reported Tuesday, the government sees long-term wireless contracts as “muddying the cost of handsets and mobile fees and creating barriers for entry.”

Apple may have breached antitrust rules by forcing Japanese carriers to offer discounts on iPhones and charge higher monthly fees, the country’s regulators said last month.

The government is considering pushing carriers to charge separately for phones, the senior telecoms ministry source told the news gathering organization.

Even though customers in Japan are not charged upfront for their device, they still pay for it in installments that local carriers attach to their monthly service fees in fixed-term contracts.

Japan’s major carriers like NTT Docomo, KDDI and SoftBank all conceal the true cost of a smartphone by offering long-term service contracts that can cost as much as 10,000 yen, or approximately $90.51, per month.

KDDI has already created plans that separate the cost of the handset and carrier fees while both KKDI and Docomo have also cut costs for customers by lowering their fees.

Ending smartphone bundling in Japan, a 127 million people country and an important market for iPhones, would hurt Apple because the unbundling would kill its chances with those consumers who are not necessarily in the market for a flagship phone.

iPhones account for MM Research Institute-estimated one in every two phones sold in Japan.