EDIT2: Additional comments indicate that the crippling seems to be limited to the feature phones, though softbank at least is willing to uncripple the phone once it is fully paid off.
EDIT: confirmation in the comments section indicates that, once again, just about anything shop staff says should be disregarded.
The other day I had the rare need for a one seg TV tuner. I still have my old AU phone with one seg, so I pulled it out, plugged it in, turned it on, and fired up the TV tuner. Who knew that a service contract is required to receive terrestrial TV broadcasts? I didn't.
Oops. au ICカード(UIM)エラー ご利用出来ません. Of course I didn't expect to be able to use EZweb or any of AU's services since I'm no longer a customer, but I did expect to view freely available* television broadcasts. I also did not expect that the phone would paperweight itself simply because of no contract.
I expect too much.
I inquired at an AU Store. According to the shop staff, early one seg phones were able to receive one seg broadcasts without a valid service contract but all current models require a connection to EZweb and hence a working cellular connection, including the IS03 android smartphone. The staff actually described it as building in a wall, though we all know to take anything said by carrier shop staff with a healthy amount of skepticism. Technically, there is no need to connect to EZweb, since programming guide and text information is included in the broadcast.
This begs the question of what other functionality is crippled once you end your contract with AU (or Docomo or Softbank). Unfortunately, the back plates of the display models are glued shut, so we weren't able to yank an IC card from an IS03 to confirm it would partially cripple itself, and the shop staff weren't about to unbox a new one just to satisfy my curiosity.
The staff did however assure me that the one seg function of the IS03 would cease to function without service from AU. Owners of Japanese made android smartphones: Can you use all the functions of your phones (infrared, one seg, ketai osaifu, etc.) with the IC/SIM card removed?
* one seg is freely available but technically not free since Japanese law requires anyone who owns a television capable of receiving terrestrial broadcasts to pay for NHK. This includes owning a cell phone with a one seg tuner. (I've seen an NHK rep demand payment from a Japanese person whose only TV was their cell phone. It didn't end well... for the NHK rep.)