KDDI, SoftBank Corp. and Rakuten Mobile Announce Views on NTT Law (2)

―Amendments to Telecommunications Business Act cannot adequately address regulations stipulated in NTT Law―

KDDI CORPORATION
SoftBank Corp.
Rakuten Mobile, Inc.

(Reference Translation [1])

KDDI CORPORATION, SoftBank Corp., and Rakuten Mobile, Inc. ("the three companies") today announced their views on the "The NTT Law: Our Perspective (2)" ("NTT's Perspective (2)") document issued by Nippon Telegraph and Telephone Corporation ("NTT") [2] on November 7, 2023.

NTT's Perspective (2) suggests that the current regulations stipulated in the NTT Law, including those related to fair competition, universal service obligations, and foreign investment regulations―which the three companies view as especially significant areas given their potential impact on Japan's national interests and citizens' lives―can be replaced with amendments to the Telecommunications Business Act, and therefore abolishing the NTT Law is not an issue. The three companies have shared views on this matter that differ from NTT's perspective.

<NTT's claims in NTT's Perspective (2) and shared views of the three companies>

	NTT's claims	Shared views of the three companies
Fair competition	⋅ The prohibition of the merger of NTT East/West and NTT DOCOMO can be addressed with the prohibition regulations of the Telecommunications Business Act.	⋅ The business scope regulations under the NTT Law not only prohibit the merger of NTT East/West and NTT DOCOMO, they also have a wide-ranging regulatory effect. Accordingly, it is not realistic to address these regulations under the Telecommunications Business Act. ⋅ Regulation of the Telecommunications Business Act, which is based on the operators' market share, may not be effective on its own due to concerns related to regulatory evasion.
Universal service obligations	⋅ Fiber-optic IP phone services are not within the scope of universal service.	⋅ The exclusion of fiber-optic IP phones services is only because of their position in the universal service system under the Telecommunications Business Act. The scope of the universal service obligation under the NTT Law covers all households (equivalent to 60 million lines), and users of the fiber-optic IP phones services are also protected.
Universal service obligations	⋅ NTT East/West serve as last resort operators if certain conditions are met.	⋅ The certain conditions that NTT is seeking are not currently in place, and if the NTT Law is abolished, it would not guarantee the provision and maintenance of services nationwide.
Foreign investment regulations for NTT	⋅ It is necessary for foreign ownership regulations to target major telecommunications operators, and the means of implementation should be covered not only through the Foreign Exchange Act, but through other laws and regulations as well.	⋅ NTT's special assets cannot be treated in the same way as other telecommunications operators' facilities, and the foreign ownership regulations stipulated under the NTT Law are effective and difficult to replace by strengthening the Foreign Exchange Law. ⋅ The Economic Security Promotion Act is expected to apply to mobile operators as well.
Comparison with other countries	⋅ Special corporation laws have been abolished in major countries.	⋅ The existence of special corporation laws is due to differences in competition policies and competition structures unique to each country and Japan does not have the prerequisite conditions to abolish its special corporation law.
Inherited special assets from public corporation	⋅ When NTT was privatized, the assets inherited from the public corporation had been reverted to the Government of Japan, which is a shareholder of NTT. These assets currently belong to shareholders, including those in the private sector, in proportion to their respective shareholdings.	⋅ The assets inherited from the public corporation are owned by NTT East/West, and the shareholder of NTT East/West is the NTT holding company (100%). Therefore, the assets owned by the corporation can only be said to revert to the shareholders when the company has been dissolved.

On October 19, 2023, a total of 180 entities, encompassing telecommunications operators, including the three companies, and local governments, submitted a jointly-signed request (the "Request") to express their opposition to the abolition of the NTT Law and to urge lawmakers to conduct more careful policy discussions. The Request signatories believe it is crucial that discussions on the NTT Law be conducted in a manner that avoids any potential harm to Japan's national interests and its citizens' daily lives.

In the Request, the 180 signatories agree that a review of telecommunications policy, including the NTT Law, should be considered for the realization of IT and telecommunications infrastructure that contributes to improvements in Japan's quality of life, economic revitalization, and international competitiveness as a national aim.

Rather than abolishing the NTT Law, if revising the law is considered, the signatories believe that the entire industry can hold positive discussions on the future of Japan's telecommunications industry. The signatories hold the view that policy discussions on the NTT Law should proceed in this direction.

<Attachment>

Views on "The NTT Law: Our Perspective (2)" document issued by Nippon Telegraph and Telephone Corporation (6.7MB) (in Japanese only)

(Reference)

180 Entities Submit Request to Oppose Abolition of NTT Law, Call for Careful Policy Discussions

[1]
This press release has been translated from the Japanese original for reference purposes only. In the event of any discrepancy between this translated document and the Japanese original, the original shall prevail.
[2]
For more information, please refer to NTT's press release dated November 7, 2023 (in Japanese only).

Company, product and service names in this press release are registered trademarks or trademarks of the respective companies.

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