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

KDDI Corporation

(Reference Translation [1])

On October 19, 2023, a total of 180 entities, including telecommunications operators and local governments, submitted a jointly-signed request (the "Request") to the Chairman of the Policy Research Council of the Liberal Democratic Party ("LDP"), as well as the Chairman of the Project Team on the Future of the Act on Nippon Telegraph and Telephone Corporation (the "Project Team") and the Minister for Internal Affairs and Communications. The Request aims to establish a fair and competitive environment with Nippon Telegraph and Telephone Corporation ("NTT"), which has inherited assets and crucial facilities from its prior form as a public corporation, to support innovation and regional revitalization in Japan through diversified competition. The Request expresses the entities' opposition to the abolition of the Act on Nippon Telegraph and Telephone Corporation (the "NTT Law") and urges lawmakers to conduct more careful policy discussions.

■Purpose of the Request

Since August 2023, discussions have taken place within the LDP's Project Team and at the Ministry of Internal Affairs and Communications' Special Committee on Telecommunications Policy ("Special Committee"), under the Information and Communications Council, regarding the possibility of completely privatizing NTT, including the abolition of the NTT Law.

The Request 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 Japan's quality of life, economic revitalization, and international competitiveness as a national aim. At the same time, the Request signatories oppose the outright abolition of the NTT Law and urge careful consideration on these important matters. The Request signatories believe that ensuring a fair and competitive environment in Japan's telecommunications industry requires a combination of the Telecommunications Business Act ("the Business Act"), which sets out fair competition rules, and the NTT Law, which imposes responsibilities for the public good on NTT, as well as its group companies Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation ("NTT East/West"), as the inheritors of assets and facilities from the former Nippon Telegraph and Telephone Public Corporation ("the Public Corporation").

The Business Act and the NTT Law were enacted in 1984 to fundamentally reform the centralized telecommunications framework of the Public Corporation and foster a vibrant private sector based on the principle of competition in Japan's telecommunications industry. The purpose was to promote efficiency and revitalize the telecommunications industry, with the aim of driving technological innovation in the telecommunications field, enabling societal and economic development, and promoting internationalization. In this context, NTT was established.

Since then, a fair and competitive environment has been achieved by combining the Business Act and the NTT Law as the two pillars of Japan's telecommunications framework. This combination has led to an increased number of market entrants, the advancement and diversification of telecommunication services such as fixed-line and mobile phone communications, FTTH, CATV, as well as reduced user fees, resulting in an improved quality of life and economic revitalization.

The role of IT and telecommunications will continue to be crucial in Japan, and to realize the Government of Japan's "Vision for a Digital Garden City Nation," it will be necessary to foster a fair competitive environment among operators to ensure the healthy development of IT and telecommunications infrastructure.

■Content of the Request

• While the Request signatories understand the importance of discussions regarding the future of Japan's telecommunications industry, they are concerned that the current discussion period is shorter compared to discussions on NTT's traditional roles. They are also concerned whether sufficient and necessary discussions will take place.
• The signatories request the establishment of a fair environment to compete with NTT, which has inherited assets and important facilities from the Public Corporation, to promote innovation and regional revitalization through competition among a diversified number of industry players. The Request signatories therefore oppose the abolition of the NTT Law and call for more careful policy discussions.

■Concerns if the NTT Law is abolished

• (1)

  If the responsibilities and operational constraints of NTT and NTT East/West are eliminated, there is a risk that NTT East/West will further expand their businesses and integrate into the NTT Group, thereby hindering Japan's fair and competitive environment. This could lead to higher user fees, stagnant innovation, and jeopardize the public interest.

• (2)

  For various social challenges, such as ensuring the continuity of communication lifelines during disasters, promoting digital transformation (DX), and sustaining the development of regional areas, it is necessary to achieve a secure, safe, resilient, high-speed, and high-capacity telecommunications environment, regardless of location. Progress has been made on this front through competition among private sector operators. However, for areas that cannot be covered through competition, it is appropriate for NTT to continue to play a role as the operator of last resort. If the NTT Law is abolished, there is a risk that NTT, which has inherited assets and important facilities from the Public Corporation, will no longer be responsible for these public obligations.

• (3)

  The NTT Group does not possess the capability to provide region-specific information, disaster prevention measures, and daily living information that locally-based operators such as CATV operators have been offering. If regional operators are excluded from the industry, there is a concern there may be a decline in regional services.

• [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. Please see the Japanese press release for a full list of signatories.