Beware problems related to solicitations of optical fiber broadband service

On February 1, 2015, the Nippon Telegraph and Telephone East Corporation (Japan Corporate Number: 8011101028104) and the Nippon Telegraph and Telephone West Corporation (Japan Corporate Number: 7120001077523) (hereinafter called "NTT East/West") started wholesaling optical fiber broadband service (FLET'S HIKARI). Using this service, numerous businesses including new entrants from outside the industry (hereinafter called "HIKARI collaboration businesses") provide consumers with their own services combining the optical fiber broadband service wholesaled by NTT East/West, provider service, mobile phone service, etc. at various fees and in various contract styles. While consumers have more options for contract partners now, local consumer centers across Japan have received many inquiries and complaints about contracts of these services (e.g. "I thought they were talking about a change in the current service by the major telephone company, but it was found out that a new contract was made with an unknown company", "Although I don't recall going through procedure necessary for entering into a contract, switchover to another company was completed", "I concluded a contract because I was told the fee would be smaller, but unknown options were added to the service and the total fee has increased", etc.). Some consumers reported that they had contracted without fully understanding the concept of wholesaling optical fiber broadband service.

Therefore, NCAC decided to introduce recent consultation cases in order to prevent recurrence and spread of problems by alerting consumers, calling upon and providing information to relevant organizations

Note: Optical fiber broadband service wholesaled by NTT East/West and provided by Hikari collaboration businesses is referred to as Hikari wholesale service.

Diagram 1: Transition of the number of consultation cases

(data registered through Jan. 31, 2016)

The number of consultation cases was 4 in January 2015, 74 in February 2015, 282 in March 2015, 460 in April 2015, 629 in May 2015, 861 in June 2015, 809 in July 2015, 927 in August 2015, 1,210 in September 2015, 1,374 in October 2015, 1,257 in November 2015, 1,080 in December 2015, and 453 in January 2016.

What is Hikari wholesale service?

It is the optical fiber broadband service provided by Hikari collaboration businesses. Hikari collaboration businesses provide consumers with combined services including optical fiber broadband service, optional services such as optical phone service (e.g. IP phone) and their own services such as provider service. This business model is called "Hikari collaboration model" (Diagram 2).

Diagram 2: Differences in contracts for FLET'S HIKARI (example)
◆ In case of contract with NTT East/West

A consumer makes a contract for optical fiber broadband service and optional services including optical phone service with NTT East/West and makes another contract for other services including provider service with other business.

◆ In case of contract with Hikari collaboration business

Optical fiber broadband service is not contracted between consumers and NTT East/West in the latter case.^*

A consumer makes a contract for optical fiber broadband service, optional services including optical phone service, and company-specific services including provider service with a Hikari.

1. ^* If a Hikari collaboration business does not provide optional services such as optical phone service provided by NTT East/West, these optional services are contracted between a consumer and NTT East/West. Some Hikari collaboration businesses further wholesale the optical fiber broadband service to another business.

Sample cases of inquiries and complaints

[Case1]

The caller told that he was with a major telephone company, so I thought he was talking about change to a new plan.

[Case2]

There was no prior explanation that existing services excluding optical fiber broadband service would be cancelled.

[Case3]

The service fee and Internet speed were different from the initial explanation when I had been solicited. When I applied for cancellation, I was charged an outrageous fee.

[Case4]

I had made a contract for optical fiber broadband service as well as mobile phone service at the same time, but the explanation I had been given was found out to be false.

[Case5]

The former landline number was not taken over because I was given false explanation by the business. Cancellation of mobile phone service which I had contracted by the set was categorized into midterm cancellation, and I was charged a cancellation fee.

Problems highlighted by the sampling of inquiries and complaints

1. Change of contract partner was not clearly explained to consumers.
2. The amount charged is different from the amount explained when solicited.
   • The actual monthly fee is different from the amount explained when solicited
   • Insufficient explanation on the extra fee to be incurred in addition to monthly fee
3. Some consumers were unable to get the preferable user environment because they had been given false explanation.

Advice for consumers

Be aware that Hikari wholesale service is not directly contracted with NTT East/West, but with a Hikari collaboration business as a new contract.

1. Confirm the current contract.
2. Confirm contract details of Hikari wholesale service (e.g. name of the contract partner, name of the service).
3. Compare the current contract and the planned contract for Hikari wholesale service to consider whether or not to change your contract.
4. In case of trouble, consult your local consumer center.

Requests

Requests to the government:
Addressed to Telecommunications Consumer Policy Division, Telecommunications Business Department, Telecommunications Bureau, Ministry of Internal Affairs and Communications (JCN: 2000012020001)
NCAC requests that you will instruct telecommunications carriers to give consumers sufficient explanation on contract details and key points such as change in contract relationship, cancellation of the current contract, new monthly fee, contract period, cancellation fee, etc. when soliciting and selling Hikari wholesale service.
In light of the surge in problems caused by inadequate explanation on service contents, change of contract partner, etc. in soliciting and selling Hikari wholesale service, NCAC further requests that you will continuously give administrative directions to telecommunications carriers and agents thereof which violated Article 26 of the Telecommunications Business Act with a view to developing a sound market and preventing consumer damage.

Requests to industry associations: Addressed to Telecom Services Promotion Conference (No JCN)
In light of the surge in consultations on Hikari wholesale service, NCAC requests you to ensure that your members will give consumers sufficient explanation on contract details and key points such as change in contract relationship, new monthly fee, contract period, cancellation fee, etc. when soliciting and selling Hikari wholesale service based on "Voluntary standard and guideline for sales activities by telecommunications carriers" and that your members will call attention to consumers that the current service contract will have to be cancelled in case of switchover to a Hikari collaboration business, so that consumers can choose services independently based on sufficient information.
Moreover, NCAC requests you to conduct survey if your members might have breached the voluntary standard, and to take actions to reduce complaints (e.g. raising awareness of consumers).

Addressed to National Association of Mobile-phone Distributors (JCN: 2011005006137)
NCAC requests you to ensure that your members give sufficient explanation to consumers about characteristics and key points of services in sales activities at mobile phone shops so that consumers can independently choose services, by informing and guiding your members.