Resellers threaten to sue NTT, government over phone lines

30 May 2006

A group comprising around 40 fixed line resellers and other individuals is planning to sue the government and former monopoly operator Nippon Telegraph & Telephone Corp (NTT) alleging that a price cut has reduced the value of the telephone lines they acquired from the telco. According to Yoshitaro Nomura, the lawyer representing the group, the suit will be filed in Tokyo and Osaka, seeking JPY100 million (USD890,000) in compensation. More lawsuits may follow.

NTT started selling the phone rights, which were considered tradable assets that could be used as collateral under the law, more than 50 years ago to fund the expansion of its national fixed line network. However, in March 2005 it slashed the price a user pays for a fixed line in half, to just JPY36,000 each. In response Nomura, who represents the Association Requesting Compensation on the Rights of Telecom Users, has accused the government and NTT saying, ‘The rights have been fatally damaged by NTT and the Japanese government, which cut their value without reimbursement or compensation’. NTT has earned more than JPY4 trillion from the sale of 60 million rights, which were sold for as much as JPY80,000 each, Nomura said. Each right is now worth as little as JPY1,000 yen when bought in the second-hand market, he added.

In a separate story, Japan’s communications ministry has announced that the number of subscribers to landlines provided by companies other than NTT increased nearly seven-fold to 2.61 million in the year to 31 March 2006. Rival players such as KDDI and Softbank Corp have been successful in attracting customers while NTT has seen its subscriber numbers fall 6.9% to 54.24 million in the same period. NTT accounted for 93.4% of all fixed line phone subscribers at that date, down from 97.8% a year ago. The ministry added that the number of people using a VoIP service rose by 37.9% to 11.45 million as of the end of March.