October 14, 2020 Guidance for Telemarker Co., Ltd. on Inappropriate Solicitation for Optical Collaboration Service for Corporations

The Ministry of Internal Affairs and Communications (MIC) has today instructed Telemarker Co., Ltd. (a company headed by SAITO Satoshi) to ensure its compliance with the Telecommunications Business Act (Act No. 86 of 1984). The company was recognized to have violated Article 27-4 of the Act, which obliges the company to take measures, including guidance for business consignees such as intermediaries.

1. Outline of the case and content of administrative guidance

1. 1.

   Many complaints have been lodged with public agencies, including MIC, regarding Platinum Hikari (hereafter referred to as the “Service”), an optical collaboration service^* for corporations provided by Telemarker Co., Ltd. (hereafter referred to as “Telemarker”). These complaints include many cases suspected to be inappropriate solicitations, including cases where the company identified itself as a major telecommunications carrier or its sales agent. The users were solicited in the misbelief that it was a major telecommunications carrier or its sales agent.

   • *
     An optical line service provided by a business operator that receives the wholesale of optical lines from Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation (hereafter referred to as “NTT East and West”).
2. 2.

   In response to the above complaint consultations, MIC requested Telemarker to submit a recording of the telemarketing of CSC Solutions Co., Ltd., a sales agent that handles this service. MIC found a violation of the provisions of Article 27-2, Paragraph 1 (i.e., the prohibition of misrepresentation) and Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation) of the Telecommunications Business Act (hereafter referred to as “the Act”), where the provisions of Article 73-3 apply mutatis mutandis.

3. 3.

   MIC checked the legal compliance system of Telemarker.

   • Telemarker commissioned the business of mediating the conclusion of contracts regarding the provision of the Service and the business incidental thereto (hereafter referred to as the “business of mediation, etc.”) to its sales agent CSC Solutions Co., Ltd. It was before the establishment of the notification system for sales agents on October 1, 2019. However, Telemarker did not confirm CSC Solutions’s submission of a notification under Article 73-2, Paragraph 1 of the Act, and Telemarker did not take any measures to comply with this provision.
   • A document of Telemarker regarding the procedure of business for the sales agent states that the sales agent should introduce the service content before the solicitation without mentioning the name of the telecommunications carrier that provides the telecommunications service.
     These facts indicate that Telemarker did not take measures to properly and reliably conduct the work entrusted to its sales agent. Therefore, MIC recognized Telemarker’s violation of the provisions of Article 27-4 of the Act (Measures for Guidance for Intermediary Business Trustees).
4. 4.

   From these circumstances, MIC instructed Telemarker to ensure thorough compliance with the law. The main contents of instruction for Telemarker are as follows:

   • 1.
     Thorough compliance with the provisions of Article 27-4 (Measures for Guidance for Intermediary Business Trustees) of the Act. That is, Article 27-2, Paragraph 1 (i.e., the prohibition of misrepresentation) and Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation), where the provisions of Article 73-3 apply mutatis mutandis, as well as Article 73-2, Paragraph 1 (i.e., the notification of business, such as mediation)
   • 2.
     Report on the implementation of recurrence prevention measures. To prevent such improper cases from occurring in the future in the telecommunications service that Telemarker provides, Telemarker should take recurrence prevention measures promptly based on the above guidance and report in writing to MIC by November 13, 2020.

2. Violation of notification obligation for operations, such as mediation of Telemarker’s sales agent

Telemarker commissioned the business of mediating the conclusion of contracts regarding the provision of the Service and the business incidental thereto (hereafter referred to as the “business of mediation, etc.”) to its sales agent CSC Solutions Co., Ltd. It was before the establishment of the notification system for sales agents on October 1, 2019. However, CSC Solutions did not submit a notification under Article 73-2, Paragraph 1 of the Act. Sales agents that report the business, such as mediation, are announced on MIC’s website. Furthermore, since April 1, 2020, when a sales agent explains the provision conditions for concluding a telecommunications service contract, the sales agent must specify the notification number of the sales agent in the document used for the explanation. Those who engage in intermediary services related to telecommunications services stipulated by law should properly submit a notification of intermediary services based on Article 73-2, Paragraph 1 of the Act to the Ministry of Internal Affairs and Communications. Besides, for telecommunications service users, if a problem arises with a sales agent, a public consultation desk will facilitate the handling of complaints and consultations. Inform MIC of the relevant notification number.