June 19, 2020 Guidance to Good Luck Co., Ltd. regarding the Provision of Donnatokimo WiFi MVNO Service to Users

The Ministry of Internal Affairs and Communications (MIC) has today instructed GOOD LUCK Inc. (headed by Mitsuhiro Sasaki, Representative Director) to ensure their compliance with the Telecommunications Business Act (Act No. 86 of 1984). GOOD LUCK Inc. was recognized to have conducted improper acts in light of the purpose of protecting users’ interests stipulated in Article 1 of the Act. Furthermore, it was recognized to have violated Article 27 (Procedure for Processing Complaints) and Article 27-2 (i), which prohibits intentionally failing to disclose or misrepresenting facts.

1. Outline of the Case

Since February 21, 2020, users of Dokodemo WiFi (hereafter referred to as “the service”), a Wi-Fi service provided by GOOD LUCK Inc. (hereafter referred to as “GOOD LUCK”), have experienced trouble, including a significant decrease in communications speed. This trouble was due to the tightness of the total communications capacity available per month. The use of this service was hindered, which led to complaints from a large number of users.
In the background of these facts, GOOD LUCK, the provider of the service, failed to recognize the mechanism of the telecommunications service to be provided, the mechanism of the telecommunications equipment to be used, and potential business risks correctly. Furthermore, GOOD LUCK provided the service to users without sufficiently securing the necessary management system and cooperation with related businesses, such as wholesale telecommunications carriers. It was confirmed that the issue had occurred without foreseeing or preventing the issue. It is recognized that GOOD LUCK’s response impaired a large number of users as a result.

2. Content of administrative guidance

• 1.
  GOOD LUCK stated on its website and in the contract terms and the disclosure statement that it reserved the right to perform bandwidth control only in exceptional cases, but the data capacity was, in principle, unlimited. In that way, GOOD LUCK attracted users, and it concluded contracts by not setting limits to the monthly available capacity of data or the communication speed for the service in usual cases even if large-capacity communication is performed. Nevertheless, in late March 2020, it was discovered that the communications speed of a considerable number of users was significantly limited. As mentioned above, although they explained on their website, in the terms and conditions, and the disclosure statement that bandwidth control might be performed, the scale of restrictions that GOOD LUCK conducted is significantly different from GOOD LUCK’s catchphrase “Unlimited.” It is recognized that GOOD LUCK overstated its service quality when GOOD LUCK attracted users.
  Therefore, it is considered that GOOD LUCK’s act of improperly attracting users and concluding contracts is considered to be contrary to the purpose of protecting users’ interests as stipulated in Article 1 of the Act.
• 2.
  Furthermore, to resolve the situation where the total amount of communications capacity is tight, GOOD LUCK limited users’ communications capacity to 25 GB per month if the users had a track record of data usage exceeding a certain amount. At that time, GOOD LUCK did not provide users with specific criteria for those who are subject to the restrictions and did not respond to inquiries at all.
  This is considered that GOOD LUCK did not properly provide information (criteria for users subject to communication restrictions) that could be users’ motivation to decide whether to continue or cancel the use of the service. It constituted the act of intentionally failing to disclose or misrepresenting facts that may affect users’ judgment and was in violation of the provisions of Article 27-2, item (i) of the Act (i.e., prohibiting the non-disclosure of facts). Furthermore, GOOD LUCK’s attitude of not responding to the complaints received violated the provisions of Article 27 of the Act (Procedure for Processing Complaints).
• 3.
  Besides, as mentioned above, GOOD LUCK did not recognize the necessary information about this service. Moreover, GOOD LUCK tried to handle all matters related to this case, including the provision of service, without constructing the necessary system, and the interests of so many users were lost, and the case had a great social impact. Accordingly, it can be considered that GOOD LUCK’s act is contrary to the purpose of protecting users’ interests stipulated in Article 1 of the Act.
• 4.

  Under these circumstances, MIC has instructed GOOD LUCK to ensure compliance with the law and implement measures to protect users’ interests.

  Main content of instructions to GOOD LUCK

  • Prompt implementation of measures to protect user interests
    As a telecommunications carrier, GOOD LUCK should take appropriate measures promptly by properly recognizing business risks associated with the service and protect users’ interests, such as the elucidation of the root cause of trouble, solution of the trouble, and provision of appropriate information to users.
    When attracting users to the telecommunications service, GOOD LUCK should keep in mind not to overstate its service quality in terms of the provision conditions of the service.
  • Thorough compliance with the provisions of Article 27 and Article 27-2, item (i) of the Act
    GOOD LUCK should establish a system to ensure thorough compliance with complaints handling obligations stipulated in Article 27 of the Act and eliminate the state of false notification as stipulated in Article 27-2 of the Act.
  • Report on the implementation of recurrence prevention measures
    For the prevention of such improper cases from occurring in the future in the telecommunications service that GOOD LUCK provides, GOOD LUCK should take recurrence prevention measures promptly based on the above guidance and report in writing to MIC by July 16, 2020.

3. Calling attention to other telecommunications carriers

In the case of controlling the bandwidth of data communications under certain conditions, it is considered appropriate to inform the users of the details of the conditions clearly with consideration of the Guidelines for Consumer Protection Rules for the Telecommunications Business Act (established in March 2016 with the final revision in March 2020) and Guidelines on Bandwidth Control Operation Standards (established in May 2008 with the final revision in December 2019). In particular, when stating unlimited communications capacity for a certain period, it is necessary to be careful and respond appropriately if such expressions are misleading to users.
Regarding the potential risks related to the service as mentioned above, the linking of information between the wholesale telecommunications carrier and the service provider (GOOD LUCK in this case) was insufficient, e.g., GOOK LUCK provided the service without securing the necessary system. As a result, it was difficult for GOOK LUCK to act appropriately before and after the occurrence of the trouble. When providing services to users, it should be noted that risk management is the telecommunications carrier’s responsibility under appropriate cooperation with related operators and that it is necessary to strive not to damage users’ interests.
The Standards for Security and Reliability of Information and Telecommunications Networks (MPT Notice No. 73 of 1987), Appendix 2 (Management Standards) stipulates that telecommunications carriers need to clarify the system of cooperation with outside parties and the scope of responsibility in managing information and communications networks. With this in mind, MIC plans a third party’s verification in the future to organize lessons learned to prevent the recurrence of such trouble.