March 19, 2021 Release of Report from Study Group on Operation of Price Cap System

The Ministry of Internal Affairs and Communications (MIC) organized a study group (chaired by TSUJI Masatsugu, Professor, Economics Faculty of Economics, Kobe International University) on the operation of the price cap system. This study group examines and organizes matters to be kept in mind when calculating the expected rate of productivity improvement (X-factor) required for setting a standard rate index indicating the maximum rate level (price cap) for subscription telephone services.
Recently, the study group compiled a report, and MIC has decided to release the same to the public.

1. Background

The maximum rate level (price cap) has been applied as a rate regulation since October 1, 2000, to charges related to telephone services, including subscriber telephone services, of Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation (hereafter referred to as "NTT East/West").
For setting the standard rate index that indicates the maximum rate, the expected rate of productivity improvement (X-factor) is to be calculated every three years based on a reasonable forecast of future costs. However, the application deadline of the current X-factor is the end of September 3, 2021, and it is necessary to calculate the new X-factor necessary for setting the standard rate index applied from October 1, 2021. MIC organized the study group to start studying and organizing matters to be noted when calculating the X-factor to be applied in the next term (three years from October 1, 2021).
As a result of its study at four meetings, this study group's report has been compiled.

2. Report

The published material is in Japanese only.

3. Future plans

The standard rate index applicable from October 1, 2021, will be calculated considering the report of this study group and subject to consultation with the Information and Communications and Posts Administrative Council.

Contact

For further information about this press release, please fill in the inquiry form and submit it to MIC on the website
https://www.soumu.go.jp/common/english_opinions.html

International Policy Division, Global Strategy Bureau, MIC

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