June 15, 2023 Publication of First Report of Study Group on Operation of Price Cap System

Since December 2022, the Ministry of Internal Affairs and Communications (MIC) has been holding the Study Group on Operation of Price Cap System (chaired by TSUJI Masatsugu, President of Kobe International University), which has compiled the first report.

1. Background

Nippon Telegraph and Telephone East Corporation and Nippon Telegraph and Telephone West Corporation (hereafter referred to as “NTT East and NTT West”) have been operating a price cap system as a rate regulation since October 1, 2000.
In setting the base rate index that indicates the upper limit price, the expected rate of productivity improvement (X-factor) based on a reasonable forecast of future costs is calculated every three years. The current X-factor is scheduled to be applied until the end of September 2024. However, the rate structure is scheduled to be changed in January 2024 due to the migration to the IP network by NTT East and NTT West. Therefore, the Study Group on Operation of Price Cap System (hereafter referred to as the “Study Group”) has been studying the treatment of the base rate index and X-factor to be applied in and after the same month onward.
This Study Group has compiled the first report, which is now available for public release.

2. First report

See the attachment in PDF for the first report of the Study Group.

3. Future plans

Based on the first report, the Study Group will continue to discuss the calculation of the X-factor for the next period, which is scheduled to be applied in and after October 2024.

< Related press release >
Organization of Study Group on Operation of Price Cap System
https://www.soumu.go.jp/menu_news/s-news/01kiban03_02000834.html

• *
  The published materials are in Japanese only.