Highlight: telecoms and web entry in Japan

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Telecommunications and web entry

i Web and web protocol regulation

The MIC regulates web and IP-based providers (reminiscent of high-speed web and voice over web protocol providers), together with wired telephony and cellphones, below the Telecommunications Enterprise Act. The Act and the laws thereunder emphasise safety of the secrecy of communications and the dependable and non-discriminatory provision of telecommunications providers.

The Act regulates not solely service suppliers that function their very own community amenities, but additionally service suppliers that facilitate telecommunications between customers however don’t function their very own community amenities (reminiscent of devoted internet hosting providers on which shoppers can function an electronic mail server). Web-based providers that aren’t designed to facilitate telecommunication, reminiscent of web banking and internet-based publication and media subscriptions, are usually not deemed to be telecommunications providers which might require a submitting with the MIC.

In June 2022, the Eating regimen handed an modification to the Telecommunications Enterprise Act that can come into pressure inside a yr. The modification newly designated enterprise operators of serps and social community service (SNS) suppliers as telecommunications providers suppliers who might be regulated below the Telecommunications Enterprise Act.

ii Common service

Underneath the Telecommunications Enterprise Act and the NTT Act, the NTT group is required to supply wired telephony providers (analogue or IP over optical fibre), pay telephone providers and emergency name providers to all areas of Japan. NTT East and NTT West⁶ present providers to depopulated areas, and a telecommunications commerce affiliation comprising all the main telecommunications firms in Japan then reimburses NTT East and NTT West for any value deficits incurred by an NTT group’s provision of the service. Nationwide regulation requires every telecommunication service supplier connecting its community with that of NTT East or NTT West to pay a small payment (roughly ¥2 to ¥8, various from yr to yr) per landline and cell phone quantity (buyer), which prices are sometimes handed alongside to particular person customers in reference to their month-to-month phone service payments. However such funding help, NTT East and NTT West have operated at a deficit of their landline companies because of the burden of proudly owning and sustaining all the amenities essential to supply providers to the whole lot of Japan, together with quickly depopulating areas. To cut back this burden, the NTT Act was amended in Could 2020 to allow NTT East and NTT West to make use of wi-fi telecommunication amenities owned by different telecommunications firms to fulfil their duties of offering common service.

Traditionally, there was no comparable regulation requiring common broadband service, however in June 2022, the Eating regimen handed an modification to the Telecommunications Enterprise Act to require common entry to sure broadband providers. Because of this, operators of those broadband providers might be obligated to, amongst different issues, broaden their providers in sure areas, and put together and make accessible the phrases and situations for such providers. It’s anticipated that such broadband providers will embody optical fibre/fibre to the house (FTTH) and CATV transmitted through a hybrid fibre coaxial methodology. Subsidies can even be launched to expedite the secure provision of providers in unprofitable areas.

However the shortage of a proper requirement for common protection earlier than the 2022 modification, as of 2015, the broadband infrastructure (3.5G, satellite tv for pc web, 3.9G, digital subscriber line (DSL), optical fibre/FTTH, and so on.) penetration price in Japan had already reached 100 per cent, and super-broadband infrastructure (optical fibre/FTTH, 3.9G and different infrastructure with an information transmission pace over 30Mb per second, together with DSL, mounted wi-fi entry, satellite tv for pc, and broadband wi-fi entry) penetration price had equally reached 99.98 per cent. That mentioned, persevering with to roll out optical fibre might be particularly vital to allow the proliferation of 5G. Optical fibre’s nationwide penetration price was 99.3 per cent as of March 2021, however it’s nonetheless under 95 per cent in a number of prefectures which have remoted islands or mountainous areas. The MIC is planning to extend the penetration price to 99.85 per cent by the top of fiscal yr 2024, and to 99.90 per cent by the top of fiscal yr 2027. The MIC can be searching for to carry optical fibre or, at minimal, cell phone entry, to all areas by the top of fiscal yr 2022.

Rakuten Cellular: a brand new cellular community operator service supplier

Rakuten KK, a serious e-commerce platform, has lengthy had the most important market share of all cellular digital community operators (MVNOs) in Japan. Its just lately established subsidiary, Rakuten Cellular, was authorized to develop into Japan’s fourth cellular community operator (MNO) in April 2018. Rakuten Cellular was allotted 1.7GHz 40MHz bandwidth in April 2019, and shortly thereafter introduced the launch of its MNO providers.⁷ To consolidate its service choices, Rakuten KK additionally assigned its MVNO enterprise to Rakuten Cellular in April 2019. Rakuten Cellular launched MNO providers in April 2020.

Public WiFi entry

In line with a 2020 survey of international guests carried out by the Japan Tourism Company, the shortage of free public WiFi in Japan was ranked as probably the most inconvenient points of their go to to Japan (11.0 per cent of the respondent answered negatively), although the ratio had considerably decreased in comparison with the survey in 2017 (21.2 per cent).

The MIC has been implementing enhancements to public WiFi providers in an effort to extend the variety of international guests to Japan. Specifically, the MIC has been managing the implementation of the SAQ2⁸ JAPAN Undertaking since June 2014. The objectives of the SAQ2 JAPAN Undertaking embody:

1. rising the variety of free WiFi hotspots and bettering the accessibility of those hotspots to the general public;
2. facilitating the supply and set up of Japanese SIM playing cards for international cell phone customers in Japan;
3. decreasing worldwide roaming charges relevant to international cell phone customers in Japan; and
4. implementing multi-language interpretation techniques (i.e., translation functions).

In November 2013, an NTT group affiliate started offering a smartphone software known as Japan Related-free WiFi,⁹ which permits customers to connect with public WiFi entry factors throughout Japan, together with at airports, practice stations, comfort shops and vacationer spots, with a one-time new person registration. The smartphone software is offered in 16 languages, together with English, French, German, Spanish, Italian, Chinese language, Korean, Thai and Bahasa Indonesia. This NTT group affiliate can be persevering with to put in extra WiFi entry factors.

In preparation for internet hosting the 2020 Olympic Video games in Tokyo (which finally had been moved to 2021 because of the covid-19 pandemic), in February 2016 the MIC issued a coverage assertion encouraging the adoption of a simplified and unified authentication protocol with the objective of accelerating international guests’ entry to free public WiFi providers. On behalf of the MIC, Gateway App Japan, a non-profit organisation, publishes a smartphone software, known as the Omotenashi app,¹⁰ with the cooperation of KDDI and SoftBank. KDDI and SoftBank are main opponents of the NTT group, which, as famous above, offers the Japan Related-free WiFi app. These two smartphone functions (Japan Related-free WiFi and the Omotenashi app) are appropriate (i.e., international guests will have the ability to entry the WiFi entry factors throughout Japan utilizing both of those functions). Not too long ago, a handful of personal firms, reminiscent of Accenture and SoftBank, have launched first-party functions enabling international guests to entry 1000’s of WiFi entry factors throughout Japan. With customers’ consent, a few of these non-public firms collect anonymised information from the usage of their functions, together with information person attributes and placement historical past, which they then analyse and promote to 3rd events as studies.

Tokyo Metro, a railway firm that’s owned by the Japanese nationwide and native Tokyo governments and operates lots of the subway traces in Tokyo, offers public WiFi entry factors in practically all of its stations. As well as, in preparation for the Tokyo Olympic Video games, Tokyo Metro outfitted all the subway trains it operates with WiFi previous to 2020, however as of June 2022 has terminated public WiFi service on its trains. Journey Japan WiFi (one other competitor to Omotenashi and Japan Related-free WiFi) stays accessible on these trains.

In January 2019, the federal government started imposing a ¥1,000 departure tax, informally often known as the worldwide vacationer tax, on all international guests to enhance Japan’s tourism infrastructure, together with to fund the proliferation and enhancement of public WiFi.

Separate from the above enhancements to free WiFi providers, main Japanese cell phone service suppliers have established an emergency catastrophe service set identifier (SSID): 00000JAPAN. Throughout pure disasters, this SSID allows every person to make use of the WiFi networks of any Japanese cellular service supplier even when the person doesn’t have a subscription for, and accordingly wouldn’t usually have entry to, that community. This SSID was made accessible for the primary time throughout a two-week interval following an earthquake within the Kumamoto space in April 2016. Extra just lately, this SSID was activated following flood disasters within the Hiroshima and Osaka areas in July 2018 and September 2018, respectively, in addition to following a big earthquake in Hokkaido in September 2018, and extreme typhoons through the autumn of 2019. In the course of the 2018 Hokkaido earthquake, nevertheless, the WiFi entry factors had been rendered unusable because of widespread electrical outages. In mild of rising safety and privateness issues, the MIC just lately warned that communications despatched by way of this SSID are deliberately unencrypted to prioritise accessibility, and subsequently topic to interception by third events.

Due to the completion of the Olympic Video games and the lower in inbound vacationers (because of the covid-19 pandemic and different components), a number of free WiFi providers have been wound down. Because of this, the variety of WiFi entry factors in Japan has decreased from 198,000 in 2019 to 157,000 in 2021.

Use of international cellular gadgets

As a common rule, below the Radio Act, it’s prohibited to make use of cellular gadgets in Japan that don’t meet Japanese radio frequency (RF) emission requirements, and with respect to which the producer has not obtained authentication from the federal government. Till comparatively just lately, many international guests had been subsequently technically violating the Radio Act by utilizing their private cellular gadgets in Japan (for the reason that gadgets offered abroad sometimes haven’t been authenticated by the Japanese authorities), however there are not any recognized instances of any international customer’s truly being charged with Radio Act violations for private cellular machine use. In August 2016, an modification to the Radio Act took impact, allowing international guests to Japan to make use of their private cellular gadgets (even when not authenticated in Japan) for as much as 90 days, as long as the gadgets have both been licensed by the Federal Communications Fee in the USA or acquired CE certification within the European Financial Space utilizing requirements equal to these imposed on Japanese cellular gadgets. This Radio Act modification was applied to encourage international vacationers to go to Japan in anticipation of the 2020 Olympic Video games. Whereas there had beforehand been issues that gadgets not authenticated in Japan might adversely have an effect on the radio use atmosphere, the MIC concluded that the probability of an adversarial impact was minimal. The MIC had earlier loosened the Radio Act’s restrictions to permit Japanese residents to make use of international cellphones for R&D functions through an modification to the Radio Act that got here into pressure in November 2019. Underneath the amended Radio Act, Japanese residents are permitted to make use of international cellphones for R&D functions for as much as 180 days, however the person is required to file prior notification with the MIC (which may be completed on-line) and this exception solely permits customers to attach gadgets which have acquired international certifications utilizing requirements which can be equal to these imposed on Japanese cellular gadgets below the Radio Act.

Along with government-imposed restrictions, non-public firms in Japan have in sure instances voluntarily adopted insurance policies prohibiting the sale of sure international cellular gadgets. In Could 2019, for instance, NTT DOCOMO, KDDI and Softbank voluntarily ceased distribution of cellular gadgets manufactured by Huawei after the USA imposed sanctions on Huawei. These carriers ultimately resumed gross sales of Huawei gadgets after the US authorities introduced it was extending the pre-‘ban’ grace interval.

Proliferation of the web of issues

To handle the speedy enhance within the variety of web of issues (IoT) gadgets, which might exhaust the variety of accessible cell phone numbers, in January 2017, the MIC amended its laws on the task of telephone numbers to assign the designation ‘020’ to machine-to-machine (M2M) information connection gadgets, segregating numbers for M2M providers from normal cellular numbers designated with ‘090’, ‘080’ and ‘070’. Though these ‘020’ numbers had been initially 11 digits lengthy (the identical as cell phone numbers), to broaden capability to satisfy rising demand, the MIC amended the related laws in 2019 to assign 14-digit ‘020’ numbers. This transformation made a further 10 billion numbers accessible for M2M information connection gadgets. It’s anticipated that M2M information connections carried out by way of cellular networks will initially be used primarily for telemetry (e.g., distant administration of water and fuel meters, merchandising machines and elevators) and telematics (e.g., GPS and different info providers outfitted in autos), and can ultimately cowl linked vehicles and different IoT gadgets. NTT DOCOMO, KDDI and a number of other MVNOs commercially launched M2M information connection providers in October 2017.

New laws have just lately been adopted to handle IoT gadgets’ vulnerability to cybercrime (see the ‘Cybercrime’ part under).

IP telephony

In November 2015, NTT introduced a plan to modify from the usage of fixed-line public switched phone community (PSTN) to IP telephony. In line with NTT’s up to date implementation plan, NTT will start work on the swap to IP telephony in January 2024 with completion deliberate for January 2025. As the present PSTN is a elementary aspect of Japan’s telecommunications infrastructure, the MIC is paying shut consideration to rising IP telephony providers and the method by way of which NTT will transition away from PSTN. In mild of the significance of PSTN to the present infrastructure, in February 2016, the MIC requested the Telecommunication Council to determine potential points that might come up from the swap to IP telephony. To mitigate sure issues recognized by the Council (reminiscent of customers’ skill to retain present phone numbers), the MIC introduced a proposed modification to the Telecommunications Enterprise Act to the Eating regimen in March 2018, which was subsequently enacted in Could 2018. Underneath the modification, every telecommunication firm should get hold of the MIC’s approval of its plans relating to the usage of phone numbers, and should thereafter adjust to the authorized plans. Moreover, when telecommunication firms stop to supply providers through the shift to IP telephony, these firms should file discover of such cessation with the MIC in order that the MIC could make a public announcement of the terminating providers to clients.

iii Restrictions on anticompetitive practices

The telecommunications trade in Japan has historically been dominated by NTT East and NTT West and by three main non-public telecommunication firms: NTT DOCOMO, KDDI and SoftBank. A fourth main service supplier, Rakuten Cellular, was granted an MNO enterprise licence in April 2018 and launched industrial MNO providers in April 2020. As a result of present suppliers can develop into dominant (to the exclusion of recent entrants) as soon as their community or know-how normal has been adopted by a essential mass of customers, the MIC and the Japan Honest Commerce Fee (JFTC) have collectively adopted tips to control anticompetitive practices by service suppliers with excessive market shares.

Finish person pricing restrictions

Underneath the Telecommunications Enterprise Act, costs charged to end-users by NTT East and NTT West for wired telephony and payphone providers are topic to caps decided by the MIC. These caps are supposed to forestall these firms from abusing their near-monopoly over these elementary providers and to encourage them to enhance effectivity. As well as, costs to be charged by NTT East and NTT West for optical information providers, and costs to be charged by KDDI, NTT DOCOMO and SoftBank for cellular providers, should all be submitted to the MIC for assessment earlier than implementation. If the MIC finds a pricing scheme inappropriate, both as a result of it’s anticompetitive or in any other case considerably unreasonable, the MIC could require the service to vary its pricing scheme. In any other case, costs charged to end-users and the opposite phrases of service are usually not regulated. This will likely change, nevertheless, as the federal government has just lately began making use of stress on the main telecommunications firms to scale back costs for cell phone providers. The MIC amended the Telecommunication Enterprise Act in December 2021 to obligate KDDI, NTT DOCOMO, SoftBank, Wi-fi Metropolis Planning (WCP) and UQ Communications to report back to the MIC particulars relating to the calculation methodology and underlying information used to find out cellular connection pricing and different phrases and situations.

Entry to NTT East and NTT West optical fibre networks

As a common rule, every telecommunication enterprise licence holder should enable another service to interconnect with its community. Nonetheless, the costs charged for, and the tactic of, interconnection increase controversial points and have been more and more topic to regulatory scrutiny.

Telecommunications firms have pressed for better entry to NTT’s infrastructure, together with its optical fibre community. Beforehand, NTT East and NTT West solely supplied entry to its fibre optic community on a bulk foundation. Nonetheless, following 1 February 2015, NTT East and NTT West started to supply single-line fibre optic entry by way of a fibre optic wholesale programme to different carriers and to firms that aren’t conventional telecommunication suppliers, reminiscent of Sohgo Safety Providers (ALSOK) and Tsutaya, a rental video firm. These fibre optic wholesale programmes goal to extend fibre optic use by, amongst different measures, encouraging discount in charges charged on the end-user degree. As of March 2022, roughly 819 operators had commenced use of those wholesale fibre optic providers.

As well as, competition-related issues have arisen from the confidential nature of NTT East’s and NTT West’s contracts with the secondary retailers to whom they supplied fibre optic wholesale providers. For instance, KDDI and SoftBank expressed issues that NTT East and NTT West had been offering their fibre optic wholesale providers to NTT group firms at decrease costs than to unaffiliated firms, which in flip enabled NTT group firms to supply fibre optic providers to end-users at decrease costs.

In response to those issues, the MIC issued tips regarding the availability of fibre optic wholesale providers that prohibit the disparate therapy amongst service suppliers and likewise present the MIC with potential enforcement mechanisms. A survey carried out by the MIC confirmed that NTT DOCOMO and NTT Communications (an information communication firm throughout the NTT group) had obtained a fibre optic wholesale service market share of roughly 60 per cent by providing finish customers giant reductions on their respective cellular service charges. Given the prominence of this market share, and because of their relationship to NTT East and NTT West, different fibre optic service suppliers have argued that the discounted charges charged by NTT DOCOMO and NTT Communications are anticompetitive in nature. To handle these issues, in Could 2016 the MIC launched investigations into NTT DOCOMO’s enterprise practices. In its investigation report, which was issued in August 2018, the MIC concluded that the discounted charges charged by NTT DOCOMO and NTT Communications didn’t represent anticompetitive practices. Nonetheless, the MIC did decide throughout its investigation that NTT DOCOMO’s on-line description of the phrases and situations relevant to its pricing low cost was deceptive to clients. NTT DOCOMO voluntarily modified this description, however in June 2018 the MIC nonetheless issued an administrative course to NTT DOCOMO to forestall future occurrences of deceptive advertising and marketing.

MNO pricing for providers to MVNOs

Together with the introduction of fibre optic wholesale providers, the supply of MVNO service in Japan can be increasing. Whereas MVNOs have existed in Japan since 2001, there have been few suppliers and subscribers till just lately.

In 2007, the MIC’s tips relating to MVNOs had been amended to make clear the relative rights and obligations between MVNOs and MNOs, and to determine a formalised dispute settlement process. After this modification, the variety of MVNO service suppliers utilizing MNOs’ cellular traces or WiMax (worldwide interoperability for microwave entry) traces considerably elevated. In 2014, associated tips had been amended, together with a change within the calculation of cellular line wholesale pricing. These calculation modifications have diminished cellular line wholesale costs to the good thing about MVNOs, however pricing stays a serious subject between MNOs and MVNOs. Extra just lately, in 2017 the rules relating to MVNOs had been amended twice to, amongst different issues, make clear that the MIC is authorised to subject enterprise enchancment orders to any MNO that discriminates towards MVNOs with respect to offering entry to its community.¹¹

The aforementioned tips and amendments to the Telecommunications Enterprise Act mentioned under seem to have elevated MVNO exercise. In FY2013, solely 22 MVNOs supplied information communication providers or voice communication providers in Japan. Nonetheless, as of March 2022, the variety of lively MVNOs has elevated to 1,648. Correspondingly, there have been 24.81 million MVNO subscribers in March 2022, up from 7.17 million in December 2013. Nonetheless, regardless of this latest enhance in MVNO exercise, MVNO service subscribers nonetheless solely constituted 13.0 per cent of all cellular service subscribers as of March 2022.

Wholesale service pricing

The MIC established a brand new guideline relating to the verification of wholesale costs in September 2020, and revealed the results of a self-verification carried out by NTT East and NTT West pursuant to the rule of thumb in 2021. The MIC concluded that market stress didn’t present an enough examine on wholesale service pricing with respect to entry to NTT East and NTT West optical fibre providers and cellular line resellers. Accordingly, the Telecommunications Enterprise Act was amended in June 2022 to encourage extra price-competitive negotiation. Underneath the amended act, the wholesale service supplier could not refuse to supply providers if the relevant buyer accepts the supplier’s normal phrases and situations and is obliged to reveal its worth calculation methodology, amongst different info.

For the primary time in 10 years, NTT DOCOMO, KDDI and SoftBank expressed their intent to low cost cellular line wholesale providers in 2021. The MIC can be contemplating the institution of normal pricing for cellular wholesale providers.

Measures to handle anticompetitive results of machine bundling and low cost programmes, SIM-locking and auto-renewing contracts

One purpose MVNO penetration stays low is that MNOs generally allow subscribers to buy new cellular gadgets on month-to-month instalment plans – typically concurrently providing reductions on month-to-month subscription charges equal to or better than the quantity of the month-to-month instalment funds for the machine. MNOs promote that this instalment and low cost programme renders subscribers’ new gadgets ‘successfully free’. In distinction, the overwhelming majority of MVNOs would not have the monetary assets to allow subscribers to pay for brand new cellular gadgets in instalments. As an alternative, MVNO subscribers searching for a brand new cellular machine should typically pay its total buy worth upfront. This useful resource disparity has made it harder for MVNOs to compete with MNOs for brand new subscribers.

Recognising the excessive obstacles to entry created by these successfully ‘free’ cellular machine programmes, in March 2016 the MIC issued tips compelling MNOs to lower the dimensions of their cellular machine reductions in order that subscribers are required to make cheap funds towards their new gadgets. The supposed results of these tips is to bolster competitors and, ultimately, cut back cellular service subscription charges. In October 2016, the MIC issued official warnings to NTT DOCOMO, KDDI and SoftBank for making an attempt to subvert the March 2016 amended tips by distributing coupons to subscribers and potential subscribers in lieu of reductions. The Telecommunication Enterprise Act was amended on this regard in Could 2019 to state that mixed sale of cellular gadgets and cellular service contracts is prohibited, and reductions linked to the cellular service contract ought to be restricted as much as ¥20,000. Even after the modification, nevertheless, comparable reductions nonetheless exist in follow, ostensibly below the rationale that the low cost isn’t linked to the cellular service contract.

The MIC has additionally made efforts to handle the problems of SIM locking and obligatory two-year service contracts with automated contract renewal, in every case to facilitate competitors between MNOs and MVNOs and cut back customers’ cellular bills.

Because the MIC’s preliminary adoption of tips in 2010, it has inspired cellular service suppliers to supply SIM unlock choices for patrons’ cellular gadgets, because it believes that the follow of SIM locking prevents customers from freely selecting cellular service carriers and causes competitors stagnation. Most just lately, in August 2021, the MIC drastically revised its tips such that, as a common rule, SIM locking is prohibited. SIM locking is now solely permitted with the MIC’s prior approval.

Previously, progress towards the abolishment of mechanically renewing two-year service contracts was sluggish. For years MNOs ceaselessly required clients below ‘free’ cellular machine programmes to enter into two-year contracts below which clients had been required to pay roughly ¥10,000 for early termination, plus an accelerated fee of the acquisition worth of a smartphone that will in any other case be paid by instalments through the two-year time period. The 2-year contract system, at the side of the ‘free’ cellular machine programmes, has lengthy been recognized as decreasing clients’ freedom of selection in cellular service carriers and considered by the MIC as elevating anticompetitive issues. Though the MIC issued tips on quite a few events over time to handle these contracting practices, its tips had been largely ineffective in addressing the elemental subject of mechanically renewing two-year contracts.

Nonetheless, the federal government lastly took steps to handle this subject in Could 2019 by amending the Telecommunication Enterprise Act to impose restrictions on the usage of mechanically renewing two-year contracts – a considerably extra affirmative step than its prior non-binding tips. As a common precept, the newly amended Telecommunication Enterprise Act prohibits the usage of any contract provisions that will prohibit customers’ skill to terminate their cellular service contracts, if the restrictions rise to a degree that will be deemed to have anticompetitive results. Given its generality, the MIC has been delegated the duty of adopting particular laws to hold out this mandate. The MIC’s laws make clear the sorts of anticompetitive behaviour which can be prohibited below the amended Telecommunication Enterprise Act. The MIC’s laws checklist, amongst others, the next as examples of prohibited provisions in customers’ cellular service contracts:

1. any termination penalty (no matter quantity) at the side of a contract time period longer than two years;
2. no matter contract size, any early termination penalty in extra of ¥1,000; and
3. automated renewal clauses coupled with an early termination payment, whatever the preliminary contract time period, until the next situations are met:
   • the contract should be terminable with out a payment throughout a minimal three-month window extending from one month previous to expiry of the unique contract time period by way of the primary two months of the renewal interval;
   • customers should be given the selection, upon execution of the unique contract, to not have any termination penalty apply to renewal durations;
   • customers should be given the selection, on the time of automated renewal, to not have any termination penalty apply to that renewal interval; and
   • the service supplier can not change pricing or phrases to incentivise clients to consent to an extended termination penalty interval.

As well as, in June 2022, the JFTC and the MIC amended their joint tips relating to the promotion of competitors within the telecommunication enterprise to make clear that sure MNO practices – reminiscent of vital reductions on cellular gadgets tied to service plans, encouraging producers to restrict distribution of SIM-unlocked gadgets to opponents and requiring machine distributors to promote gadgets on the worth designated by the MNO – might represent violations of anti-competition legal guidelines.

In an earlier effort at reigning in anticompetitive practices, amended laws implementing the Telecommunication Enterprise Act that took impact in October 2018 added MVNO voice communication providers to the checklist of providers for which clients have an eight-day cooling-off interval after signing a brand new service contract, throughout which interval the settlement may be terminated with out penalty.

MVNOs which can be affiliated with MNOs

The MIC has just lately begun analysing the state of competitors between MVNOs. Specifically, the MIC has expressed issues that MNOs may favour affiliated MVNOs and, in flip, discriminate towards unaffiliated MVNOs by offering them slower information visitors speeds. The MIC didn’t point out any MNOs by title, however many commentators consider that the MIC was referring particularly to KDDI (which owns 32 per cent of UQ Communications) and SoftBank (which is affiliated with Y!Cellular). In October 2018, the MIC established new laws prohibiting MNOs from discriminating between MVNOs with respect to information visitors speeds. In reference to the foregoing, in Could 2020, the MIC revised the MVNO tips to, amongst different issues, make clear that an MNO is permitted to function an MVNO enterprise by counting on a community supplied by a third-party MNO (along with counting on the MNO’s personal community), but when such operation of the MVNO enterprise considerably harms competitors or the supplier ceases improvement of its MNO community in favour of specializing in its MVNO enterprise that takes benefit of the MNO networks of different suppliers, the MIC could prohibit the MVNO enterprise by way of an administrative order.

International enterprises

The MIC additionally seeks to handle the difficulty that the associated fee to adjust to the Telecommunication Enterprise Act could differ between Japanese and international enterprises. The associated fee distinction is primarily due to the problem of extraterritorial enforcement of the Act, leading to uneven enforcement between home and international enterprises. Earlier than the Telecommunication Enterprise Act was amended, a international firm was not topic to extraterritorial enforcement until the corporate had an institution or a facility in Japan, even when it supplied providers to Japanese customers. To handle this hole, the MIC amended the Telecommunication Enterprise Act in Could 2020 to increase its extraterritorial enforcement to international enterprises that present to Japanese clients providers equal to these of the home enterprises which can be regulated by the Telecommunications Enterprise Act. These amendments got here into full pressure and impact in April 2021. The amended Telecommunication Enterprise Act requires such international telecommunication firms to register with the MIC and to designate an area consultant in Japan to make sure that the MIC can realistically implement sanctions. This modification additionally goals to reinforce the safety of Japanese customers’ privateness rights.

As a consequence of extraterritorial software, even international telecommunication firms should adjust to the duty to guard customers’ proper to secrecy of communication, which is protected much more stringently than private information below Privateness Act (e.g., even the gathering of secret communication requires the consent of knowledge topics). Nonetheless, international telecommunication firms could face problem in complying with these secrecy of communication necessities. The primary problem is to appropriately delineate what classes of knowledge fall inside these necessities within the context of digital communication (which can embody header information, IP addresses, location information, and so on.). The MIC has supplied steerage that any element of communication (reminiscent of date, place, identification code, frequency of communication) is deemed to represent a secret communication. Nonetheless, such a broad definition should still be tough to use in follow in the middle of enterprise. International telecommunication firms ought to monitor the event of discussions with respect to understanding these necessities.

iv Unsolicited communications

Unsolicited texts and emails, on one hand, and unsolicited telephone calls, however, are regulated below separate regulatory regimes. With respect to unsolicited texts and emails, the Act on Regulation of Transmission of Specified Digital Mail prohibits:

1. the transmission of emails utilizing false sender info as a method of commercial for the sender’s personal or one other individual’s gross sales actions;
2. the transmission of emails to individuals who haven’t opted in to obtain such specified emails; and
3. even the place the recipient has opted in to obtain emails from the sender, the transmission of an unreasonably giant variety of emails for the aim of corroborating or selling the sender’s personal or one other individual’s gross sales actions.

Violators of those prohibitions on unsolicited texts and emails could face penalties of as much as one yr’s imprisonment or a high-quality of as much as ¥1 million.

In distinction, laws pertaining to unsolicited telephone calls are dealt with on the native prefectural degree. Accordingly, every native prefectural authorities has established an area ordinance prohibiting the making of unsolicited telephone calls. For instance, in July 2018 the metropolitan authorities of Tokyo elevated penalties below an anti-nuisance ordinance prohibiting continued unsolicited telephone calls, facsimiles, emails and SNS messages, with offenders now being penalised with as much as one yr’s imprisonment or a high-quality of as much as ¥1 million.

Because of a research carried out by the Working Group on Client Safety Guidelines based mostly on the MIC’s assortment and evaluation of customers’ complaints traits, the MIC has recognised that there are widespread client complaints about solicitations made by telecommunication enterprise suppliers that deliberately mislead customers as to the identification of that supplier or omit the aim of communication (e.g., to solicit clients to enter into subscription contracts they might not need). Some customers had been induced to enter into agreements with small-sized enterprises that misleadingly portrayed themselves as bigger, extra well-known enterprises, whereas others switched service suppliers below the mistaken perception that they had been simply switching to a unique subscription plan supplied by their present service supplier. To handle these points, the MIC amended the Telecommunication Act to require telecommunication service suppliers and distributers to obviously state their identification and the aim of a communication prior to every communication for solicitation. The modification got here into full pressure and impact in October 2019. These client safety guidelines had been bolstered by one other modification of the related laws of the Telecommunication Enterprise Act that got here into full pressure and impact in July 2022 and requires telecommunication service suppliers to supply written phrases and situations to customers earlier than they enter into agreements solicited by telephone calls and means to permit customers to terminate the service contracts extra simply, and limits the dimensions of early withdrawal penalties, amongst different issues.

v Privateness and information securityProtection of non-public info

In step with Japan’s constitutional safety of freedom of speech and secrecy of communication, the Telecommunications Enterprise Act prohibits ISPs from censoring or infringing on the privateness of communications passing by way of their networks.

As a common matter, the Regulation In regards to the Safety of Private Data (Privateness Act) protects private info or information that can be utilized to determine particular residing individuals. Underneath the Privateness Act, the entities dealing with such info are required to publish a ‘goal of utilisation’ relating to its use. Private info included right into a database should be stored precisely, and essential and correct measures to keep up its safety should be maintained. Any individual whose private information is stored in a database has a proper to request entry to the info, and add to, modify or delete it. In August 2015, the Privateness Act was amended to strengthen the safety of non-public info, together with by way of expanded safety of delicate private info, restrictions on the switch of non-public info outdoors Japan and the institution of protocols for the usage of anonymised information to facilitate massive information evaluation. In June 2020, the Act was amended to introduce the idea of ‘pseudonymised information’, which is information that’s not fully anonymised, however doesn’t determine people by itself. This idea was launched to facilitate massive information evaluation as a result of fully anonymising information is usually impractical.

Additional, the MIC and the Private Data Safety Committee (PPC) have collectively issued Privateness Act tips which can be particular to telecommunications companies. As these tips are structured to mirror the necessities of each the Privateness Act, which typically applies to all companies dealing with private info, and the Telecommunications Enterprise Act, which offers protections regarding the secrecy of communication (a constitutional proper), they’re thought of much more stringent and sturdy than the overall tips issued by the PPC, which solely mirror Privateness Act laws. Such extra restrictions require, amongst different issues, telecommunications enterprise operators to:

1. publish privateness insurance policies relating to their assortment and use of personal info and, specifically, the gathering of data by way of smartphone functions, on an affordable effort foundation;
2. set up inner laws relating to the size of time they might retain communication log data; and
3. delete this info after the expiry of this era.

The rules had been amended in March 2022 to additional reinforce the principles thereunder. For instance, the modification states that the place private info is collected for ‘profiling’ functions (i.e., use of non-public info to analyse actions, preferences and different attributes of the info topic), telecommunications enterprise operators should specify the ‘goal of utilisation’ in order that the info topic can moderately perceive how the knowledge might be used. The modification additionally clarifies, amongst different issues, that as a common rule any info protected by secrecy of communication can’t be used for ‘massive information’ evaluation, reminiscent of machine studying or information mining, even whether it is pseudonymised.¹² As well as, the modification clarifies that person identifiers, terminal identifiers, software use historical past, cookies and placement info are private info and the availability thereof to a 3rd occasion is topic to restrictions below the Privateness Act.

Telecommunications enterprise operators are notably prone to switch private information throughout borders. Cross-border transfers of Japanese private information are topic to sure restrictions below the Privateness Act. Even international companies that aren’t straight processing private information in Japan ought to take note of the extraterritoriality of Japan’s information privateness guidelines, which is triggered by a international enterprise’ assortment of non-public information from an information topic positioned in Japan when supplying items or rendering providers to the info topic. In an effort to facilitate the worldwide change of data, in July 2018 the PPC and the Commissioner for Justice, Shoppers and Gender Equality of the European Fee mutually recognised one another’s private information safety regimes as equal. Starting in January 2019, the restrictions on the cross-border switch of non-public information between Japan and the EU have been exempted. Following Brexit, such mutual recognition was prolonged to the UK.

Additional amendments to the Privateness Act had been handed in June 2020, which got here into full pressure and impact in April 2022. The amendments pertain to varied issues, together with the enhancement of knowledge topic rights, narrowing the scope of permissible opt-out switch of non-public information, creating a brand new class of pseudonymised information with, amongst different issues, much less cumbersome necessities and heightened submitting duties upon an information breach. Notably, international firms ought to take observe that extraterritorial enforcement might be strengthened. Underneath the amended Privateness Act, the PPC could have the authority to straight subject obligatory orders to international firms and impose prison penalties for failure to adjust to such orders. Having mentioned that, there are substantial limits on the federal government’s skill to implement such laws outdoors Japan. To handle this subject, the PPC is permitted to collaborate with regulators in international international locations for the aim of imposing Privateness Act laws. International firms ought to be looking out for the way the follow will develop with respect to extraterritorial enforcement. Moreover, in October 2021, the PPC promulgated laws implementing the brand new amendments, which got here into full pressure and impact in April 2022, and issued tips to make clear find out how to handle day-to-day information operations in compliance with the amendments. They embody varied new guidelines, together with, amongst different issues, extra stringent transparency necessities within the case of cross-border transfers of non-public information; below such necessities, if an information controller offers private information to a recipient outdoors Japan, the info controller might be required to clarify the info privateness framework of the nation wherein such recipient is positioned and the info safety measures that the info recipient will keep.

The JFTC has additionally approached private information safety from the angle of competitors regulation. In December 2019, the JFTC issued tips on abuse of market dominance within the context of digital platforms gathering private information from platform customers. This implies that within the JFTC’s view, abuse of market dominance might happen within the business-to-consumer context, reasonably than solely within the business-to-business context. Whether or not a digital platform supplier has market dominance is a fact-intensive inquiry. The JFTC tips checklist sorts of behaviour constituting abuse, which primarily encompass violations of the Privateness Act. Nonetheless, the rules are non-exhaustive; different behaviour could represent abuse even when it doesn’t violate the Privateness Act. For instance, the JFTC takes a broader view as to what person info ought to be protected; sure restrictions on abusive behaviour cowl assortment of data that’s associated to an individual, however doesn’t determine the individual particularly. Such unidentifiable info isn’t protected by the Privateness Act, however the JFTC should still search to guard it.

The federal government has additionally sought to determine techniques by which information topics can present private information in change for providers, whereas being protected towards the illegitimate use of such information. Because of this, the non-public info financial institution (PIB) regime has been adopted. Underneath this regime, a PIB enters right into a contract with an information topic below which the PIB is authorised to handle the info topic’s private information and, when essential, to gather private information that the info topic already offers to different firms (e-commerce platform, SNS, and so on.). When an organization needs to make use of private information managed by a PIB, the PIB is authorised to find out whether or not to present the consent to such utilization on behalf of the info topic following the overall coverage specified by the info topic. The info topic additionally has the best to decide out of utilization. There are not any constraints on the sorts of advantages that could be provided to information topics in change for entry to their private information. Accordingly, the PIB could provide advantages to incentivise the info topics to take part in its service.

A PIB isn’t legally required to acquire any governmental licence to function its information enterprise, however a PIB could voluntarily get hold of certification from the Data Expertise Federation of Japan (ITFJ), primarily to display reputability of the PIB. The MIC and the Ministry of Economic system, Commerce and Business (METI) issued the newest tips setting forth the standards that an applicant should fulfill to acquire such certification in October 2019. As of June 2022, seven PIBs have obtained ITFJ certification, and two PIBs have launched information providers.

Safety of digital platform customers

As illustrated by the JFTC’s strategy to digital platform operators’ assortment and processing of non-public information, Japanese regulators have taken an incredible curiosity in defending customers (each market contributors and clients). For this goal, the METI, JFTC and MIC advocated for the Act for Transparency of Digital Platformer Transaction (Platformer Act). The Platformer Act was enacted in June 2020, and got here into impact in February 2021.

METI has specified the next firms represent ‘specified platformers’ for functions of the Platformer Act: Amazon Japan GK, Rakuten Group, Inc., Yahoo Japan Company, Apple Inc, iTunes Kabushiki Kaisha, and Google LLC. Specified platformers are topic to 3 sorts of obligations:

1. disclosure necessities;
2. necessities to determine procedures and buildings to successfully talk with market contributors and to deal with inquiries and complaints from market contributors; and
3. necessities to submit annual studies to METI on the compliance standing and self-assessment thereof with respect to compliance with the necessities of (a) and (b).

The Platformer Act laws had been amended to broaden the vary of specified platformers to cowl digital promoting platformers. Such amendments got here into pressure in August 2022 and extra platformers might be specified by METI within the autumn of 2022.

To adjust to the disclosure necessities, a specified platformer could must disclose gadgets that aren’t included in typical phrases of use, together with the standards used to find out the rating of merchandise, and the standards for banning participation in a market.

The Eating regimen additionally handed the Act for the Safety of Shoppers who use Digital Platforms (APCDP) on 28 April 2021. The APCDP got here into full pressure and impact in Could 2022. On-line mall companies and web public sale companies are topic to the APCDP, so a better variety of firms are topic to the APCDP as in comparison with the Platformer Act. Underneath the APCDP, amongst different issues, the Prime Minister is authorised to request digital platform suppliers to take away unsafe merchandise which can be provided within the on-line market by a vendor that can not be recognized. Moreover, customers could have the best to compel digital platform suppliers to reveal the knowledge of sellers that’s essential to file a courtroom case to make a declare for damages. To the extent that digital platform suppliers take away such merchandise or disclose the relevant vendor’s info in accordance with a request, the digital platform suppliers is not going to be accountable for any injury incurred by the vendor because of such removing or disclosure.

Laws on cookie use

In June 2022, the Telecommunication Enterprise Act was amended to incorporate cookie-related laws for the primary time in Japan. Underneath the modification, suppliers of on-line providers utilizing third-party cookies or equal know-how might be required to take one of many following measures: (1) notify customers what sorts of info might be submitted; (2) get hold of prior consents from customers; or (3) present customers with an opt-out choice. A variety of ‘on-line providers’ might be topic to this new regulation, together with mounted or cell phone providers, internet-access providers, e-commerce providers, SNSs, serps, information web sites and so forth.

Remedy of infringing content material

ISPs are usually not at the moment required to proactively delete content material that infringes upon the mental property rights or privateness rights of others. Nonetheless, the Web Supplier Legal responsibility Limitation Act enacted in 2001 offers a protected harbour for ISPs that delete such content material. Underneath this protected harbour, no ISP could also be held accountable for the deletion of content material on its community if the ISP moderately believes that the content material infringes the mental property rights or privateness rights of others, or if a 3rd occasion alleges infringement and the content material sender doesn’t reply to the ISP’s inquiry inside seven days. The Web Supplier Legal responsibility Limitation Act additional shields ISPs from tortious legal responsibility for failing to delete infringing content material. In reliance on this statutory defence to legal responsibility, ISPs typically don’t take steps to observe the content material passing by way of their networks. The Act does, nevertheless, authorise individuals whose rights are infringed by content material delivered over the web to demand that the ISPs present info relating to the distributor of the content material in order that authorized motion could also be taken towards the distributor. Nonetheless, as a sensible matter, it’s typically not potential to determine the unique distributor of such infringing content material the place content material passes by way of a number of networks. In recent times, the federal government has paid shut consideration to piracy points affecting Japanese companies, notably piracy actions that concentrate on the sorts of media related to its ‘Cool Japan’ coverage (e.g., manga and animation).

In April 2018, the Mental Property Technique Headquarters of the Cupboard Workplace (IPSHQ) took what many considered to be an aggressive step by issuing a coverage known as ‘Pressing Countermeasures Towards Piracy Websites’, which is directed at addressing piracy points. Underneath this coverage, the IPSHQ declared that it’s acceptable for personal ISPs to voluntarily block entry to 3 main piracy web sites: Manga-mura, Anitube and Miomio. The coverage doesn’t legally oblige ISPs to dam entry to those websites, however the IPSHQ nonetheless expects ISPs to voluntarily comply. Notably, there was a powerful backlash towards the coverage from the Japan Web Suppliers Affiliation, which has argued that blocking entry to those websites violates legal guidelines defending the secrecy of communications. In line with the IPSHQ, the coverage is just a brief measure supposed to bridge the hole till the federal government passes extra everlasting laws regarding piracy web sites. The IPSHQ established a council of consultants for the aim of drafting such laws, and initially focused the issuance of an interim report in September 2018. Nonetheless, there was robust disagreement among the many council’s members in regards to the legitimacy of blocking entry to on-line content material, which led to a failure to satisfy the supposed report timing. The ultimate assembly of the council in October 2018 ended with out a subsequent assembly being scheduled. In line with studies, the council could have discontinued additional discussions and there have been no substantive discussions since 2018. In October 2019, the IPSHQ revealed a report back to summarise discussions relating to countermeasures towards piracy websites and its working schedule with respect thereto, and amended that report in April 2021, however laws as to blocking piracy web sites remains to be solely into account.

Though the IPSHQ didn’t attain a consensus, the Company for Cultural Affairs (ACA) approached this subject from the angle of the Copyright Act and efficiently pushed for an modification thereto. Underneath the modification, an operator of any piracy web site is topic to a prison penalty of imprisonment of as much as 5 years or fines of as much as ¥5 million, or each; and an individual posting a hyperlink to infringing content material on a piracy web site is topic to imprisonment of as much as three years or fines of as much as ¥3 million, or each. Along with the ban on piracy websites, the ACA addressed unlawful downloads of infringing content material. Earlier than the modification, the statutory ban on unlawful downloads pertained solely to restricted classes of infringing content material: particularly, music and movies. The amended Copyright Act bans downloads of all classes of infringing content material, together with books, theses and laptop applications. The ban on piracy websites got here into full pressure and impact on 1 October 2020. The extension of infringing content material classes got here into full pressure and impact on 1 January 2021.

Safety of minors

A statute for the safety of minors from dangerous web content material, often known as the Youth Web Atmosphere Act, got here into impact in April 2009. The statute directs authorities our bodies to enhance web security for juveniles (below the age of 18) by encouraging ISPs to make use of applied sciences that restrict juvenile entry to dangerous content material. The statute targets content material glorifying crime or suicide, obscene sexual content material, and different depictions of utmost violence or cruelty. The statute additional exhorts mother and father to observe their kids’s web use, and to restrict entry to inappropriate content material by utilizing filtering software program and different measures.

The statute requires cellular community service suppliers to filter web content material for patrons which can be juveniles, besides the place a mother or father has expressly requested that filtering not be used. Underneath the Act, commencing in April 2010, producers of gadgets with web connectivity (aside from cellphones) are required to pre-install filtering software program or in any other case facilitate the usage of third-party filtering software program or providers. Initially, the Act didn’t impose any filtering-related requirement on cell phone use outdoors the cellular community (e.g., on WiFi), partly as a result of only one.5 per cent of juveniles owned smartphones in 2010. Nonetheless, as of 2017, 63.2 per cent of juveniles owned smartphones, and solely 44 per cent of these juvenile smartphone customers utilised filtering software program. Which means that a big inhabitants of juveniles might have been uncovered, or not less than had entry, to inappropriate content material in an unfiltered method. In June 2017, the Act was amended to incorporate smartphones throughout the scope of cellular community service suppliers’ obligations to filter web content material and producers’ obligations to pre-install filtering software program. The amended Act additionally requires cellular community service suppliers (i.e., MNOs and MVNOs) to substantiate whether or not every new subscriber is a juvenile and, in that case, to clarify filtering to such juvenile and activate filtering. The amended Act grew to become efficient in February 2018.

Cybercrime

In Japan, cybercrime has lengthy been an space of public concern. In recent times, regulation enforcement has centered its efforts on combating cybercrime associated to laptop hacking by way of the unauthorised use of IDs and passwords, and different assaults on safety holes; the distribution of laptop viruses, and the enter of knowledge and unauthorised instructions that may trigger injury to computer systems and information; and different sorts of crimes facilitated by way of the web, reminiscent of drug trafficking, prostitution, fraudulent web auctions and youngster pornography.

Combating the distribution of kid pornography has been an space of explicit scrutiny and public curiosity. The Act on Punishment of Actions Regarding Little one Prostitution and Little one Pornography and the Safety of Youngsters, initially handed in 1999, prohibits the distribution of kid pornography. This Act was amended in 2004 to outlaw the importing and distribution of kid pornography over the web, and was additional amended in 2014 to criminalise the easy possession of pornographic photographs that includes minors and to require ISPs to dam such pornographic materials.

To fight rising cybersecurity threats, the Primary Act on Cybersecurity was enacted in November 2014. The Act prescribes the idea of cybersecurity and defines the roles and duties of the federal government. In January 2015, the Cybersecurity Strategic Headquarters (Headquarters) and Nationwide Heart of Incident Readiness and Technique for Cybersecurity had been established to facilitate programme planning, coverage formulation and general coordination for cross-cutting cybersecurity measures. Additional, in April 2022, below the amended Police Act, the Nationwide Police Company fashioned the Cyber Police Bureau and the Particular Cybercrime Investigation Workforce, which investigates cybersecurity-related crimes in a centralised method.

With respect to authorities authorities’ skill to observe content material distributed over telecommunication channels, regulation enforcement authorities had been beforehand solely permitted to utilise wiretapping throughout prison investigations of organised crime for homicide, drug-related crimes, arms possession or stowaway smuggling by acquiring a wiretap warrant pursuant to the Act for Wiretapping for Legal Investigation (Wiretapping Regulation). Nonetheless, in April 2016, the Wiretapping Regulation was amended to allow wiretapping for use in prison investigations right into a broader scope of organised crimes, together with these involving the usage of explosive supplies, kidnapping, fraud, theft and youngster pornography.

The MIC has expressed explicit issues that IoT gadgets are susceptible to malware that might render them ‘zombies’ topic to manipulation by a cyber-attacker. The MIC has careworn that, to implement countermeasures towards cyberattacks, it’s important to have particular info regarding the servers used for cyberattacks and contaminated networks. Nonetheless, it was tough for telecommunications enterprise operators to share such info with each other in mild of authorized obligations to guard the secrecy of communications below the Telecommunications Enterprise Act. In Could 2018, the Telecommunications Enterprise Act was amended with the objective of building a authorized framework to allow the sharing of data amongst telecommunications enterprise operators for cybersecurity functions. Underneath the amended Telecommunications Enterprise Act, a third-party organisation designated by the MIC will act as a hub by way of which the related info might be shared amongst telecommunications enterprise operators with out violating the necessities for secrecy of communications. In January 2019, the MIC designated ICT-ISAC Japan, a cybersecurity analysis organisation, to behave because the third-party for these functions.

As well as, the Act on Nationwide Institute of Data and Communications Expertise has been amended to authorise the Nationwide Institute of Data and Communications Expertise to evaluate networks and determine these missing acceptable password configurations. The Nationwide Institute of Data and Communications Expertise will determine particular networks and convey explicit network-specific info to telecommunications enterprise operators through a chosen third-party organisation to warn community homeowners of any password configuration deficiencies. The Nationwide Institute of Data and Communications Expertise started working in February 2019 below the challenge title ‘NOTICE’ (i.e., the Nationwide Operation In direction of IoT Clear Atmosphere). Following these cybersecurity developments, the Telecommunication Enterprise Act was correspondingly amended in April 2019 so as to add new information safety necessities to the technological specification requirement for IoT terminal gear.