| During the six months ended September 30, 2005, the Japanese
economy continued to show a steady overall recovery with improved corporate earnings
and increased capital expenditure and consumer spending. |
The telecommunications market has been undergoing drastic environmental changes
as a result of the rapid spread of broadband access services and the introduction
of new types of services such as FMC (Fixed-Mobile Convergence) services that
combine mobile and fixed-line telephones, and "Triple Play" service
that integrate Internet, IP telephone and video capabilities all in one. |
In the rapidly expanding broadband market, customer needs are becoming more diverse
than ever and competition among telecommunications providers is intensifying
in the form of both services and prices, against the backdrop of further acceleration
in the changeover to fiber optics and IP. In the fixed-line telephone market,
meanwhile, the shift toward mobile and IP phones as well as the spread of direct
subscriber telephone services using dry copper lines made for an increasingly
competitive business environment. |
In the midst of rapid changes in market and competitive conditions, Nippon Telegraph
and Telephone West Corporation (NTT West) positioned fiscal 2005 as a critical
year for taking the "first steps" toward achieving the "NTT West
Group Medium-Term Vision" and its goal of "providing optical access
services to 15 million users in 2010." Toward this end, NTT West moved forward
with efforts to introduce attractive new services aimed at dramatic expansion
of optical access lines and fiber-optic IP-based services, promoting high value-added
solution businesses such as security features, and expanding the operations of
the entire NTT West Group. Specifically, NTT West implemented the following measures: |
1. Development of the Broadband Business
(i) Expanded Broadband Access Services |
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In optical access services, to supplement its conventional B-FLET'S
plans and satisfy diversifying user needs, NTT West offered the "FLET'S
HIKARI PREMIUM Family Type" plan, a new access service that provides high-quality
video-telephony using IPv6 addresses and security protection as basic functions,
and additionally supports optical IP phone and On Demand TV. NTT West also introduced
the "FLET'S HIKARI PREMIUM Condominium Type" plan, a new service for
multi-dwelling houses to meet the needs of customers living in condominium buildings.
Also, in addition to the previously-offered limited-time, no-monthly-fee campaign
for new subscribers to FLET'S HIKARI (a generic term for B-FLET'S and FLET'S
HIKARI PREMIUM) services, NTT West introduced the "HIKARI GUTTO DISCOUNT," a
discount program with a special rate for up to one year for new subscribers who
signed up for a "FLET'S HIKARI PREMIUM Family Type" plan or a "B-FLET'S
Family 100 Type" plan in Shizuoka, Aichi, Kyoto, Osaka, Hyogo, Hiroshima,
or Fukuoka during a specified promotion period. For ADSL users, NTT West offered
a discount of maximum 50% for one year to attract more customers.
Furthermore, to attract new FLET'S subscribers and encourage continued use of
the service, NTT West offered the "FLET'S ATTO (amazing) DISCOUNT," which
provides a discount on monthly charges with the requirement of two continuous
years of use, and "FLET'S ZUTTO (continuous) DISCOUNT," which offers
an automatic discount on monthly charges based on the number of years of use.
NTT West also made efforts to provide services meeting customer needs by achieving
shorter lead time (from application to line connection) with the introduction
of the Administrative Quick Response for Optical Service (AQROS) system and making
24-hour support available to ensure customers can make use of its service with
peace of mind. As a result, the number of FLET'S HIKARI subscriber lines installed
exceeded one million in just four years and one month, after a full-scale launch
of the service. |
(ii) Expanded Broadband Application Services |
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NTT West began to offer the "HIKARI DENWA (fiber-optic phone)" service,
an optical IP phone service for individual customers, not only to "B-FLET'S
Condominium Type" users but also to users of "FLET'S HIKARI PREMIUM
Family Type" and "FLET'S HIKARI PREMIUM Condominium Type."
For corporate customers, NTT West also added to the "HIKARI DENWA Business
Type" plan a mobile IP-phone terminal, which is compatible with the optional "IP
Centrex function." This allows NTT West to make highly convenient IP phone
terminals available to customers at a reasonable introductory cost.
NTT West also added new features to "HIKARI DENWA" and "HIKARI
DENWA Business Type" to achieve a level of usability equal to fixed-line
telephones and proactively deployed the service across the region to expand the
customer base.
To enhance its application services that use IPv6 addresses, NTT West launched "FLET'S
v6 My Disk" targeted at users of "FLET'S HIKARI PREMIUM" and "FLET'S
v6 APPLI" services. The new service enables users to store and manage a
large volume of data such as images taken with a digital camera and document
files, and share data with other users safely.
As part of its "FLET'S SQUARE" service, NTT West has been providing
live broadcasts of concerts and events and videos of popular cartoons to FLET'S
access service users, and it recently opened "v6 Stage," a broadband
site for users of FLET'S HIKARI PREMIUM and FLET'S v6 APPLI, to distribute "multi-angle
content" that allows simultaneous viewing of a scene from multiple angles,
and "high-quality content" in the Hi-Vision, in an effort to further
enhance the unique attractiveness of FLET'S services.
For "FLET'S SPOT," a public wireless LAN service, NTT West opened "FLET'S
SPOT Cafe" at five key stations in the western Japan region, where visitors
can experience ubiquitous wireless service with leading-edge wireless LAN equipment
and application software. At the same time, NTT West added to the number of access
points to expand the service area so that customers can use the service in an
ever more convenient and comfortable manner. In addition, in response to demand
for a nationwide public wireless LAN service that covers the service areas of
NTT West and East and consumer interest in using different wireless LAN terminals
for different purposes, each of which is increasing in line with the growing
number of customers, NTT West decided to offer a new service that supports mutual-roaming
between NTT West and NTT East through "FLET'S SPOT" and compatibility
with multiple wireless LAN terminals from October 2005. |
2. Development of the Solution Business |
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NTT West launched "Mobile IP Centrex Solution" as a new item in
the "N.prosol" line-up. This solution allows fast and low-cost creation
of a ubiquitous office environment that integrates fixed-line phones with mobile
phones and voice with data by combining "HIKARI DENWA Business Type," an
IP phone service for corporate customers, with 3G mobile phone and wireless LAN
dual terminals.
For security-related services, NTT West worked together with NTT MARKETING
ACT CORPORATION and NTT NEOMEIT CORPORATION to launch "ThinClient Total
Solution," a system that prevents confidential information from being taken
out illegally by a person inside of an organization or being leaked via lost
or stolen data. It is targeted at corporate customers and local governments that
have concerns about information security measures following the enforcement of
the Law Concerning the Protection of Personal Information.
To provide a higher level of authentication at login to business systems that
are constructed and operated from a network of multiple sites, NTT West also
introduced the "Biometrics-enabled IC Card Security System" jointly
with NTT CARD SOLUTION CORP. This system combines biometrics technology, which
has gained attention due to its ability to protect personal information against
loss or theft, with "ELWISE-CARD," which is an IC card developed by
NTT Service Integration Laboratories.
Also, NTT West and NTT COMWARE CORPORATION jointly installed a biometrics
authentication system within the electronic prefectural office systems of the
Saga Prefectural Office, which is the first biometric authentication system that
manages access from all employee computer terminals to be introduced in a prefectural
government office.
Furthermore, NTT West opened its business service center to provide secure,
safe, and reliable services to preferred corporate customers that use many services,
such as leased circuits and LAN services. The service center manages the entire
process of order acceptance, installation, and support for stable operation in
a prompt, flexible, and integrated manner, with the goal of providing smooth
multi-point, multi-line connection, prompt repair service, and comprehensive
after-sale service, regardless of type of circuit or location. |
3. Expanded NTT West Group Operations |
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NTT NEOMEIT CORPORATION collaborated with Hewlett-Packard Japan Ltd. to launch
the "Community-Based IT Full Support Service Business," which offers
a full range of support services in an integrated manner from provision of IT
equipment to system construction, operation and maintenance, and data erasure
/ recycling of PCs and servers at the time of system upgrade.
NTT NEOMEIT also developed "u-Consent (outlet) Service (tentative name)," which
is Japan's first home appliance control service that creates a remote control
environment by networking existing home appliances and combining broadband circuits
with mobile phones. NTT NEOMEIT plans to start a field trial in the second half
of the fiscal year.
NTT MARKETING ACT CORPORATION has provided nursing homes with "ACTOS
KIT TAG de OMAMORI (protect) MENU," a system that was developed jointly
with NTT APPLIE CORPORATION, Dai Nippon Printing Co., Ltd., and NTT West, based
on trial results of a system that combines broadband circuit and wireless IC
tag technologies.
NTT MARKETING ACT also launched the "ACTOSMALL SHUTTEN (shop-opening)
SERVICE" at its Internet shopping site ACTOSMALL," which provides an
all-in-one package of support services covering acquisition of new customers,
settlement and delivery, to general business operators who are planning to open
an Internet store and is also working to increase the number of customers and
shops through an alliance with the portal site "ACTOS e-MACHISHIROU (find
information about your town on the Web)." |
4. Measures for Fixed-Line Telephone Services |
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Faced with a widespread use of direct subscriber telephone services using
dry copper, NTT West lowered rates, including by implementing discounts on basic
charges (line service charges) for customers who receive consolidated bills for
multiple lines, in order to encourage continued use of NTT West's telephone services.
The "Number Display" service exceeded five million subscribers in
less than seven years after its full-scale launch due to the fact it meets the
needs of home telephone users and serves to improve customer service at telephone
reception desks in a range of business environments. |
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NTT West also worked to maintain and improve the level of customer service
throughout the entire service area of NTT West. As part of such efforts, NTT
West established a system whereby calls to 133 (for repair service) are transferred
to "Number 113" centers in other regions when call volume is heavy
due to natural disaster or equipment failure, to allow the handling of as many
calls as possible.
In addition to the above, NTT West waived basic charges for customers who
could not use their telephones for 24 hours or longer due to building damage
from typhoons, and those who had no access to their telephones for 24 hours or
longer because they had been ordered to evacuate. This was based on the number
of days without telephone access. Reinstallation charges for customers who moved
from damaged buildings to temporary housing were also waived.
Furthermore, amid intense public criticism arising from a series of corporate
scandals, the NTT West Group has been actively working to reinforce its corporate
ethics. During this period, the Group further applied itself to cultivating high
ethical standards both officially and privately, and creating a solid corporate
culture against fraud and misconduct. Among other things, the Group held corporate
ethics workshops similar to those held last year for all levels of management
and employees, and conducted surveys to determine the level of employee awareness
of ethical issues.
Meanwhile, in the light of the full-fledged enforcement of the Law Concerning
the Protection of Personal Information, the need for proper handling of customer
information is more significant than ever. The NTT West Group reinforced its
efforts to protect customer information by implementing various measures: (1)
creation of the "Information Security Promotion Center" to provide
guidance across the group companies; (2) conducting workshops and on-site inspections
of contractors to implement stricter control systems and procedure based on the "Security
Guidelines for Protection of Customer Information Held by Contractors";
(3) check on the level of understanding concerning the protection of customer
information by self-evaluation testing on the Web for all employees (including
those in group companies, and temporary workers) and; (4) preparation and distribution
of "Q&As" on the protection of personal information and "One-Point
Advice" summarizing precautions.
To lay the groundwork for such measures, the entire NTT West Group carried
out "customer first" activities and continued to work diligently to
earn the trust and confidence of its customers.
As a result of the above measures, the results of our principal services for
the six months ended September 30, 2005 were as follows: the number of subscriber
telephone lines installed stood at 24.71 million; in INS-Net services, the number
of INS-Net 64 lines installed totaled 3.68 million and; the number of FLET'S
ADSL and FLET'S HIKARI installations came to 2.61 million and 1.05 million, respectively.
Operating revenue, recurring profit, and net profit for the first six months
of the fiscal year ending amounted to 1,005.0 billion yen, 30.6 billion yen,
and 19.1 billion yen, respectively. |
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