In the first half of the fiscal year ended March 31, 2009, the Japanese economy began slowing down due to the effects of rising oil and other commodity prices. The subsequent disorder in the international financial markets gave rise to a global economic crisis, causing a further rapid deterioration of the domestic economy, including major declines in exports and production and downturns in corporate income and employment.
In the information and telecommunications sector, NTT West has implemented dynamic structural changes towards the realization of the ubiquitous broadband society envisioned by the "u-Japan Policy" and the "New IT Reform Strategy". In addition to the expansion of Internet usage due to rapid advances in the use of IP and broadband networks and the rapid growth of mobile phones, these changes include the integration of communications and broadcasting as well as of fixed-line and mobile communications and the expansion of new network services that exploit SaaS*1.
In the broadband market, fiber-optic access services continued to expand, and the number of fiber-optic access subscriptions overtook the number of DSL service subscriptions in the first quarter of the fiscal year ended March 31, 2009. In addition, the market environment underwent major changes through the full-scale roll-out of a triple play service that provides integrated Internet, IP telephony and video service and the appearance of new services for information devices other than personal computers. In the fixed-line telephone market, the shift from conventional fixed-line telephony to optical IP telephony advanced in conjunction with the expansion of fiber-optic access services, and competition continued with the direct subscriber telephone services of other companies using dry copper lines and telephone services provided by cable television operators.
Under this severe and drastically-changing business environment, NTT West, as a "customer-oriented corporate group" that endeavors to meet customer expectations and truly contribute to society, strove to provide and maintain stable universal services, and with the aim of converting to a business model focusing on optical and IP services, formulated and made efforts to that effect under the five-year "NTT West Group Medium-Term Management Strategy". The three pillars of this strategy are "growth strategies" directed at increasing revenue, "providing improved value-added services to customers " and "strengthening corporate culture" to reduce costs. |
(1) Efforts to Promote Fiber-Optic and IP Services
In order to realize the "NTT West Group Medium-Term Management Strategy," NTT West began service in certain parts of Osaka in March 2008 of Flet's Hikari Next, a highly-reliable fiber-optic access service that uses the next-generation network (NGN) and can be used for bandwidth-secured applications. During the fiscal year under review, NTT West sharply expanded its service territory, making the service available in certain parts of the Osaka 06 area, cabinet ordinance-designated cities and cities on the same scale as prefecture capitals. In the fiscal year ending March 31, 2010, NTT West will further expand its service territory to cover about 80% of the customers in the areas where optical services are currently offered. In addition to the previously-available Flet's Hikari Next Family Type and Flet's Hikari Next Mansion Type, NTT West also expanded its service lineup by providing: Flet's Hikari Next Business Type, a new service for enterprise customers that delivers high-volume data transmissions at speeds of up to roughly 1 Gbps*2; Flet's Hikari Next Mansion Type Mini Optical Wiring Systems*3, a service where optical fibers are installed directly in the individual units of small multi-dwelling residences; and Flet's VPN Wide, which enables high-security communications using a simple, low-cost private network. NTT West will continue to develop and offer new, highly convenient services that take full advantage of such NGN characteristics as broadband capability, high quality and high security, endeavor to expand the lineup of services that further enhance the appeal of the NGN, and promote efforts aimed at creating a rich communication environment and new business opportunities.
NTT West also sought to increase sales and enable more customers to use the Flet's Hikari*4 fiber-optic access service through discounts on monthly rates and installation fees. In addition, NTT West collaborated with companies in a wide range of fields, including: Benesse Corporation in providing a safe and comfortable learning environment through a combination of the Shinkenzemi Junior High School Course + i*5 online correspondence education program and Flet's Hikari; Business On Line Inc. in developing SaaS accounting services using Flet's access service; and TOHO Cinemas Ltd. and Kadokawa Cineplex Inc. in digital cinema distribution*6. NTT West also started offering Flet's TV Transmission Service, which enables users to receive terrestrial digital broadcasts and BS digital broadcasts through a combination of Flet's Hikari with broadcasting services provided by their Opticast Inc., and Hikari Soft Denwa, which enables customers to use Hikari Denwa from personal computers. NTT West also launched a new series of information devices called Hikari Link, which promises a convenient, secure and comfortable lifestyle with the help of Flet's Hikari. Through these measures, NTT West worked on increasing sales of fiber-optic access services and strove to expand and achieve the widespread use of high-value-added services. |
(2) Measures Relating to the Solutions Business
In the corporate business sector, NTT West carried out efficient and effective sales activities focusing on solutions that take into consideration industry characteristics and trends in such fields as local government, emergency preparation, education, agriculture, financial services and healthcare.
In the data center business in particular, NTT West endeavored to cultivate new demand by reinforcing cross-organizational efforts through collaboration with group companies and promoting bundled packages with the "TSWATT" system surveillance, maintenance and management service.
For the Business Ether Wide corporate network services using the NGN, NTT West started offering, in addition to the existing line-surveillance function, the "LAN/WAN monitor" that monitors terminals within a LAN.
Moreover, with the aim of eliminating the digital divide and providing a broadband service environment that meets regional needs, NTT West joined forces with individual localities to actively work on improving the broadband environment. |
(3) Efforts to Improve Service and Product Quality
With the goal of evolving into a "customer-oriented corporate group", NTT West set up the "With Customer Activity Promotion Office" in June 2008, implementing a framework to actively address customer requests and comments sent to a 116 center and other channels. For instance, in responding to requests to enable calling Navi-Dial numbers from Hikari Denwa, in September 2008 NTT West began enabling direct connections between Hikari Denwa and Hikari Denwa Office Type and the Navi-Dial service provided by NTT Communications Corp. with the prefix of 0570.
In addition, NTT West continued to make efforts to shorten lead time for the delivery of fiber-optic access service by promoting immediate determination of installation dates, and by taking orders for and performing installations on weekends and holidays. With the aim of increasing the use of fiber-optic access services, NTT West made efforts to enhance the offering of services that customers can use with a sense of security. These efforts included "Remote Support Service" where designated call center operators respond to inquiries about the setup of personal computers, routers and other equipment connecting to Flet's Hikari, and the setup and instructions for e-mail and other software; and "Agent Service," a one-stop gateway to repair work and solutions for any problems involving information devices used by customers subscribed to NTT West lines, even for problems with other companies' products.
Further, with the aim of nurturing engineers well-versed in the NGN service operation business and maintaining stable telephone services, NTT West strove to further improve the technical skills of its employees. In particular, to increase the number of fiber-optic service professionals, NTT West introduced a goal of training approximately 2,400 engineers by the end of the fiscal year ending March 31, 2010, undertook to improve the training framework and carried out practical training programs. |
(4) Status of Business Structures
Anticipating the emergence of a diverse range of information devices that will need to be connected to home LANs and an increase in demand for consulting and configuration and operational support services for customers' home IT environments attuned to their individual needs and lifestyles, NTT West established six companies, including NTT West-Home Techno Kansai, a business specializing in home networking, in April 2008, and began marketing activities in July 2008.
NTT West also improved the operational efficiency of 116 centers by introducing an automated voice response system (IVR)*7 that routes a customer's application or inquiry to the appropriate agent based on the purpose of the call.
In addition, through the "Kaizen Program" designed to laterally spread achievements attained in different parts of the company, NTT West created internal qualifications for various skills, strengthened skill training, and made a database that contains information relating to successful measures. |
(5) CSR Activities
NTT West considers CSR activities to be one of the most important pillars in the management of the company, and in providing information and communication services, believes that it is the social responsibility of a company to contribute to the environmentally-friendly, healthy and sustainable development of society.
To this end, pursuant to the NTT Group CSR Charter (adopted in June 2006), NTT West sought not only to rigorously comply with the law in its thorough protection of private information, but also to maintain and gain the trust of its customers by providing a safe and secure communication infrastructure. Moreover, NTT West established the Environmental Management Promotion Office in June 2008 and endeavored to promote environmentalism by contributing to the reduction of the environmental burden on society through its information communication services and by decreasing energy consumed in its business activities. Furthermore, NTT West formed the Harmonious Life Promotion Office in April 2008 to promote diversity in the workplace and various ways of working through diversity management.
With regard to these CSR efforts, to further inculcate the principles of the NTT Group CSR Charter and promote group-wide CSR activities, NTT West enhanced its CSR management while issuing NTT West Group CSR Reports to proactively disclose relevant information to its stakeholders.
In other areas, as part of an effort to provide safe and secure services, NTT West introduced devices to diagnose underground cracks that are difficult to detect visually and created internal qualifications for pole inspections in order to prevent concrete poles from cracking.
Moreover, anticipating the only supposedly predictable earthquake in the Tokai area, and with the goal of establishing a framework for responding swiftly and precisely to recover communication facilities in case of an emergency, NTT West conducted specific training disaster drills, implemented a broad range of preparatory activities and confirmed prior arrangements on how information will be shared among group companies and government ministries and agencies.
Lastly, pursuant to Article 6, Paragraph 1 of the Act against Unjustifiable Premiums and Misleading Representation concerning products and services, the Fair Trade Commission ordered NTT West in July 2008 to retract certain flyers, newspaper advertisements, leaflets and direct mail NTT West issued from February 2007 to August 2007 to advertise Hikari Denwa services, because they caused customers to mistakenly believe that the terms of use were significantly more favorable than they were in reality. NTT West would like to apologize sincerely for the inconvenience caused to its customers. To provide proper advertisement materials that are easy to understand, NTT West set up the Advertisement and Representation Screening Office at its headquarters in June 2008 to screen all advertisement materials prior to their use and to take into consideration the opinions of consumer advisors and others. In addition, the Business Risk Management Promotion Committee led by the representative director is charged with reviewing fundamental, company-wide policies regarding advertisements and with inspecting the proper handling of advertisements. Through these efforts, NTT West will continue to ensure that its advertisements are easy for customers to understand. |
(6) Sales Conditions
As a result of the above efforts, operating revenues for the fiscal year ended March 31, 2009 totaled 1,824.3 billion yen (a decrease of 4.0% from the previous fiscal year), recurring profit totaled 19.5 billion yen (a decrease of 21.6% from the previous fiscal year) and net income for the current period came to 15.4 billion yen. |
| *1: |
Software as a Service. A system for providing software application functions to customers as needed via a network. |
| *2: |
1 Gbps is the maximum speed under technical specifications. The actual usage speed may decrease as a result of customers' usage environment and congestion in communication lines. Also, control traffic that controls communications also uses communication lines in addition to customer-generated traffic, so the actual maximum speed will be slightly lower than 1 Gbps. |
| *3: |
An "All-Optical" method for installing optical fiber directly to individual units in buildings served by NTT West by running lines through common areas in the building. |
| *4: |
A collective term for FLET'S Hikari Next, FLET'S Hikari Premium and B FLET'S. |
| *5: |
A correspondence course offered by Benesse Corporation to first-year middle school students in the fiscal year ended March 31, 2009. Taking advantage of the Internet, the program uses voice and video commentaries and interactive guidance to raise students' academic skills and help them pass high school entrance examinations. |
| *6: |
Distribution of movies in digital data format instead of the conventional format of film. |
| *7: |
Interactive Voice Response. |
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