"THE COMMUNITY"
ON NTT DOCOMO'S NEW 30,000 YEN DEPOSIT TO NON-JAPANESE SUBSCRIBERS ONLY

(Press Releases dated April 22, 2002 in English and Japanese)
(Protest letters we submitted in English and Japanese to the president of NTT DoCoMo, a Mr Tachikawa Keiji, on June 20, 2002, available HERE.)
(Kyodo News Service article, dated June 21, 2002 on UMJ and The Community's June 20 Protest Visit to NTT Docomo's HQ in Tokyo available HERE (English text) (Japanese text))
JAPAN TIMES article Aug 29, 2002, on the Protest Visit and subsequent improvement in Docomo Policy, available HERE.
Saga Shinbun article Sept 4, 2002, available here in English and original Japanese

A PRIMER ON THE ISSUE

By Arudou Debito, James Gibbs, and others.

As of April 1, 2002, DoCoMo, Japan's largest cellphone operator and a subsidiary of Japan's largest telephone operator, Nippon Telegraph and Telephone Corp (NTT), has decided to levy a deposit of 30,000 yen for all non-Japanese customers who are not legally Permanent Residents of Japan.

Although only affecting new subscribers, the authors of this site believe that NTT's actions are unfair, blaming non-Japanese for payment delinquency due in part to NTT's own byzantine rules, unrealistic in terms of actual rates of default for foreigners, and misguided in light of where NTT's current financial woes really lie--in its own incompetent investing practices.

If you are visiting this site cognizant of the problem and looking for the TRILINGUAL LETTER OF PROTEST to submit when unsubscribing from DoCoMo, please CLICK HERE.

If you need more information, read on.

This site is organized thus (click to page down):


1) ASAHI ON DOCOMO'S "FOREIGN TARIFF"
2) JAMES GIBBS ON DOCOMO'S BYZANTINE UNSUBSCRIPTION SYSTEM
3) "ANONYMOUS" ON FOREIGNERS' ACTUALLY INFINITESIMAL RATES OF DEFAULT
4) BEN AND OLAF CRUNCH THE NUMBERS FOR FOREIGNER DEFAULTS
5) ARUDOU DEBITO ON NTT'S INCOMPETENT BUSINESS PRACTICES
6) ASAHI ON "NTT LOSS WORST IN JAPANESE HISTORY"
7) IHT ON "NTT SEES DOUBLING OF LOSSES"
8) FINAL WORD

DOCOMO'S "FOREIGN TARIFF"

By Paul Murphy
IHT/Asahi April 12, 2002, pg 21
(online at http://www.asahi.com/english/business/K2002041200497.html)

Saying foreigners are skipping out on mobile phone bills at six times the rate of Japanese, NTT DoCoMo Inc. is now demanding a 30,000 yen deposit from many non-Japanese subscribers.

The new policy to treat foreigners as credit risks was quietly introduced April 1.

DoCoMo is demanding the deposit from non-permanent residents--a category that includes the vast majority of non-Asian foreigners living in Japan--who choose to pay their bills at convenience stores.

Foreign customers who signed up before April 1, and those who pay by direct debit from bank accounts are not affected.

"There have been many cases of people returning to their country without paying their charges," said DoCoMo spokeswoman Mariko Hanaoka, noting that Japanese who are considered credit risks are also asked to cough up deposits.

"It is not our intention to be discriminatory," she said.

Rights activists see things differently. "They are assuming that any foreigner who is not a permanent resident is a credit risk. That assumption is very problematic," said Tony Laszlo, head director of Issho Kikaku, a nongovernmental organization that studies multicultural issues.

One analyst said the decision makes commercial sense.

"This is a financial decision by DoCoMo. If the default ratio is higher (for foreigners) than general subscribers it is logical to shut that down," said Mark Berman, telecoms analyst with Credit Suisse First Boston Securities (Japan).

He added, however, that DoCoMo may lose foreign customers to rivals J-Phone Ltd. and KDDI Corp.

The change could also rebound embarrassingly on DoCoMo at a time when it is busy projecting itself internationally.

The company invested almost 2 trillion yen overseas in the last two years to lay the groundwork for the international spread of i-mode and third-generation mobile phone services.

DoCoMo declined to say how much it had lost in unpaid bills. However, Hanaoka cited one case of a foreigner leaving the country with 260,000 yen in unpaid charges.

From July 2001 to March, DoCoMo charged subscribers in the U.S. military a 50,000 yen application deposit to cover the risk of service personnel leaving bills unpaid. That figure has now been reduced to 30,000 yen.

J-Phone and KDDI say they treat foreigners and Japanese equally when it comes to paying bills.

At KDDI, "Nonpayment of bills by foreigners is a problem but an extremely small one," a spokeswoman said.

ENDS



JAMES GIBBS ON NTT'S BYZANTINE SYSTEM AND HOW IT CREATES "DEADBEAT" FOREIGNERS

A not-small portion of those foreigners "skipping out" have tried to cancel their phone bill but are unable to. Docomo intentionally makes it difficult to cancel those phones so the process is dragged out over several months. Then they can keep charging fees and call the foreigners deadbeats when they don't cough up the money for services they never used and had asked to be stopped.

Specifically, Docomo had been requiring people who want to stop the service to visit their office and fill out forms.

Think about this. In ordinary consumer law principles when a customer notifies you to stop something you must stop it. Otherwise companies would continue a service and then bill and sue to get payment. To continue to bill is a kind of fraudulent activity, particularly when you send such request in writing by registered mail. But Docomo is able to skirt such laws by including a "must visit office and cancel" note in the fine print of its sign up contracts. At this point you have to ask yourself who are the consumer laws designed to protect --the consumer or the large corporation NTT Docomo?

I don't know if this situation has changed, but the whole thing was very clearly designed to prevent people from cancelling their phones, and if you can extend a phone bill by one month, just the monthly minimum charge times a million people is a huge amount of money, and Docomo knows this.

For foreigners the situation can be even worse because many are on tight schedules to get out of the country when they move, and everything comes down to the wire. Trekking over to the one Docomo closing office sometimes is impossible.

One foreigner I knew was begging and pleading with them the day before leaving to cut the phone, but they just ignored the requests and later wrote this person up as delinquent. This no doubt damaged the person's credit rating through reporting to various credit agencies. Another foreigner reported a phone stolen and demanded that they cut the line. Docomo said they would cut the line after the forms were filled out. Can you imagine if Visa or Master Card gave a customer that kind of response? They would never survive in court once the "stolen" info was confirmed that they received it. Yet Docomo by its policy will leave those phones running so that a thief can run up the bill and the victim can get billed for it. Later, Docomo can blame foreigners for skipping out on their bills.

Another big issue related to this problem is a highly unfair and unethical cancellation scheme (see more at http://www.japantraveler.com/JT-00.02/DDI-NTT.htm), which Docomo utilizes via its small print to force more money out of people who want to cancel their service. As a result, more disputes, more "foreign deadbeats" for Docomo to blame, and more revenue from penalizing them. And now more money in advance just to subscribe to their services. Docomo has created this situation with its own heavy-handed policies and then turns around and blames it on foreigners.

I very strongly believe that Docomo is actually creating the majority of the problems it is griping about by means of this hard-to-cancel policy. Consumer law is based on the principle that consumers should be able to stop receiving a service when they ask for it to stop. More investigation by an outside party is necessary.

We tried to buy an ad for our English school in one of Recruit's English magazines. They demanded that we include a clause in the student agreement or receipt saying that students could cancel their subscription here at any time and get all unused prepaid money back, even though the offer/agreement/contract is at cheaper rates for larger-lesson purchases. All businesses do this, i.e., give discounts for bulk purchases. Even though there is a law that requires schools to refund money, Recruit demanded that we put it in the agreement as well. I asked them why we had to have a sentence saying "we will obey the law." Now how about Docomo following this practice?

The point is why are some businesses forced to adhere to strict consumer laws while a behemoth like Docomo with umpteen ex-bureaucrat amakudari fat-cats allowed to stick it to the consumers and force them to pay up by means of this "you-signed-the-contract" logic. Why is Docomo given this exceptional status? The answer is very simple. These amakudari fellows have made sure of it that Docomo contracts are fine with no consumer protection while other business contracts can be cancelled at will with full refunds.

In the end, I believe the solution must be a boycott of Docomo by all foreigners in Japan.

James Gibbs
james AT jobsinjapan DOT com


ANONYMOUS ON ACTUAL RATES OF FOREIGNER DEFAULT--INFINITESIMAL

From: (name withheld upon request)
To: "'Arudou Debito/Dave Aldwinckle'" <debito@debito.org>
Subject: RE: NTT DoCoMo and its misguided "foreigner tariff"
Date: Wed, 17 Apr 2002

According to the Japanese telecom analyst at [a leading financial analysis company in Japan which requested anonymity], 99% of DoCoMo's (foreign and domestic) subscribers have good credit ratings. Unfortunately, the recent change in policy came into effect when DoCoMo found itself having problems with the US military bases in Okinawa. Credit worthiness was usually accepted based upon Japanese bank accounts. However, servicemen would close their bank accounts suddenly and pocket their mobile phones, leaving the company in a lurch. DoCoMo is simply (over?)reacting to the few tens of thousands of servicemen that apparently were abusing this system over the years. As you say, the deposits are immaterial to profit and loss statements because of the relatively low number of foreign subscribers in Japan. Therefore, it's a little difficult to argue, as you do in sections below, that the company willingly adopts this policy in order to partially make up for "poor investment decisions" abroad. It might make sense to point this out to your readership.

As evidence, from J@pan Inc Magazine (http://www.japaninc.net):

VIEWPOINT: DoCoMo's New Policy Has Foreigners Fuming

Starting this month, if you're a foreigner in Japan and you want an NTT DoCoMo cellphone, you have to pay for it via an automatic withdrawal from your bank account or put up a deposit of 30,000 yen. DoCoMo's Japanese customers can opt to pay at the local convenience store, but foreigners who don't want DoCoMo reaching into their bank account will have to pay the deposit, a DoCoMo official told J@pan Inc. The company doesn't accept any credit card payments.

But some foreigners say even that option -- using automatic withdrawal or putting up a deposit -- hasn't been made clear by vendors. An angry J@pan Inc reader who goes by the handle 'New KDDI Customer' related this episode to us: "After waiting for an hour to have my phone set up, I was told that as of April 1, DoCoMo has changed its policy to exclude foreign residents from the option of convenience store payments. The only option now open to people like me is to surrender their bank account information and allow DoCoMo to withdraw automatically. It appears that foreigners do not enjoy the same level of trust as Japanese in DoCoMo's eyes. I promptly got my money back."

New KDDI Customer is right. Foreigners do not enjoy the same level of trust, and that is because too many of them have been skipping out on their bills. "There have been a lot of cases of foreign customers leaving the country without paying their bills," says Mariko Hanaoka of DoCoMo's international public relations division. She points out that foreign-born permanent residents in Japan aren't affected by the policy change -- only those who are on a limited-stay visa.

Last July, DoCoMo started making US military personnel plunk down a 50,000 yen deposit on new phones because of the problem of soldiers skipping out on their bills. But while that policy has helped to curb the problem with military personnel here, DoCoMo says, too many civilians have also been saying sayonara without paying their cellphone bills.

Hanaoka says DoCoMo doesn't know exactly how much deadbeat foreign accounts cost the company, but last summer Stars & Stripes newspaper cited an anonymous source who estimated military people skipping out on cellphone accounts cost DoCoMo 3 million yen a month.

While there is no excuse for not paying your bills before you leave, is DoCoMo right to paint all foreigners with the same brush? Many people say the policy is discriminatory. "DoCoMo seems to be living in the past, when discriminating against foreigners was commonplace," says New KDDI Customer. "Perhaps success breeds arrogance."

Big bureaucratic companies like DoCoMo often can't maneuver skillfully through these sorts of problems. DoCoMo doesn't accept credit card payments, but what if it did just for foreigners? Or what if it made everybody pay a deposit or use the automatic withdrawal payment method? The new policy is a clunker. J-Phone and KDDI can expect to see more foreign clients coming their way. They both accept credit cards -- even from foreigners.

-- Bruce Rutledge, Editor, J@pan Inc Magazine



COMMUNITY MEMBERS BEN AND OLAF CRUNCH THE NUMBERS FOR FOREIGNER DEFAULTS
Date: Thu, 18 Apr 2002
From: Ben <roppongi@tke.att.ne.jp>
To: community-j@yahoogroups.com
Subject: Re: [Community-J] Community: NTT DoCoMo project proposal

I have to agree with Dave and the rest of the members who have replied to the proposed boycott.

The company I work for has 800 NTT mobile phones for it's employees who's average spending is about 8000 yen per phone. I will write a e-mail to the Japan CEO (who's my friend) to address this issue. Blatant rational discrimination against non-Japanese is unreasonable.

However the thing that bothers me is this: the assertion in the above Asahi Shinbun article - "foreigners are skipping out on mobile phone bills at six times the rate of Japanese" What does this mean?

There are nearly 120 million Japanese and 1.7 non-Japanese residents, basically 1.4% of the population.

Let's do the math as best we can....

There are 32.3 million i-Mode subscribers. For argument's sake, let's assume a ratio of subscribers to be the same as the general population (which is, admittedly, an overstatement of foreign subscribers, since there are probably far more Japanese customers). So, if 1.4% percent of Docomo holders are Non-Japanese Residents....

1.26B yen (which is 10 million US$ approx) in loss from foreigners

Now, for the Japanese side who don't have to do the deposit....

13,4B yen (which is 102 million US$) in loss from Japanese

Therefore, even assuming these ratios (which is still mathematically unsound since, I repeat, there are certainly more than six times more Japanese Docomo subscribers than foreign), DoCoMo losses are at least 10 times larger from Japanese than from the foreign community.

Yet the foreign community foots the blame?

NTT Docomo needs to have a fair rating system in regards to credit. One or more of the options could be used:

  1. All new Docomo subscribers are required to pay the deposit, regardless of nationality
  2. Deposit is refundable (with interest) after 1 year of on-time payments with no credit rating
  3. Proper credit checks done on all new subscribers and require deposit for those who don't meet the requirements

Please feel free to correct my math. However, I feel this new policy is wrong, especially in the era of Japan's hosting of the World Cup.

Dave, I would be willing and able to request a meeting with Docomo president Keiji Tachikawa together to state our point.

Regards, Ben (one Community Member)

---------------------------------

Date: Thu, 18 Apr 2002
From: Olaf Karthaus <olaf@debito.org>
Subject: Re: NTT DoCoMo: unrealistic "foreigner defaults"

Here is another way to look at it.

We can assume that 1.4% of DoCoMo users are foreigners (the average of the population).

Since the 30,000 yen gaijin penalty only applies to non-permanent residents, this number can approximately be halved.

That means 0.7% of subscribers are foreigners in the bracket targeted by NTT.

In order to have 0.7% of customers produce the same financial damage as the 99.3% other (Japanese) customers, you need 140 times the number of deadbeat foreign customers!

Which number does the Asahi article quote? Barely 6 times?

I would definitely say that NTT is overreacting.

Olaf Karthaus, another Community Member



NTT BLAMING THE FOREIGNERS FOR ITS OWN FAULTS:
ARUDOU DEBITO ON NTT'S INCOMPETENT INVESTMENT STRATEGIES

NTT has been swilling in cash for a couple of generations. Consequently, excess and financial irresponsibility are hallmarks of its business practices.

NTT was the former domestic telephone monopoly in Japan, run by the Japanese government until privatization in 1985 (see http://www.nttamerica.com/about/ntt.html). It basically still has monopoly powers, like those over land-use lines tariffing all telephone competitors and internet service providers, creating cash cows and rival profitability stiflers. NTT requires every Japan resident to pay probably the highest deposits in the world (Y76,440 of deadweight cash) just to get the rights to open a land line. Just a few years ago, NTT was allowed by the Ministry of Posts and Telecommunications to triple its local telephone booth rates overnight (from ten yen per three minutes to ten yen per minute). It now charges some of the developed world's highest domestic rates, making it often less expensive to call overseas than to call Kyushu from Sapporo. Unsurprisingly, for years NTT has been Japan's "most profitable company".

NTT's excessive management style still reflects a cossetted mindset. Like any bureaucratic organ, it does not invest in terms of cost or budget--only in terms of targets and goals. For example, I personally have witnessed NTT rent whole subway cars (all ten or so connected cars on one train) on main government lines in Tokyo, just to display one advertising flyer for a single campaign. Imagine how much that must have cost per day!

Then consider I-Cards. To plug a small hole in profitability due to counterfeit telephone cards, NTT launched a huge sticker campaign for every phone booth in Japan, warning users of possible arrest, heavy fines, and incarceration. It also poured huge amounts of revenue into developing a whole new system of phone booths with disposable telephone cards--the "I-Card"--which cannot be forged. This probably cost the company far more than to just let the regular authorities deal with forgery problems. But then again, NTT has historically never been short of money.

Even a few years ago, due to foreign pressure, there was talk of reform and institutionalizing real competition in Japan's domestic telecommunications market. It resulted in only cosmetic restructuring.

Why is this situation allowed to stand? Because NTT is still seen by the government as Japan's flagship in the international market. With some Mandarins refusing to give up time-honored tenets of Industrial Policy, "administrative guidance" (gyousei shidou), and textbook mercantilism, NTT is allowed to fatten itself on a protected and captive domestic market for an eventual emergence on the world stage. Still Japan's biggest company in terms of stock market capitalization, NTT has spent the past two years making heavy investments for toeholds overseas at any cost.

This is why to me, NTT's decision to tariff foreigners is within character. It is the same old story of a diffident, greedy, and bloated company, unafraid of any real damage due to customers fleeing to competitors, still fulfilling its goals: plug any purported leaks in its corporate mass, and pay no heed to any possible PR disaster. Because no matter what, people are forced to use NTT services.

In sum, NTT has gone on too long behaving like a bureaucratic organ instead of like a company, and it has finally come back to haunt them. This year NTT incurred the largest losses in Japanese history. As evidence, two short articles I'll type in for you. Final word from me afterward.



NTT LOSS WORST IN JAPANESE HISTORY
(IHT/Asahi April 4, 2002, pg 21)

Pummelled by failed equity investiments overseas and spiraling costs from personnel cuts, the Nippon Telegraph and Telephone Corp. group will post extraordinary losses topping 2 trillion yen for the year ended Sunday, NTT sources said Wednesday.

This figure will bring the NTT group's consolidated net loss to about 900 billion yen.

The sizes of both the extraordinary loss and the net loss are the largest ever for a Japanese business entity.

The group was to announce the figures today.

The extraordinary losses include 800 billion yen by mobile phone arm NTT DoCoMo Inc., mainly from overseas investments, and about 700 billion yen in combined costs at regional carriers NTT East Corp. and NTT West Corp. for job cuts and other restructuring efforsts.

The figure also takes into account the 600 billion yen in losses mainly on overseas investments at long-distance carrier NTT Communications Corp.

Nissan Motor Co. set the previous recor dfor net loss--684.4 billion yen--for the year ending March 2000.

ENDS



NTT SEES DOUBLING OF LOSSES
FOREIGN INVESTMENTS ALSO PUNISH DOCOMO
(IHT April 5, 2002, pg 11)

TOKYO--Nippon Telegraph and Telephone Corp. warned Thursday that unprofitable overseas investments would cause it to post a loss more than double the amount previously forecast.

Japan's dominant telecommunications carrier said its group net loss for the previous financial year would balloon to Y865 billion ($6.5 billion).

Nearly half of the special charges were from investment write-downs by its mobile-phone subsidiary, NTT DoCoMo Inc. Japan's biggest wireless operator, which had forecast a profit of Y225 billion for the year, said Thursday that it now expected a lost of Y36 billion.

Analysts said the loss would be the largest ever for a Japanese nonfinancial company. NTT had forecast a net loss of Y331 billion in November.

But they also said that they saw no reason for alarm over the wider loss, which had been expected, and the balance-sheet cleanup would set the stage for an earnings recovery this year.

NTT shares closed Thursday at Y518,000, up Y4000. DoCoMo shares closed at Y37,000, up Y5000.

NTT attributed the huge loss to special charges of more than Y2 trillion to trim its bloated work force and on write-downs on overseas investment made during a telecommunications share-price bubble.

DoCoMo said it had suffered unrealized losses of Y506 billion in its share holdings in AT&T Wireless Services Inc. and further losses of Y30 billion from an investment in KG Telecommunications Co of Taiwan.

A former state monopoly faced with increasing competition, NTT went on a costly acquisition drive in 2000 and 2001 to lay the groundwork for new growth possibilities outside Japan.

But those investments turned sour as a global sell-off in telecom shares hit carriers worldwide, forcing NTT to post a consolidated special loss in the six months through Sept 30, 2001.

ENDS


FINAL WORD:

I doubt that punishing foreigners in Japan for NTT's own financial excesses will make much of a difference to its balance sheets. It is a misdirected act in any case. How about punishing NTT's Japanese staff overseas for making incompetent decisions? That is clearly where the real financial black holes lie.

As they are wantonly and unfairly targeting foreigners, I too support a boycott of DoCoMo and NTT wherever possible. If people switch to other non-NTT cellphone services, I suggest they make their discontent and their reasons for doing so clear to the company.

Want to unsubscribe from NTT Docomo with a downloadable statement of discontent? CLICK HERE for the TRILINGUAL LETTER OF PROTEST.

Arudou Debito
Sapporo
Proud J-Phone user

Press Releases dated April 22, 2002 in English and Japanese
Protest letters we submitted in English and Japanese to the president of NTT DoCoMo, a Mr Tachikawa Keiji, on June 20, 2002, available HERE.
Kyodo News Service article, dated June 21, 2002 on UMJ and The Community's June 20 Protest Visit to NTT Docomo's HQ in Tokyo available HERE (English text) (Japanese text)
JAPAN TIMES article Aug 29, 2002, on the Protest Visit and subsequent improvement in Docomo Policy, available HERE.

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