FTC orders end to misleading NTT ads

The Fair Trade Commission on Tuesday ordered NTT East Corp. and NTT West Corp. to scrap advertisements that have misled consumers about fees for optical fiber Internet protocol (IP) phone services.

According to FTC officials, the two telecommunications giants violated the law for preventing misleading and exaggerated representation of goods and services.

Their ads offered comparisons between basic charges for their IP services and the higher charges for conventional land-line phones. But the ads failed to mention the additional fees required for using optical fiber cable networks.

The two NTT companies issued a statement apologizing for "causing great inconvenience for our customers."

Officials at the two companies said they have set up in-house inspection teams to check on advertisement content.

It is the second time the FTC has taken disciplinary action over misrepresentation in the telecommunications industry. The other instance also involved the two NTT fixed-line phone companies.

The Ministry of Internal Affairs and Communications on Tuesday also instructed the two companies to take corrective measures.

A number of users, particularly elderly citizens, have complained to authorities about the complicated NTT fee systems and conditions for use of the telephone services.

In response to the complaints, the FTC studied about 4,000 types of advertisements and fliers issued by the two companies since fiscal 2006.

The commission found that about one-third of the ads did not mention the cable usage fees or did not explain the total fees in a clear manner.

According to officials, users of the IP phone services must pay between 2,625 yen and 5,460 yen a month to use NTT's optical fiber cable network, known as FLET'S Hikari. In addition, users pay a basic monthly phone use fee of 525 yen.

In some of the ads, the companies didn't mention the optical fiber cable use fees and simply emphasized that the 525 yen basic charge for the IP phone services was much cheaper than the basic fee of 1,680 yen for ordinary land-line phones.

Some NTT East ads also failed to note the separate 525 yen monthly charge for use of a router device to separately connect lines from the optical fiber cable to phones and personal computers.

Other advertisements offered a flat rate of 8.4 yen per 3 minutes of call time to anywhere in Japan. The ads did not mention that calls to cellphones from the Internet phone would result in higher fees charged.(IHT/Asahi: July 17,2008)