Japan to rethink NTT laws, breakup possible

Will NTT monopoly be broken?TOKYO, 6 July 2000 (MaxisNet) - Eager to galvanise the nation's laggard Information Technology (IT) sector and bring down costs, Japan plans to begin a review of laws governing telecoms giant NTT with a view to possibly breaking up the former state monopoly, a Japanese newspaper said.

Will NTT monopoly be broken?

TOKYO, 6 July 2000 (MaxisNet) - Eager to galvanise the nation's laggard Information Technology (IT) sector and bring down costs, Japan plans to begin a review of laws governing telecoms giant NTT with a view to possibly breaking up the former state monopoly, a Japanese newspaper said.

The move comes as Prime Minister Yoshiro Mori launches a new cabinet which has made IT a key plank in its economic platform and against the backdrop of a feud with Washington over the rates NTT (Nippon Telegraph and Telephone Corp) charges its rivals to use the "last mile" of its lines to consumers' homes.

An advisory panel to the Posts and Telecommunications Ministry will launch the review of the laws as early as this month and seek to reach a conclusion two years later in order to revise the laws in 2003, the daily Nihon Keizai Shimbun said.

Just one year ago, the government capped a lengthy debate by splitting NTT into three units - two near-monopoly regional local phone providers, NTT East and NTT West, and a long-distance and international carrier called NTT Communications.

But critics, including an advisory panel to Japan's Fair Trade Commission, charge that the reorganisation failed to spark sufficient competition in the world's second-largest telecoms market.

The ministry's advisory panel will consider whether to break NTT up completely, expanding the scope of businesses that NTT East and West can enter, and the introduction of fair competition rules governing the two regional units, Nihon Keizai said.

NTT President Junichiro Miyazau has said that revising the existing NTT to give NTT East and West more flexibility is a prerequisite for enabling the telecoms giant to lower the interconnection fees it charges rivals.

U.S. and Japanese officials are struggling to settle the feud over NTT's interconnection fees before U.S. President Bill Clinton meets Mori at a July 21-23 Group of Eight (G8) summit, and last-ditch talks on the thorny topic will begin here from July 10.

Washington - along with many NTT customers and rivals here - argues that the interconnection rates charged by NTT are much too high and stifle competition.

Up to now, the United States has demanded an immediate 41 percent cut in NTT's local rates, which it charges rivals for access to the last leg of lines to homes and businesses, while Tokyo has offered a 22.5 percent reduction over four years.

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