Adopted ICT Issues A' Forming a Shared Vision

1
Policy and Regulation for Telecommunications in
Japan
May 16, 2002 Mr. UCHIDA Koichi Director-General,
International Affairs Department, Ministry of
Public Management, Home Affairs,Posts and
Telecommunications (MPHPT), Japan
2
Telecom Service Monopoly of NTT Public
Corporation Domestic
KDD Company Ltd.
InternationalPolicy Regulation
Ministry of Posts and Telecommunications
Before Era of Competition
Before 1985 (1953-1985)

• Two Major Goals achieved by 1979
• 1) Clearance of Waiting List for New
  Telephones
• 2) Completion of Nationwide Direct Dialing
• Universal Service
  Provision

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3
Introduction of Competition Policy
1985

• Enforcement of Telecommunications Business Law
• - Liberalization of Telecom Business
• - Privatization of NTT
• NCCs (New Common Carriers) into the Telecom
  Market
• - 5 Type1 NCCs 209 Type2 NCCs in 1985
• Competition Policy
• - Interconnection Procedures
• - Tariff Management based on Cost
• - Licensing on Demand and Supply Analysis
• - Prevention of Cross-subsidization

2
4
Establishment of Pro-Competitive Environment
among NTT (dominant) and NCCs
(Non-dominants) especially in local
network, because Non-dominants
depend on NTTs local networks
Further Competition Policy
Target
Further Competition Policy

• - Market Entry
• - Licensing without demand supply
  analysis (1997)
• - Lifting the restrictions on
  foreign-capital investment in the Type-I carriers
• except investment in NTT and KDD (Feb
  1998)
• - Tariff Management
• - Abolition of government approval system
  for telecom tariffs (Nov 1998)
• - Introduction of a price cap system to NTT
  East/West (Oct 2000)
• - Establishment of Interconnections Rules (Nov
  1997)
• - General obligation for type-I carriers
  to interconnect with other networks
• - Requirement of RIO (Reference
  Interconnection Offer)

3
5
Objectives promotion of fair competition
(equal footing among carriers) appropriate
scale for efficient management of NTT
Reorganization of NTT
- Ensuring as a shareholder to ensure NTT
East/West provide regional communications
services on a stable basis - Promoting
fundamental research and development on
telecommunications
NTT Holding Company (Nippon Telegraph and
Telephone Corp.)
NTT West Corp. (Nippon Telegraph and Telephone
West Corp.)
NTT East Corp. (Nippon Telegraph and Telephone
East Corp.)
NTT Communications Corp.
-Providing regional communications service in
Eastern Japan -Being obliged to provide universal
service of telephony in Eastern Japan
-Providing regional communications service in
Western Japan -Being obliged to provide universal
service of telephony in Western Japan
Special corporation
Private company
1
The holding company holds all shares of NTT East
Corp. and NTT West Corp.  
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4
6
Development of pro-competitive policies
(Liberalization of the telecommunications
business)
Privatization of NTT Corporation
1985.4
?Interconnection (November 1997) New rules
ex. general obligations for type-I carriers
to interconnect with other networks
?Foreign ownership restriction Lifting of
restrictions on foreign-capital investment
(excluding NTT and KDD) (February 1998)
?User rates reform Abolition of government
approval system for telecom service fees
(November 1998)
Reorganization of NTT
1999.7
?User rates regulation for NTT West/East
Introduction of a price cap system (October 2000)
?Interconnection Introduction of a long-run
increment cost methodology (November 2000)
?Telecommunications Council Report The first
recommendation policies to increase
competition purpose of promoting the IT revolution
?Review of the rules concerning
interconnections ex. Unbundling of optical
fibers (March 2001)
Revision of the Telecommunications Business Law
(2001.11)
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7
Number of Telecom carriers
Type-I telecommunications carriers
379 (Of these, CATV business operators
269 Special Type-II carriers

133 General Type-II carriers
9,781 Total
10,273 (As of January 1, 2002)
Type-I telecommunications carriers
7 Special Type-II carriers
9 General Type-II carriers
200 Total
216
(As of April 1, 1985)
6
8
Market share of NTT Group
??????
Sales
Traffic volume
Regional communication
NTT East, NTT west 92.7
NCC 10.1
NTT 89.9
NCC 7.3
NCC 46.54
NTT Communications 45.4
NCC 58.5
NTT 53.5
Long-distance telephone service
?Note?
NCC 37.1
NTT DoCoMo 62.9
NTT DoCoMo 61.2
NCC 38.8
Mobile communication
Total number of calls in FY 2000 (One unit 100
million calls)
Fiscal 2000 settlement of account (One unit
100 million yen)
NCC
NTT Group
NCC
NTT Group
Regional communication
4,270
54,340
Local calls
65.1
580.3
Long-distance / international telephone
16,276
13,555
Out-of-prefecture calls
89.7
103.4
186.0
315.7
49,239
Mobile communication
Mobile telephone calls
31,247
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Telecom Service Charges
? Long-distance call rate (Tokyo - Osaka)
? Local call rate
(Three-minute, week-day, day-time rate)
(Three-minute, week-day, day-time rate)
NTT East and West, KDDI, JT, NTT-C 8.5
yen TTNet,QTNet 8.4 yen
400 yen
NTT East, QTNet 9 yen TTNet 8.7 yen
10
?16 ?15
TTNet 54 yen
Fusion Commu- nications Corp. 20 yen
NTT-C,JT KDDI 80 yen
10 yen

? 95
CWIDC 45 yen
9 yen
9 yen 8.7 yen
8.5 yen 8.4 yen
5
0
CWIDC 00.12, TTNet 01.2, NTT-C, KDDI, JT
01.3 Fusion Communications Corp. 01.4
NTT 76.11 01.1.9
TTNet etc. 98.1.7
01.1.10 01.4.30
01.5.1
 

? Mobile communication rate
? International call rate (Japan - U.S. )
(Three-minute, week-day, day-time rate)
Telephone call rate (Mobile phone ? fixed
telephone in the same prefecture)
Basic fee 17,000 yen
MCIWCJ 150 yen(98.12.1) JT 180 yen(99.10.1) CW
IDC 180 yen(99.10.5) KDDI(001)180
yen(99.11.1) KDDI(0078) 156 yen(99.11.1) TTNet
132 yen(99.11.11) DTJ 75 yen(00.12.10) NTT-COM
160 yen(00.4.3) Fusion Communications Corp. 45
yen(01.9.1)
1,530 yen
260 yen
? 75
KDD 450 yen(96.11.23) JT 440 yen(96.12.20) CW
IDC 440 yen(96.12.20)
? 71
? 73
4,300 yen
70 yen
? 93
NTT DoCoMo 93.3.25
NTT DoCoMo 93.3.25
NTT DoCoMo Central and nine other
companies 00.12.1 -
J-PHONE 99.6.1
8
10
(thousand)
()
87,200 (estimated)
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Spread of Broadband Internet Usage
(thousand)
2,100
Fiber-optic networks 18,188 (As of the end of
Feb. 2002)
2,000
1,900
1,800
1,700
Wireless About 6,500 (As of the end of Feb. 2002)
1,600
1,500
1,400
1,300

Cable Internet About 1,399,000 (As of the end of
Feb. 2002)
1,200
1,100

1,000
900
total number of subscribers
800
0
5
9
23
2
17
26
4
14
700
6
8
DSL 2,076,302(As of the end of Feb. 2002)
28
25
3
12
15
22
16
27
21
600
24
18
19
20
500
400
300
200
100

15

.

10

25

.


5
.

0
Mar. 99
June
Mar. 2000
June
Feb. 2002
Sept.
Dec.
Sept.
Dec.
Mar. 2001
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Mobile communications usage
(2001.12)
7,280
(2001.12)
MobileexceedsFixed Fixed 55,550 Mobile56,850
(March 2000)
6,152
Mobile exceeds FixedISDN FixedISDN62,190 Mobile
62,820 (November 2000)
(2001.12)
5,115
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Implementation of new competition policies
New asymmetric system
Telecommunications business dispute settlement
committee

• Measures to counter anti-competitive activities
  by the major telecommunications carriers

Universal service funding mechanism

• Reinforce the system of mediating possible
  conflicts between carriers
• Formulate additional procedures for mediation and
  reconciliation.

• Financial support for telecommunications carriers
  as a compensation for the cost of the universal
  service
• Clarification of the scope of the universal
  services.
• .

-- Amendments of the Telecommunications Business
Law and other legislation (since Nov. 2001)
IT-related infrastructure build-up

• facilitate the laying of lines, wires and cables,
  etc (Release Rights of Way Facilitation
  guideline)
• Introduce the flexible wholesale
  telecommunications service provision system.
• Enforce interconnection rules on NTT
  West/East.(e.g. dark fiber, line sharing)

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New Asymmetric System

• - Strengthen policies to prevent
  anti-competitive attitude
• of dominant carriers
• - Prohibition of anti-competitive
  attitudes in the market
• - Issue ministerial orders against
  anti-competitive attitudes
• - Moderate regulations on non-dominant
  carriers
• - Contracts and agreement for
  interconnection
• Approval system Report
  system
• Prepare an appropriate environment for
  competition between dominants and non-dominants

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IT-related Infrastructure Build-up
- Rights of Way Facilitation Guideline -
to facilitate the laying of lines - to
release poles and conduits possessed by
power companies, telecommunications carriers and
railway companies. - Introduction of
Wholesale Telecommunications Service - to
release dark fibers to NCCs - to invite
new entrants of MVNO into mobile
telecommunications market.
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Telecommunications Business Dispute Settlement
Committee

• - Fair reinforcement of the system of
  mediating possible
• conflicts between carriers
• - Formulation of additional procedures for
  mediation and
• reconciliation for the disputes
• - Establishment of a fair and independent
  committee for
• settlement of telecommunications disputes
• - Report to Minister for MPHPT

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Universal Service Funding Mechanism
- Change over from Cross-subsidization within
NTT to neutral external subsidization -
Clarification of the scope of Universal Services
(subscriber phone service, public phone
service, emergency call service) -
Establishment of Universal Service Fund -
Collection of costs for universal service from
carriers who interconnect to the Service.
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Consumer Protection
Number of complains and consultation

• Increase of Complaints
• with expansion of Internet Usage
• Consultation Centers within MPHPT
• PR by brochures on cautions
• Clarification of ISP responsibilities

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Convergence of Broadcasting and Telecommunications
- Internet services on CATV network 196
CATVs - Broadcasting services on Telecom network
What is the Convergence - by a study group in
MPHPT
convergence
examples
Services with characteristics of both telecom and
broadcast
general telecom special
broadcast BBS Data
broadcast website broadcast via Internet
Convergence of Services
Both telecom and broadcast services through same
lines
Convergence of Data transmission Lines
broadcast using CS Internet connection using
CATV network CATV using FTTH of telecom
carriers
Equipments applicable for both telecom and
broadcast services
PC both for Internet and TV broadcast
TV for Internet access
Convergence of Equipments
Businesses provide both telecom and broadcast
services
196 CATV businesses for telecom services
(2001.3)
Convergence of Businesses
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Regulatory Regime in Japan

• Establish the policies
• Implement the policies
  Regulation
• Licensing, approval, etc.

Ministry (MPHPT, former MPT)
Information and Communications Policy Bureau
Telecommunications Bureau
Telecommunications Business Dep.
Broadcasting Policy Div.
Radio Dep.
Broadcasting Technology Dev.
International Affairs Dep.
.
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Thank You