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"Strategies of Telecom Common Carriers for Expanding Globalization: A Comparative Study of the USA, the European Union, and Japan: The Japanese Case," Paper presented at the International Conference on Global Telecommunication Companies: Competition and National Policies, East-West Center, Honolulu, U.S.A., January 7-8, 1998; Paper also presented at the Biennial Meetings of International Telecommunications Society, Stockholm, Sweden, June 24, 1998 (Supersession 3), 37pp. + appendix (63pp.) + figures.
[Outline]

This paper summarizes the development of Japan's international telecommunication after the 1985 Reform. It consists of two parts. Part I gives a summary of the history of Japan's international telecommunication from 1985 to 1997, emphasizing the impacts of the 1985 Reform and the new trend emerging after the issue of divesting NTT was settled. After a brief description of the history of the international telecommunication of Japan before the 1985 Reform is given, the impacts of the 1985 Reform are explained. The main impact was a sequence of remarkable price reductions for several years in the 1980s following the Reform. The focus of the policies and the business activities in the 1990's was the removal of boundaries between domestic, international, and other telecommunications markets, and the introduction of mutual entries between them. This took place in the debate of divesting NTT, which was concluded in 1997; NTT will be divided in 1999 into one long-distance and two regional companies under a holding company. Recently, alliances between Japanese telecommunications providers are taking place one after another.

Part II analyzes the recent trend in Japan's international telecommunication; it attempts to explain the absence of the competitive power with NCCs in domestic markets and that with NTT and KDD in global markets. First, it points out the possibility of NTT's dominance in the mobile and the long-distance markets and the absence of globalization activities with NTT and KDD. An attempt is made to explain these observations as a consequence of the fact that Japan does not possess comparative advantage on producing telecommunications services. A hypothesis is presented that the overall characteristic of Japanese organizations, to be called deep coordination in this paper, is a cause of the inactiveness with Japanese telecommunications providers, in fact, with Japanese organizations providing network-type products or services. Two evidences of this hypothesis are included: one on NTT and the other on MPT.

The paper concludes with a forecast of Japan's international telecommunication in the near future and a brief discussion how the Japanese telecommunications industry could overcome the difficulties having been pointed out in this paper. (Analysis of Industry and Regulation)

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[Table of Contents]
  1. HISTORY OF JAPAN'S INTERNATIONAL TELECOMMUNICATION: 1985-1997
    1. Brief history before the 1985 reform
    2. Impacts of the 1985 Reform
    3. The need for more competition and the divestiture of NTT
    4. The development in 1997
  2. ANALYSIS OF COMPETITION AND GLOBALIZATION TREND--WHY DOES NOT JAPANESE TELECOMMUNICATIONS PROVIDERS POSSESS THE COMPETITIVE POWER IN THE GLOBAL MARKET?
    1. MPT's asymmetric regulation and the resurgence of NTT's natural monopoly
    2. Globalization trend (?)--Why are Japanese providers, particularly NTT and KDD, slow to move toward globalization?
    3. Absence of comparative advantage with Japan on telecommunication--Why?
    4. Conclusions
  3. APPENDIX

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Hajime Oniki
ECON, OGU
09/01/98
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