JAPAN FTC COMR. STRESSES NEED TO FURTHER DIVIDE NTT
Japan Fair Trade Commission (JFTC) Comr. Shogo Itoda stressed at Washington lunch Thurs. that he would prefer to see more-independent role for his country’s antitrust agency and cleaner spinoff of NTT’s structural units into separate companies. Speaking at FCBA lunch, Itoda said 5-member JFTC now is part of Ministry of Home Affairs, which also wields telecom regulatory authority. “We firmly believe the JFTC should be separated from the business-controlling authorities and belong to the cabinet office, in order to show that its policy on competition is fair and neutral,” Itoda said. “We intend to make this happen as quickly as possible.” In other telecom areas, he took exception to U.S. concerns on interconnection rates that NTT charges. “Both American corporations which seek connections and NTT, which provides connections, are private firms,” he said. “Why should our governments negotiate about the rates imposed by private firms? Such rates should of course be set under the market mechanism.”
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Itoda stressed efforts JFTC was taking to encourage telecom competition. He dismissed as “total misunderstanding” criticisms that JFTC had little enforcement muscle to put behind competition efforts, saying agency had “a sharp bite to encourage competition.” He cited role of JFTC in promoting telecom market competition under Antimonopoly Act. “Promoting competition should be carried out by a fair and neutral entity,” he said, referring to JFTC. Ministry of Home Affairs administers licenses and other authorizations through Telecommunications Business Act. But Itoda said JFTC could take “greater responsibility” for competition than ministry because of its Antimonopoly Act enforcement authority. JFTC helped issue draft guidelines on promoting telecom competition last month and is accepting comments on draft through next week. Draft singles out as “problems” under Antimonopoly Act actions such as refusing connection without legitimate reason, setting discriminatory rates for new entrants and refusing to lease utility poles, ducts or conduits, he said. Draft was released jointly by Ministry of Public Management, Home Affairs, Posts & Telecommunications and JFTC. Point was to clarify agencies’ approach on how both Antimonopoly Act and Telecom Business Law would be applied to telecom competition.
“Further dividing” NTT into separate companies would help to promote competition because it would create competing entities in Japan with separate networks to offer access choices for other competitors, Itoda said, but he also acknowledged political quagmire that proposal such as that would face. In 1999, NTT was restructured into local companies NTT East and NTT West as well as long distance carrier, with all 3 arms under holding company in which govt. still has majority stake. Complete separation of NTT DoCoMo, Japan’s largest wireless carrier, from NTT also would provide another network interconnection alternative, he said: “I believe NTT should be further divided. The current NTT is far too strong.” Creation of 4 or 5 independent companies out of existing NTT structure in next 5 years would provide market “that would become an easier place for newcomers to participate,” he said. But he said that would entail “complete reorganization” of NTT that would result in politically tough fight.
Neither U.S. nor Japanese govt. should “interfere” with interconnection rates set by NTT, Itoda said. “Our governments should focus their discussions on positive deregulation, strict enforcement of antimonopoly laws and so forth to promote competition in the telecommunications market,” he said. “They should not address the issue of raising or reducing rates. Sound competition in the market will allow the rate to settle to a fair level by itself.” U.S. and Japan had reached compromise agreement last year on interconnection rates with NTT, with Japan agreeing to lower its rates for regional access 50% and local access 20% over 2 years. Additional “substantial” reductions were expected in 3rd year of agreement. Above-cost interconnection rates repeatedly have been raised in annual U.S. Trade Representative’s report on telecom regulatory trade barriers. In Washington, Itoda has met with U.S. FTC officials to discuss antitrust issues. For first time, telecom issues this year apparently were among topics of discussion.