Telecommunications

April 2006

New System To Reduce Paperwork For Switching Cell Phone Carriers
Mobile phone users who switch their service providers will be charged as much as 3,000 yen but have to show up only once to complete the requisite paperwork, under the number portability system to be introduced in October that allows callers to keep their numbers. Three major service providers -- NTT DoCoMo Inc., KDDI Corp. and Vodafone KK, which will be acquired by Softbank Corp. -- plan to invest as much as 10-plus billion yen to synchronize their computer systems so that they can electronically transfer customer data. This system will eliminate the need for cellular phone users who switch carriers to do paperwork at both their current and new providers. Customers will still have to show up at new carriers' outlets to register but won't have to go to their old carriers, because cancellation orders can be made via the Internet or over the phone. To finance this new system, the firms will collect fees of 3,000 yen or less from defecting subscribers. Including a new contract fee of about 3,000 yen, the switching cost for customers will be as much as 6,000 yen. To coincide with the introduction of the number portability system and to snatch customers from rivals, the carriers may reduce these fees, including calling rates. (The Nihon Keizai Shimbun, April 18, 2006)

USTR raps access to mobile, fixed-line telecoms
The Office of the U.S. Trade Representative vowed Thursday in an annual report to press for better access to Japan's mobile and fixed-line telecommunications markets. The USTR complained about high "mobile termination" rates imposed by giant provider NTT DoCoMo Inc. on other carriers for network connection and universal fixed-line service programs that favor regional carriers of the telecom giant Nippon Telegraph and Telephone Corp. group. The 2006 review report on foreign compliance with telecommunications agreements highlights three major problems in which the USTR will focus its efforts this year. They are excessively" high mobile termination rates in Germany, Japan, Mexico and Switzerland, restrictions on access to and use of leased lines in Germany, India, and Singapore, and concerns associated with universal service programs in Jamaica and Japan. "One issue that is particularly troubling to us is the emergence of new regulations around the world that are being billed as universal-service related, that may, in fact, limit competition or create barriers for foreign telecom operations," U.S. Trade Representative Robert Portman said. As for Japan, the report said that regional fixed-line operators NTT East Corp. and NTT West Corp. appear to be the only entities eligible for funds under the October 2005 program designed to address high-cost regions. "USTR has recommended to Japan that it reform this program to enable a broader range of operators, including mobile carriers, to apply for funding from this program to serve these regions," the report said. The USTR is also concerned about Japan's approval of a cross-subsidy of interconnection revenues from NTT East to NTT West, which Japan asserts is necessary to maintain uniform retail rates under the NTT law. "Allowing NTT East and West to cross-subsidize in this way raises expenses for competitors in NTT East's region and, thus, adversely affects competitors' ability to compete against NTT East," the report said. U.S. trade negotiators "will continue to work with Japan to promote reform of these programs to ensure more competitively neutral policies," it said. On the mobile services, the USTR report said NTT DoCoMo has reduced its termination rate by 2.6 percent this year, but this is the smallest reduction in 10 years and suggests that rate reductions "have plateaued in this market." "This issue will be of growing importance in the next year, as new entrants begin offering mobile services in the Japanese market, and the termination rates charged by incumbent mobile carriers will have a large impact on these new entrants' ability to compete," the report said. The Japanese government has declined to examine the mobile market for termination services and is consequently unable to determine whether rates are excessive or whether any remedies may be needed, it said. (Kyodo News, April 11, 2006)

NTT Plans Commercial Trials For Next-Generation Telecom Network
Nippon Telegraph and Telephone Corp.(NTT) in December will begin commercial trials of a next-generation telecommunications network (NGN) based on Internet Protocol technology. NTT plans to begin full-fledged NGN services during fiscal 2007, and will use these trials to confirm technologies and gauge consumer needs. In July, NTT plans to announce information regarding terminals and applications for the service. It intends to promote the development of NGN-compatible devices and services among consumer electronics makers, video delivery companies and other communications providers, and will call on these firms to participate in the trials. Testing will be conducted by NTT's regional carriers, NTT West Corp. and NTT East Corp., in the greater Tokyo metropolitan area and in Osaka. The first tests will begin in December at NTT's showrooms in these two cities. In January the tests will be expanded to residents of NTT group housing, and in April, will be further broadened to include regular consumers. NGNs are designed to use Internet routers so consumers can enjoy the advantages of a high-speed network without paying high telecommunications fees. The technology will enable users to not only converse but also exchange video, with a picture resolution on par with high-definition television. (The Nikkei Business Daily, April 03, 2006)

KDDI To Combine Fiber-Optic Network Ops With Tepco
KDDI Corp. has reached a basic agreement with Tokyo Electric Power Co., known as Tepco, to merge their fiber-optic networks this spring, The Nihon Keizai Shimbun learned Sunday. The companies would market their fiber-optic broadband services under one brand as early as June and increase the number of subscribers. They will soon assess the value of their assets, which is expected to top tens of billions of yen. It has not yet been determined whether KDDI will acquire the entire network or if Tepco will retain some portion. As of the end of last year, KDDI had 160,000 subscribers to its fiber-optic service. Combined with Tepco, the operation would have 390,000 subscribers, putting it in fourth place in the nation, behind Nippon Telegraph & Telephone East Corp. with 1.56 million subscribers, NTT West Corp. with 1.26 million, and Usen Corp., which has 420,000. Under the agreement, Tepco would pass on its fiber-optic infrastructure to KDDI but continue its marketing efforts. The service would be sold under one brand name with a unified pricing scheme. The deal would allow KDDI to shore up its fixed-line telecommunications operations, which are struggling in contrast to its thriving cell-phone business. Currently at its optic-fiber operations, KDDI must lease the lines that actually enter the home, the majority from NTT Corp.. Since leasing a single line costs 5,000 yen a month, reducing charges is difficult. By accessing Tepco's fiber-optic network in the greater Tokyo region, KDDI aims to lower costs and expand service. The telecom firm plans to develop a service that would allow cell phones to be connected to fixed lines in the home for low-cost phone and high-speed data services, while used as cell phones or wireless LAN (local area networks) terminals outside. (The Nihon Keizai Shimbun, April 03, 2006)