Telecommunications

May 2003

The government will plan easing the obligations on Nippon Telegraph and Telephone Corp.(NTT) regional operators to open up their fiber-optic lines to other companies. The General Affairs Committee of the Diet's upper house decided to study the possibility of changing the NTT operators' obligations to lease their fiber-optic lines to other telecommunications companies. But new telecommunications firms oppose the move, as it will lead to an NTT monopoly in the fiber-optic line business. The upper house has begun discussing amendments for telecommunications legislation, which have been submitted by the Ministry of Telecommunications. NTT has complained about the unfairness of the requirement that it open its lines to other firms, when power companies, which also have fiber-optic lines, are not similarly burdened. The elimination of the requirement would lead to higher rates, and new telecommunications companies protest that this would throw their business plans into disarray. As a result, the committee toned down its original resolution calling for changes to instead suggest that changes be considered.　(May 23, the Nihon Keizai Shimbun)

The government adopted a new strategy to further promote use of information technology (IT), focusing on seven major areas including medical services, according to the Ministry of Economy, Trade and Industry (METI). The IT Strategic Headquarters adopted in a meeting the strategy designated as the second stage of boosting IT in the country, as the first stage of building infrastructure for IT use is nearly finished. Other areas prioritized in the strategy include food, daily life, learning, employment and financing for small and midsize firms. Japan will try to introduce electronic medical charts in hospitals by 2005 and create a nationwide high-speed wireless network by 2008 under the strategy. Based on the new strategy, the task force also adopted an outline of the ''e-Japan Priority Policy Program 2003.'' Specific goals to be set by each government organization in boosting IT will be unveiled and finalized by early August. Taking part in the meeting were Prime Minister Junichiro Koizumi, METI head Takeo Hiranuma, Toranosuke Katayama, minister of public management, home affairs and posts and telecommunications, as well as other government officials and some business leaders.　（May 15, Kyodo News, the Mainichi Shimbun）

NTT Corp. returned to profitability in fiscal 2002, putting the previous year's record loss, but the telecommunications group's first annual sales fall in its 50-year history raised concerns over sluggish sales and a slowdown in restructuring. The world largest telecoms group by revenues, struggled to cope with dwindling voice traffic on its fixed-line network as customers switched to mobile phones or cheaper Internet-based calls. Its job-cutting and restructuring efforts, which helped rein in costs and restore profits, would lose steam in the current business year, forcing it to focus on new high-speed services to bolster its earnings. Sales fell 0.9% to \10.92 trillion and were expected to remain flat in the year ahead. NTT would cut 3900 jobs, or nearly 2% of its workforce, in current business year, a marked slowdown from last year's 7.2% cut. Those cuts helped the group generate a consolidated net profit of \233.4 billion in fiscal 2002 versus an \834.7 billion loss a year earlier, when it was hit by huge restructuring charges and special losses on overseas assets. The net figure exceeded NTT's own target, issued in November, or a \205 billion profit, and it was more optimistic about the current year, expecting a near doubling of net profit of \453 billion. NTT shifted about 100,000 workers in regional units to cut paid jobs at subsidiaries. It also halted fresh investment in its conventional telephone networks last year, focusing on broadband infrastructure such as fiber-optic networks, which will be the next growth driver. Despite the strong forecast bottom-line growth, investors were concerned about a slide in operating and pretax profits, which reflects firm's core earnings power. NTT expects 1 12.1% fall in the group pretax profit in fiscal 2003, with a profit decline in its fixed-line units more than offsetting growth in NTT DoCoMo Inc. (May 14, Reuters, the Daily Yomiuri, the Nihon Keizai Shimbun)

In an effort to promote wireless local area network (LAN) and next-generation cellular phone services, the Telecommunications Ministry will reallocate radio frequencies. The Ministry will request telecommunications carriers like NTT to hand back the radio frequencies by the end of 2005 in the Tokyo and Osaka regions, where wireless LAN service will be launched, even if the licensing periods for these frequencies have not run out yet. This will enable the government to reallocate these frequencies to providers of wireless LAN and next-generation cell phone services. The measure is aimed to help boost the number of wireless LAN users by 1 million. The frequencies in question are in the band of 4.9-5GHz, which is currently used mainly to relay voice data. Their licensing periods run to November 2007. The carriers to be asked to hand back their frequencies will be given compensation. The payment, which will be made on a 50-50 basis by the government and the companies reallocated the frequencies, is estimated to total \480 million. Telecom carriers that are giving up their frequencies, such as the regional arms of NTT, will be encouraged to switch to fiber-optic data communications systems. As the popularity of cell phones has created a shortage of radio frequencies, the government has looked for a frequency band that can be reallocated. The Telecommunications Ministry will report the proposal to a panel dealing with the matter, and aims to submit to next year's ordinary Diet session a bill revising the Radio Law.　(May 14, the Nihon Keizai Shimbun)

The market for wireless broadband services in Japan will reach 92 trillion yen in a decade, according to projections. The Telecommunications Council is to use the estimates made by an advisory panel to the telecommunications minister, in compiling a report on Japan's medium- to long-term policies on wireless communications. The council aims to submit the report in July to Minister Katayama of the Public Management, Home Affairs, Posts and Telecommunications. The policies aim to make Japan the world leader in wireless broadband technology and services. The market for wireless communications capable of high-speed transmissions, such as wireless local area network (WLAN) services, has budded only recently and thus generates limited revenues. With the development of new generations of mobile phones, the market could become a catalyst for Japan's economic revival if the technology is employed in other sectors of the economy. Wireless broadband could spread from the core industries of broadcasting and telecommunications to other industries. (May 5, the Japan Times, Kyodo News, the Mainichi Shimbun)