Telecommunications

November 2007

Govt Set To Tell DoCoMo To Open Cell Phone Network To Rivals
A government dispute resolution panel recommended Thursday that Communications Minister Hiroya Masuda order NTT DoCoMo Inc. to open up its cellular phone network to Japan Communications Inc., a move that could end the domination of the domestic market by three providers.　Japan Communications, which offers data communications services using circuits leased from other companies, sought the ministry's intervention after its negotiations with DoCoMo on cell phone network leasing had gone nowhere.　The sticking point has been whether the leasing should be done using the interconnection mechanism or the wholesale method. Japan Communications wants the interconnection mechanism, under which DoCoMo must reveal its leasing terms and conditions. But DoCoMo insists on the wholesale method, which gives the firm a high level of discretion in setting fees and other terms of service.　This is the first case in which the ministry is being asked to sort out a dispute over leasing of cell phone circuits.　Based on the panel's recommendations, the minister is expected to issue Tuesday an order almost entirely supporting Japan Communications' claims. This will likely spur new market entries and help make cellular phone services cheaper and more diverse.　In its Thursday recommendations, the panel said DoCoMo should publish the terms and conditions for its network interconnection service. It also said DoCoMo should lease circuits based on a more transparent fee system and urged the company to use a bandwidth-based fixed-fee system rather than a pay-as-you-go system based on the actual volume of communications.　In addition, the panel rejected DoCoMo's argument that it should be allowed to set the prices of Japan Communications services provided through DoCoMo's network. Allowing such a power "would severely hamper fair competition," the panel explained.　Based on the panel's recommendations, the ministry is expected to request cellular phone service providers to reveal how they compute network leasing fees. This may lead to cheaper cellular phone charges for consumers by lowering network leasing fees.　"Cellular phone network leasing fees are calculated very roughly," an official at a major telecommunications firm said.　"The fees could easily come down 20-30% if they have to be based on clear calculation formulas," this official said.　(The Nihn Keizai Shimbun, November 23, 2007)