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May 26, 1987


By CBR Staff Writer

The example set by the British and American governments in liberating much of their domestic telecommunications markets from the dead hand of state control and regulation, has been imitated with a will by the Japanese government – in a typically Japanese manner. Liberalisation started in Japan two years ago, since when 11 new common carriers have been formed. Six are big companies, certainly in terms of the usually minuscule Japanese capitalisations, each with nominal capital in the range of $35m to $100m. These major players include Daini-Denden, which offers a microwave network: its investment group is led by Kyocera Corp and it is an aggressive player in the main geographic market which embraces Tokyo and Osaka. Both it and Japan High Speed Communications, part of the Toyota group, are the independent players in the cellular mobile telephone market. Japan High Speed won value-added network services operator Network Information Systems Ltd over from NTT for the Japan-Osaka region last December, and Network Information has just started reselling capacity on Daini-Denden lines, undercutting NTT rates by about 20%. Connection of the lines was completed in mid April, and the maximum speed on its network is 64Mbps. Other value-added companies are in general still in the NTT camp, and even Network Information Systems still leases NTT lines for the Osaka to Fukuoka section of its network. Japan Telecom Co was formed to lay fibre optic cables along the tracks of the Shinkansen bullet trains, and was the first company to offer direct competition to Nippon Telegraph & Telephone. It has backing, needless to say, from Japan National Railways. Teleway Japan decided that the hard shoulders alongside the main highways represented another ready-made burial ground for fibre-optic cables, and is affiliated with Japan Highway Public Co. Tokyo Electric Power has formed Telecommunications Network Co to offer a high-speed facsimile and communications service, again using fibre optics, this time along the wayleaves of the electricity grid. Several of the big traders are investors in Japan Communications Satellite Co, a joint venture between C Itoh and General Motors’ Hughes Communications: it hopes to start satellite transmission services from February next year 1988. Also reaching for the stars is Space Communications Corp, a joint venture between Mitsubishi and Mitsubishi Electric, which is looking to the European Ariane rocket to put its first satellite on stations. Both the satellite operators will require customers to buy a small dish-antenna units to access the networks. Japan Defence Agency also has its own IDDN Integrated Defence Digital Network, carrying voice, data and other digital services.

Competition tough

Among the smaller players, Osaka Media Port, whose investors include Kansai Electric Power and the Osaka Metropolitan Government, will use Kansai Electric’s power grid for optical lines; and Railway Telecommunications, another player laying cables along railway lines, will also serve most of Japan’s Honshu main island. The others are relatively small companies serving their own regions. Nippon Telegraph & Telephone is finding competition tough, and is having to revise its pricing and come up with new strategies to remain competitive: its own offering is the digital Information Network System, for which the term Integrated Services Digital Network, and the ISDN standards, were originated. The network is a 20-year programme started about five years ago. NTT also gets business from its rivals through its consulting subsidiary which advises on the design and maintenance of networks.

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