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May 26, 1987

THE MINISTRY OF POSTS COMPROMISES TO SETTLE CELLULAR FRANCHISE ROW

By CBR Staff Writer

The Japanese Ministry of Posts & Telecommunications has been having a torrid time of late, and its problems over the Cable & Wireless international networking bid is just one area where it is likely to forced into compromise. It has already had to step back from its decision that there should be a convenient – but unfair – carve-up of the two cellular radio mobile telecommunications services, and has now agreed that both contenders in the battle to provide alternative services to those offered by Nippon Telegraph & Telephone should slug it out in both the major regions, Tokyo-Nagoya and Osaka. The two contenders, each of which is also a major player in the liberalised telecommunications business, are the Toyota group company, Japan High-Speed Communications, and Daini-Denden, a member of the Kyocera group. The Ministry has also bowed to strong US pressure and allowed Motorola to enter technical discussions about access to Nippon Telegraph & Telephone’s base stations. Daini-Denden is delighted to get a crack at the more promising of the two cellular markets, but Japan High-speed, needless to say, is less thrilled, and said stiffly that the issue at stake was how demand would develop. The answer to that seems to be provided by the existing player, Nippon Telegraph & Telephone. NTT announced last week that sales of car and portable telephones had reached 100,000 in fiscal 1987 to March; that is the same sort of annual rate at which subscribers are being added in the UK, but the Japanese service started as long ago as 1979. Despite that, the market but only recently started to take off, when the usage fee was reduced by about 25% to $140 from around $200 previously. Demand has been growing at about 50% per annum over the past couple of years, and, spurred by new products, such as a new 1 lb 10 oz portable phone launched in April, is expected to continue at the same rate this year, with sales expected to be in the region of 150,000 for the financial year just started. The two independent companies have their own strategies: Japan High-Speed is developing portable phones, while Daini-Denden has joined forces with electricity companies to use their substations as cell base stations. Each still has to negotiate access rates to link to the national NTT network.

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