Telecom merger clash

www.infoworld.com |  Business

NTT COMMUNICATIONS ON Monday rejected charges of anti-competitive practices levied by seven congressmen seeking to block NTT's planned acquisition of U.S. Internet access and hosting provider Verio. The congressmen made the charges in a formal complaint filed last month with the United States Trade Representative (USTR).

Specifically, the congressmen are asking the USTR to block the deal because they say Japan has yet to live up to its World Trade Organization (WTO) commitments in the area of interconnection rates. The complaint refers to the fees levied by NTT East and NTT West, Japan's two local carriers, to other carriers for delivering calls to subscribers.

"These two matters are totally different," said NTT Communications spokeswoman Akiko Kato. The company is a long distance and international carrier, not a local carrier, and as such, Kato said, "NTT Communications pays interconnection fees to NTT (local companies) at the same rate as U.S. carriers, so it's not related."

The U.S. and Japan have been clashing over the issue for years, and U.S. carriers maintain the NTT rates are far above the international average.

All three NTT companies -- NTT Communications, NTT East and NTT West -- are wholly owned subsidiaries of Nippon Telegraph and Telephone, Japan's former monopoly domestic telecommunications provider. They were created on July 1 last year when the carrier split its operations as part of gradual deregulation in the local telecommunications industry.

In a May 25 letter to USTR Charlene Barshefsky, the seven congressmen said, "If the Japanese telecommunications market is not open to competition, NTT's proposed acquisition of a major U.S. Internet backbone cannot stand. We urge you to work with your counterparts at the Department of Justice, the Federal Communications Commission, and NTIA to address this serious potential for harm to competition in the U.S. telecommunications market."

In May, NTT Communications announced plans to acquire Verio in a deal worth $5.5 billion.

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