U.S. calls for more telecom deregulation in Japan

Fresh from its July success in signing a key telecom agreement with Japan, the U.S. government Friday published its annual review of deregulation and competition in Japan and continued to keep up the pressure on the Asian nation to open up its markets.

In its Fourth Annual Submission on Deregulation and Competition Policy, the U.S. Trade Representative (USTR) devotes eight of the report's 49 pages to issues associated with telecom and information technology and this year, for the first time, includes commentary on areas of emerging technologies.

With the July signing of an agreement on interconnection rates -- the charges levied by dominant local carrier Nippon Telegraph and Telephone (NTT) on other carriers to complete their calls -- out of the way, the new report leads off with the need to establish an independent telecom regulator in Japan.

"The current structure of the Ministry of Posts and Telecommunications (MPT) impairs its ability to function as a regulator in an impartial and independent manner," the report said. Of particular concern to the U.S. was political influence on regulatory functions, the MPT's dual role as a regulator and promoter of Japan's telecom industry and the government's majority stake in NTT.

The issue is likely to become a greater source of friction between the two governments as foreign, and particularly American, carriers attempt to gain access to Japan's telecom market while Japanese companies continue to make inroads into the U.S. marketplace.

The report also called on the Japanese government to require NTT to provide "transparent, nondiscriminatory, timely and cost-based access to all poles, ducts, conduits, inside wiring and rights of way it owns or controls." Unlike in the U.S. market, there are no right-of-way regulations in Japan. This, coupled with multiple layers of administration and strict codes on construction, means it is much harder for start-up companies to make direct connections to customers and bypass NTT.

The related issues of unbundling and collocation, which allow competing carriers access to NTT's backbone and its facilities and buildings for installation of equipment, also were covered in the latest report, as in those before it, but a new section was added covering IT-related issues.

The USTR chose to focus on eight areas: promotion of trade in digital products; carrier liability; intellectual property; electronic government procurement; security; the legal framework for e-commerce; privacy issues; and the rule-making process applied to IT issues.

Most of the calls made by the USTR reflect those of the Okinawa Charter, a broad-based agreement on basic principles relating to information technology that was signed by leaders of the world's seven largest industrialized economies at the recent G8 Summit in Okinawa, Japan.

Many of the issues are yet to be addressed by Japan or other nations, as laws are still being drafted to cover business in these new areas of the economy, but their inclusion in the latest USTR report underlines to the Japanese government that in these areas too, the U.S. is keeping a close eye on what Japan does.

The full text of the Fourth Annual Submission on Deregulation and Competition Policy can be found online in PDF and HTML.

This story, "U.S. calls for more telecom deregulation in Japan" was originally published by Network World.

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