IP: Fraternizing with the DFS Neoconsies

[Dave Farber <farber () cis upenn edu>]

Date: Tue, 4 Aug 1998 07:05:44 -0800
To: fukuzawa () ucsd edu
From: cjohnson () ucsd edu (Chalmers Johnson)


        Some more red meat for the third rate cybernerd neoconsies and
homesick American jingoists who have taken over DFS to chew on. This report
is by Michael Zielenziger of the San Jose Mercury News. So the world has
really changed after the WTO! You 'Tokyo analysts' would know? Some of you
should go back and take at least one more course after Econ 100AB. I know
it's hopeless to suggest that there is life after Paul Samuelson's
textbook, but you people will never get to it.


                                                Revisionism Lives!


Published Saturday, August 1, 1998, in the San Jose Mercury News


TOKYO -- The Internet, that agile new technology that offers instant
access to global commerce and communication, supposedly flouts political
boundaries. Just point and click, proponents say, and the technology of the
``virtual world'' can easily defy the trade barriers that inhibit
conventional commerce.



   Not so in Japan, as entrepreneurs like David Shepherd are learning.



   Tangent Computing Ltd., Shepherd's software distribution company, was
bounced off the World Wide Web in late July by Japanese authorities after
he switched to a U.S.-based Internet service to host his company's e-mail
accounts. It seems that a group of Japanese-based Internet providers,
operating with the approval of the government, controls who gets to play --
and how much they pay -- to get access to the World Wide Web in Japan.



   ``Basically, we were shut down for not using a Japanese Internet
provider,'' said Shepherd, a Canadian, who does 90 percent of his software
distribution business through the Net.



   Dozens of entrepreneurs such as Israeli businessman Todd Walzer have
found they could not use their Internet addresses in Japan -- known in
Internet parlance as a ``domain names'' -- unless they also used a Japanese
Internet service provider. Japanese firms, however, are usually slower and
far more expensive than overseas providers, foreign businessmen say.



   The lack of competition is a key reason that Japan, despite its
reputation for high-end technology, lags far behind the United States and
other developed economies in its use of the Internet.



   Japan has only 40,000 domain names. The United States, a bit more than
twice Japan's size, boasts more than 1.2 million. Moreover, while the
United States is fourth in domain names per person, Japan ranks 21st,
according to data compiled by Michael Borrus, co-director of the Berkeley
Roundtable on International Economics in California.



   The Japan Network Information Center, or JPNIC, the quasi-governmental
group that assigns domain names to users, is essentially run by Japan's
Internet service providers. These firms pay about $3,500 to join the
association and another $2,150 in annual dues. As members of JPNIC, these
providers have the power to ``approve'' new domain addresses -- but they
approve only those new addresses that use Japanese Internet providers,
according to Naomasa Maruyama, JPNIC vice president.



   <SNML_SUBHEAD>

<FONT FACE="Arial, Helvetica" SIZE=-1><B>Not unusual</B></FONT>

</SNML_SUBHEAD>


Mysterious, cartel-like organizations that set prices are not unusual in
Japan. Steel manufacturers, concrete producers, construction companies,
stevedores and dozens of others have been accused of conspiring to regulate
prices, keep foreign competitors at bay and regulate domestic
competition.



   But even some Japanese are surprised to hear that a cartel of Internet
providers decides who can be assigned a Web domain address within Japan --
those domains that carry the ``jp'' address. ``It's really an obstacle,
isn't it?'' said Yuichiro Anzai, dean of the faculty of science and
technology at prestigious Keio University.



   JPNIC officials, however, insist they are the real free marketeers.
``There is a difference between freedom and a free ride,'' said Maruyama.
``We are very proud the Japanese Internet developed without the support of
the government.''



   Maruyama also rejected the argument of JPNIC critics that some of the
center's policies have stifled Internet use in Japan. According to JPNIC
policy, for instance, only a company registered for business in Japan can
obtain a ``.jp'' domain name. No individual can obtain a domain name. And
any corporation can obtain only a single domain listing. No such rules
apply in the United States or in many other countries.



   <SNML_SUBHEAD>

<FONT FACE="Arial, Helvetica" SIZE=-1><B>Aimed at scams</B></FONT>

</SNML_SUBHEAD>


Maruyama said JPNIC's strict rules were created to prevent individual
``cyber scammers'' from buying up the domain names of famous companies so
they could later sell them back to the companies. (A case such as this
occurred in America this week, when a Silicon Valley man was paid some $3.3
million by Compaq Computer to relinquish the ``altavista.com'' domain name.
AltaVista is an Internet search service acquired by Compaq when it bought
Digital Equipment Corp.)



   But Bradley Bartz, an early Internet pioneer in Japan, said JPNIC is a
cartel that conspires ``to make any .jp address the most expensive domain
name in the world.'' Registering a domain name, which costs about $75 in
the United States, can cost four times as much in Japan, he said.



   ``It's an Old Boys club designed to protect the growth of Internet,''
Bartz said. ``It's all about control. By preventing the growth of domain
names, they are preventing entrepreneurs from expressing themselves and
preventing the expansion of commerce.''



   <!-- docend -->


Chalmers Johnson
President, Japan Policy Research Institute
E-mail: cjohnson () ucsd edu
Fax: (760) 944-9022