NTT is imploding

[Dave Farber <dave () farber net>]

------ Forwarded Message
From: IKEDA Nobuo <ikeda-nobuo () rieti go jp>
Date: Sun, 16 Feb 2003 13:24:45 +0900
To: Dave Farber <dave () farber net>
Cc: ikeda-nobuo () rieti go jp
Subject: [IP] NTT is imploding

NTT will raise its access charge because its combined revenue is
declining for the first time in its history.

The number of DSL subscribers doubled annually to six millions in Japan.
12 Mbps is available at the fee around $10 (less than $30 including ISP
and VoIP services) per month. VoIP is free if both sides are IP and only
7.5 yen per three minutes from Tokyo to New York. Here broadband is
exploding and NTT is imploding.

It's a result of complicated chain of events such as Softbank's
aggressive investment (more than $1 billion) and tough negotiation for
co-location, and NTT's strategic mistakes to ignore DSL. A lesson you
can learn from Japan is that the FCC's "deregulation" that allows ILECs
to monopolize their facilities will make things even worse.

> TOKYO - The government on Friday announced a plan to let Nippon
> Telegraph and Telephone Corp (NTT) raise the interconnection fees it
> charges other carriers to access its phone lines, contrary to a
> recommendation by a government advisory panel.
>
> According to the plan, NTT's regional telephone units - NTT East Corp
> and NTT West Corp - will be allowed to the raise interconnection fees by
> about 5% as a whole, though some fees will be lowered.
>
> The hike would be the first since the current interconnection fee system
> was introduced in 1994.
>
> The Ministry of Public Management, Home Affairs, Posts and
> Telecommunications also proposed that NTT East and NTT West should
> maintain equal fees.
>
> In September last year, the Information and Communications Council told
> Public Management, Home Affairs, Posts and Telecommunications Minister
> Toranosuke Katayama that the regional phone companies should set
> different fees due to their cost and other differences, which would
> result in a cut in fees charged by NTT East.
>
> Rejecting the recommendation, the latest plan marks a shift in the
> ministry's telecom policy from promotion of competition to protection of
> NTT East and NTT West, which are expected to face earnings falls due to
> the increased use of mobile phones and the Internet.
>
> The ministry plan also calls for new common carriers to partially cover
> losses to be incurred by NTT East and NTT West when the volume of
> communication, especially fixed-line phone calls, decreases by more than
> 15%.
>
> KDDI Corp, Japan's second-largest telecommunications company, issued a
> statement Friday rejecting the plan as it means to "reverse the policy
> of promoting competition by cutting phone charges."
>
> KDDI also criticized the plan as "unfair" since NTT did not pay back
> fees when the volume of communication was increasing.
>
> The advisory council will invite public opinions on the ministry's plan
> in the coming month before deciding whether to endorse it. (Kyodo News)

http://www.japantoday.com/e/?content=news&cat=4&id=249592

--
Ikeda, Nobuo
Research Institute of Economy, Trade and Industry (RIETI)
http://www.rieti.go.jp/en/


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