A Permanent Organization Needed for Handling Telecommunications Disputes: Part 2

Hajime YAMADA (Professor of Economics, Toyo University)

On August 7th, 2002, the Information and Communications Deliberative Council, an advisory body to the Minister of Public Management, Home Affairs, Posts and Telecommunications, submitted "The Final Report on Ideal Competition Policies on the Telecommunications Business in Order to Promote the Information Technology (IT) Revolution." This report partly responded to long-standing criticisms against the Ministry's administration. For example, it aims at easing restrictions on entering in and withdrawing from the business through abolishing the existing regulatory system that categorizes the telecommunications business as classes one and two. The report also attracts attention by coming out with the enrichment of consumer-oriented administration to accompany the competition policies.

On the other hand, some Internet providers express their precautions claiming that the report can be interpreted as intending to expand the scope of regulations to the contents of communications. The Japan Fair Trade Commission is also reported that they are rather willing to demand discontinuance of the Telecommunication Business Law because the report includes descriptions that would inhibit competitions.

Prior to the submission of the final report, public comments were invited in June. Some point out interesting observations. For example, Cable & Wireless IDC (C&W), a major British telecommunications business body, criticizes the report to have repeatedly stated that the competition was developing well enough without defining the word ‘enough.' Nippon Telegraph and Telephone Corporation (NTT) comments on the unfairness of the MPHPT to have fortified the regulations against NTT after they acquired market shares through competitions on a level playing field.

The market share is the simplest guidepost to determine whether the market is in a competitive state or not. However, at the same time, verification is required to make sure that no unjustified business connections are utilized in the process of forming the share. Both companies seek definite means of evaluating competitions. They insist that the decision on whether companies are in competitive states should not be left to the discretion of the MPHPT.

Meanwhile, the MPHPT had always replied that the matter requires examinations at separate investigative occasions. Such postponement itself could result in a big problem. As a further development, the MPHPT started a study meeting for this issue in September of this year.

Although the report is supposed to be examining the competition policies, it states at the end of its conclusion that the development of the markets should be given the highest strategic priority for Japan's economy as a whole. Moreover, it expresses an importance of promoting research and development (R&D) and a shift to broadband networking, as well as enforcing industry-academia-government cooperation. All of these points concerned with the promotion of the industry, not with competition policies.

The United States has long been insisting on the separation of competition policies from the policies of promoting the industry in the field of telecommunications. They claim that it is unacceptable that some business entities with higher market shares would merit from advantageous discretion of the MPHPT for a promotion of the industry. They also accused of a cozy relationship between the Japanese government and NTT. However, as is widely known in Japan, NTT actually had been struggling against the Ministry of Posts and Telecommunications, the former form of the MPHPT, so hard that some of the arguments were described as "wars." Therefore, accusing them of having a cozy relationship may not be true. However, the carelessness such as mentioning the promotion of the industry in the competition policy report may cause an unnecessary misunderstanding.

(Part 2 of an English version of the author's Japanese article that appeared in the October 1, 2002 issue of "Economist", published by Mainichi Newspaper Co.)