Review of NTT Law: Strategy to Enhance Competitiveness Needed in Telecommunications Sector

Editorial

15:32 JST, December 8, 2023

What regulations should be in place to strengthen the international competitiveness of Japan’s information and telecommunications sector while maintaining an environment for fair domestic competition? It is essential to deepen discussions from a broad range of perspectives.

The ruling Liberal Democratic Party has compiled a set of proposals that call for the abolition of the NTT Law in stages, aiming to abolish the law in the ordinary Diet session in 2025.

The NTT Law was established in conjunction with the privatization of the former Nippon Telegraph and Telephone Public Corporation into the current NTT Corp. In addition to conditions such as requiring the approval of the internal affairs and communications minister for the appointment of directors, the law stipulates that research results be made public for the sake of wide use of the technology of the former public corporation, which had monopolized the telecommunications business.

The main aim of the law was to bind NTT’s management in order to ensure fair competition and encourage new entrants into the market.

However, the industry environment has changed dramatically with the spread of mobile phones and the internet. It can be considered a natural step to review old-fashioned regulations.

As a first step, the LDP’s proposals request that the NTT Law be revised in next year’s ordinary Diet session and the obligation to disclose research results be removed.

NTT is developing the Innovative Optical and Wireless Network (IOWN), which is next-generation communications infrastructure that uses optical communications technology. This cutting-edge technology enables high-speed, large-capacity data communications with significantly lower power consumption.

But under the current law that specifies the obligation to disclose research results, the IOWN research results could be exposed overseas. It is quite natural to revise the disclosure requirements.

As the second step, the proposals call for the abolition of the NTT Law itself.

However, the law imposes on NTT the responsibility of providing fixed-line telephones uniformly throughout Japan. If that responsibility is eliminated, some are concerned that unprofitable local telecommunications networks could be abandoned.

The proposals state that the Telecommunications Business Law, which regulates the entire telecommunications industry, should be revised in an effort to maintain the telephone network. Provisions to maintain convenience for the public would be a prerequisite for the abolition of the law.

Other telecommunications companies, such as KDDI Corp., oppose the abolition of the NTT Law. Competitors borrow NTT’s fiber-optic network for a fee to provide their mobile phone services. The fiber-optic network utilizes equipment such as utility poles that were built partly with taxpayer money.

For that reason, other companies argue that if NTT is given more freedom in management, there will be no fair competition. Maintaining a competitive environment is also an issue to be addressed.

Discussions on the abolition of the NTT Law have emerged within the LDP, but the communications ministry’s expert panel is also discussing the issue. Some in the ministry and the LDP are cautious about the abolition of the law.

There must be agreement on the importance of enhancing the competitiveness of the information and telecommunications sector. There is a need for the government as a whole to come up with a strategy to achieve this goal.

(From The Yomiuri Shimbun, Dec. 8, 2023)