NTT law: Review Should Strengthen Corporate’s International Competitiveness

Editorial

13:59 JST, December 3, 2024

What kind of regulations should be imposed on NTT Corp. to enhance the international competitiveness of Japan’s information and communications sector? In light of the changing times, the regulations must be reviewed constantly.

The Internal Affairs and Communications Ministry’s expert panel has released its final report on the future of the NTT law. The report included a proposal to ease the obligation imposed on NTT to uniformally provide landline telephone services nationwide.

Landline phones are usually connected by copper lines or optical fibers. In recent years, other telecommunications companies besides NTT have also been offering landline telephone services that are connected wirelessly using mobile phone networks. The report also classifies this type of landline phone as a uniform nationwide service.

It states that NTT will be ultimately obliged to provide this service only in areas where no other service providers are available.

This will be a key pillar of the deregulation measures regarding NTT. If multiple telecommunications companies share the responsibility for providing uniform nationwide service, it could be possible to improve efficiency. Steady efforts should be made to ensure that rural areas will not be left out of the telecommunications network.

Meanwhile, in the report, the panel did not present its judgement over the NTT law’s abolition — a focal point in terms of enhancing international competitiveness. Both arguments for and against its abolition were included in the report.

The Liberal Democratic Party has called for the law to be abolished to increase the freedom of NTT management, but competitors such as KDDI Corp. have opposed scrapping the law, saying it would destroy the environment for fair competition.

The NTT law was enacted 40 years ago toward the privatization of then Nippon Telegraph and Telephone Public Corporation. At the time, NTT had effectively monopolized landline telephone services, which were the main form of communication, so the government needed to strictly monitor its management.

However, since then, the environment has changed dramatically with the spread of mobile phones and the internet. It is only natural that the old regulations should be reviewed.

NTT had been obliged to disclose its research results, but this was also abolished with the revision of the law in April this year. A system that required the internal affairs and communications minister’s approval for appointments and dismissals of executives was also eased at the same time.

However, the report stated that the system requiring the prior approval of business plans and the obligation for the government to hold at least one-third of NTT shares would continue to be maintained.

In the field of information and telecommunications, tech giants such as Google LLC of the United States boast overwhelming competitiveness, and Japanese companies have a weak presence. In research and development of cutting-edge technology, time is of the essence, and quick management decisions are required. If the authorities get too involved in management, it will hinder growth.

NTT is developing the Innovative Optical and Wireless Network (IOWN), which is a next-generation telecommunications infrastructure that consumes significantly less electricity, and expectations are high. It is important for the government to continue revising the NTT law in a way that balances the issues of ensuring a fair competitive environment and strengthening NTT’s international competitiveness.

(From The Yomiuri Shimbun, Dec. 3, 2024)