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The new communication age in Japan
Comment The new communication age in Japan Moriya Koyama
Moriya Koyama, Japanese ViceMinister of Posts and Telecommunications, outlines the need for and format of the recent reforms in Japan ‘s telecommunications. Importantly, the principle of competition has been introduced throughout Japanese telecommunications, with private enterprises now able to provide main categories of service. The principles of impartiality between domestic and foreign suppliers and of fairness in competition have been enshrined in the reform. Further, Japan wishes to promote cooperation in the Pacific basin area to develop economic growth throughout the region. Moriya Koyama is Vice-Minister of Posts and Telecommunications, Kasumigaseki l-3-2, Chiyoda-ku, Tokyo 100, Japan. This is an edited version of a Keynote Address given at PTC 85, Honolulu, HI, USA, 13 January 1985.
1985 is an epoch-making year for Japan’s telecommunications. A revolutionary reform is to be made in Japan’s telecommunications, which began in 1870. Japan’s telecommunications service developed satisfactorily as a government enterprise until World War II. During the war, its communications network was dealt a crushing blow. After the war, in order to achieve its swift and effective recovery and expansion, the telecommunications carrier was separated from the government and a monopolistic system was created to supply telecommunications service. Nippon Telegraph and Telephone Public Corporation (NTI’) was given a monopoly in domestic service and Kokusai Denshin Denwa Company Ltd (KDD) a monopoly in international service. The two major goals regarding telephony in this system were to ‘eliminate the backlog in subscriber applications’, and to ‘provide a nationwide service of long-distance directdialing’. On the slogan ‘immediate installation, immediate connection’, which symbolized these goals, we in fact attained them in the late 1970s. Today, the number of telephones in Japan exceeds 60 million with over 50 per 100 persons. Japan’s telecommunications service, which has been supplied by the government or monopolistic enterprises and has developed over more than 100 years, underwent a Copernican change in April 198.5. That is to say, the principle of competition was introduced into the telecommunications business to promote the sound development of telecommunications
and serve the convenience of the citizens in effective and fair competition. I would like to explain two things here. First is the need for this reform. Why was it necessary to reform Japan’s telecommunications business, which. as mentioned above, has developed rapidly and satisfactorily, under the unitary system? The other is our view as the administrative organ responsible for carrying out reform our basic view of how we are carrying out the reform and how we will develop Japan’s telecommunications in the future. I refer first to the background and necessity of reform. In Japan today, the two major goals mentioned above regarding telephones have been attained, and a sophisticated telephone society has been formed. As a result, the characteristics which formed the basis of the Japanese telecommunications monopoly have changed. For instance, as for technological unification, progress in the technology of interface between networks has made the coexistence of networks possible. On the one hand, the public need for telecommunications has increased and become diversified, and specific services which meet the various needs of individual users, as well as the present, nationwide, unitary, telegraph and telephone service, have been requested. In addition, the technology and funds of private enterprises have improved and the conditions under which they may participate in the telecommunications business have been developing. In short, the need has arisen to
TELECOMMUNICATIONS
POLICY
September
1985
Comment
‘The most important point is the introduction if the principle of competition’
TELECOMMUNICATIONS
POLICY
make new media, which are actually in use today, develop rapidly and to make the telecommunications business more active and efficient by taking advantage of the impetus of competition to economic rationalization. And the conditions for this have now developed. Considering these circumstances, we proposed the reform. The necessary bills were passed in the National Diet at the end of December 1984, and the proposal was approved, and implemented. Turning to the second point - how this revolution is to be carried out and what future course we should take - I would like to explain the philosophy underlying the enactment of the law at this time. A law, by its nature, has the function of establishing order in the present situation and stabilizing it, but at a certain point in time it may become a factor restraining the development of society. This is especially true in the area of telecommunications, which is making rapid progress based on the remarkable development of electronics and communications technology. Therefore, we have attempted to build a new flexible legal structure which will secure the future development of telecommunications and provide the users of telecommunications with the results of the development. The outline of the reform is as follows: the most important point in the reform is the introduction of the principle of competition into the entire field of telecommunications. Thus, the telecommunications business, which has been operated exclusively by NTT and KDD, will be com$etely open to private enterprises. A mechanism which is capable of handling a variety of types of business and services has been provided, assuming that a variety of types of services which reflect the ingenuity of private enterprises will be created through new participation in the field. In the new system, the teiecommunications businesses are classified into Type I telecommunications businesses, which provide services with their own telecommunications circuit facilities, and Type II telecommunications businesses, which do not
September 1985
fall under Type I. Therefore, Type II telecommunications carriers provide services using the telecommunications circuit facilities of Type I telecommunications carriers. Type II telecommunications businesses are divided into General Type II and Special Type II according to the size of the facilities and other factors. We consider this classification sufficient for handling the diversity of types of businesses and services which accompany future technological progress. Restrictions on business will only be those which are necessary for each business type in order not to confuse users unnecessarily. This is intended to promote the free business activities of carriers with ingenuity and vitality. In concrete terms, permission must be obtained for the operation of Type I telecommunications businesses, because they are basic businesses which build and use telecommunications networks. As for Type II businesses, in principle, simple notification is required, because development of the market can be expected by allowing free competition by carriers as far as possible. However, registration is required of special Type II carriers because of their social and economic importance due to their scale, etc. By taking these measures, we expect that private enterprises will play an active role. We also intend to maintain the public interest regarding telecommunications businesses, such as communication privacy, safety, dependability and equal utilization opportunity, while the principle of competition is working effectively. We, as the administrative organ, are about to make various fundamental preparations to promote the vitality and ingenuity of private enterprises in the new system. To this end, we shall lay emphasis on measures such as promotion of the telecommunications industry, creation of a good environment, including the radio utilization system, for new participation, and the securing of fair competition and protection of users which is the base of those measures above. In addition, we believe that it is necessary for the administrative organ
Comment
‘We do not aim at partiality between foreign and domestic suppliers’
184
to play an active role in areas such as the promotion of the development of the fundamental technology of telecommunications and providing a contribution to international society, since they are difficult tasks for the private sector to achieve alone. As the new communications law system of Japan has attracted international attention, I would like to make a remark additionally about the law reform. In short, the purpose of the law reform at this time is to meet increased and diversified needs and make available for the Japanese inexpensive telecommunications services that are the best in quality in the world. Since a freer system was formulated based on the principle of impartiality between foreign and domestic suppliers, and the principle of fairness, our main criterion in applying the system is how to provide to the Japanese inexpensive telecommunications services of the best quality. We believe that the availability to the Japanese of excellent, advanced, highquality, low-price communications equipment, whether domestic or foreign, will both benefit users and contribute to the development of Japan’s telecommunications; we do not aim at partiality between foreign and domestic suppliers or unfair competition. And we believe that adoption of the principle of impartiality between foreign and domestic suppliers and of the priciple of fairness contributes to sound development of friendly trade relations with all countries in the field of telecommunications. With these policies and measures, we intend to construct the advanced information society for the 21st century. Since the advanced information
society is one mankind has never experienced, we must carry out more research into it and make every effort to design a truly humanistic society. While the progress of informatization spotlights our hopes for the future, we need to find out more about the shady side as well as the bright side. I have explained to you the reforms in Japan’s telecommunications system. I believe that efforts are also being made to expand and improve the telecommunications infrastructure in other countries, although the system and situations may be different. Telecommunications by nature have strong international characteristics. Therefore, international cooperation and coordination are essential to them. We live in an age of rapid technogical progress and are about to enter the advanced information society, and therefore, I feel that we must go beyond usual international cooperation and coordination by consulting one another and offering our achievements to each other. The Pacific Telecommunications Council (PTC) is the pioneer of the new type of international organization of telecommunications in the Pacific basin to promote such cooperation. As the already familiar expression, ‘Pacific Age’, attests, the world has shown an unprecedented interest in this area. I feel that the reason for this is that many nations in the area show dynamic growth and that attracts attention to the prosperous possibilities of the area. We wish to develop an affluent future for the Pacific basin through this promising field of telecommunications, by out mutual efforts. I expect PTC to continue growing as a place for cooperation.
TELECOMMUNICATIONS
POLICY
September 1985
Moriya Koyama, Japanese ViceMinister of Posts and Telecommunications, outlines the need for and format of the recent reforms in Japan ‘s telecommunications. Importantly, the principle of competition has been introduced throughout Japanese telecommunications, with private enterprises now able to provide main categories of service. The principles of impartiality between domestic and foreign suppliers and of fairness in competition have been enshrined in the reform. Further, Japan wishes to promote cooperation in the Pacific basin area to develop economic growth throughout the region. Moriya Koyama is Vice-Minister of Posts and Telecommunications, Kasumigaseki l-3-2, Chiyoda-ku, Tokyo 100, Japan. This is an edited version of a Keynote Address given at PTC 85, Honolulu, HI, USA, 13 January 1985.
1985 is an epoch-making year for Japan’s telecommunications. A revolutionary reform is to be made in Japan’s telecommunications, which began in 1870. Japan’s telecommunications service developed satisfactorily as a government enterprise until World War II. During the war, its communications network was dealt a crushing blow. After the war, in order to achieve its swift and effective recovery and expansion, the telecommunications carrier was separated from the government and a monopolistic system was created to supply telecommunications service. Nippon Telegraph and Telephone Public Corporation (NTI’) was given a monopoly in domestic service and Kokusai Denshin Denwa Company Ltd (KDD) a monopoly in international service. The two major goals regarding telephony in this system were to ‘eliminate the backlog in subscriber applications’, and to ‘provide a nationwide service of long-distance directdialing’. On the slogan ‘immediate installation, immediate connection’, which symbolized these goals, we in fact attained them in the late 1970s. Today, the number of telephones in Japan exceeds 60 million with over 50 per 100 persons. Japan’s telecommunications service, which has been supplied by the government or monopolistic enterprises and has developed over more than 100 years, underwent a Copernican change in April 198.5. That is to say, the principle of competition was introduced into the telecommunications business to promote the sound development of telecommunications
and serve the convenience of the citizens in effective and fair competition. I would like to explain two things here. First is the need for this reform. Why was it necessary to reform Japan’s telecommunications business, which. as mentioned above, has developed rapidly and satisfactorily, under the unitary system? The other is our view as the administrative organ responsible for carrying out reform our basic view of how we are carrying out the reform and how we will develop Japan’s telecommunications in the future. I refer first to the background and necessity of reform. In Japan today, the two major goals mentioned above regarding telephones have been attained, and a sophisticated telephone society has been formed. As a result, the characteristics which formed the basis of the Japanese telecommunications monopoly have changed. For instance, as for technological unification, progress in the technology of interface between networks has made the coexistence of networks possible. On the one hand, the public need for telecommunications has increased and become diversified, and specific services which meet the various needs of individual users, as well as the present, nationwide, unitary, telegraph and telephone service, have been requested. In addition, the technology and funds of private enterprises have improved and the conditions under which they may participate in the telecommunications business have been developing. In short, the need has arisen to
TELECOMMUNICATIONS
POLICY
September
1985
Comment
‘The most important point is the introduction if the principle of competition’
TELECOMMUNICATIONS
POLICY
make new media, which are actually in use today, develop rapidly and to make the telecommunications business more active and efficient by taking advantage of the impetus of competition to economic rationalization. And the conditions for this have now developed. Considering these circumstances, we proposed the reform. The necessary bills were passed in the National Diet at the end of December 1984, and the proposal was approved, and implemented. Turning to the second point - how this revolution is to be carried out and what future course we should take - I would like to explain the philosophy underlying the enactment of the law at this time. A law, by its nature, has the function of establishing order in the present situation and stabilizing it, but at a certain point in time it may become a factor restraining the development of society. This is especially true in the area of telecommunications, which is making rapid progress based on the remarkable development of electronics and communications technology. Therefore, we have attempted to build a new flexible legal structure which will secure the future development of telecommunications and provide the users of telecommunications with the results of the development. The outline of the reform is as follows: the most important point in the reform is the introduction of the principle of competition into the entire field of telecommunications. Thus, the telecommunications business, which has been operated exclusively by NTT and KDD, will be com$etely open to private enterprises. A mechanism which is capable of handling a variety of types of business and services has been provided, assuming that a variety of types of services which reflect the ingenuity of private enterprises will be created through new participation in the field. In the new system, the teiecommunications businesses are classified into Type I telecommunications businesses, which provide services with their own telecommunications circuit facilities, and Type II telecommunications businesses, which do not
September 1985
fall under Type I. Therefore, Type II telecommunications carriers provide services using the telecommunications circuit facilities of Type I telecommunications carriers. Type II telecommunications businesses are divided into General Type II and Special Type II according to the size of the facilities and other factors. We consider this classification sufficient for handling the diversity of types of businesses and services which accompany future technological progress. Restrictions on business will only be those which are necessary for each business type in order not to confuse users unnecessarily. This is intended to promote the free business activities of carriers with ingenuity and vitality. In concrete terms, permission must be obtained for the operation of Type I telecommunications businesses, because they are basic businesses which build and use telecommunications networks. As for Type II businesses, in principle, simple notification is required, because development of the market can be expected by allowing free competition by carriers as far as possible. However, registration is required of special Type II carriers because of their social and economic importance due to their scale, etc. By taking these measures, we expect that private enterprises will play an active role. We also intend to maintain the public interest regarding telecommunications businesses, such as communication privacy, safety, dependability and equal utilization opportunity, while the principle of competition is working effectively. We, as the administrative organ, are about to make various fundamental preparations to promote the vitality and ingenuity of private enterprises in the new system. To this end, we shall lay emphasis on measures such as promotion of the telecommunications industry, creation of a good environment, including the radio utilization system, for new participation, and the securing of fair competition and protection of users which is the base of those measures above. In addition, we believe that it is necessary for the administrative organ
Comment
‘We do not aim at partiality between foreign and domestic suppliers’
184
to play an active role in areas such as the promotion of the development of the fundamental technology of telecommunications and providing a contribution to international society, since they are difficult tasks for the private sector to achieve alone. As the new communications law system of Japan has attracted international attention, I would like to make a remark additionally about the law reform. In short, the purpose of the law reform at this time is to meet increased and diversified needs and make available for the Japanese inexpensive telecommunications services that are the best in quality in the world. Since a freer system was formulated based on the principle of impartiality between foreign and domestic suppliers, and the principle of fairness, our main criterion in applying the system is how to provide to the Japanese inexpensive telecommunications services of the best quality. We believe that the availability to the Japanese of excellent, advanced, highquality, low-price communications equipment, whether domestic or foreign, will both benefit users and contribute to the development of Japan’s telecommunications; we do not aim at partiality between foreign and domestic suppliers or unfair competition. And we believe that adoption of the principle of impartiality between foreign and domestic suppliers and of the priciple of fairness contributes to sound development of friendly trade relations with all countries in the field of telecommunications. With these policies and measures, we intend to construct the advanced information society for the 21st century. Since the advanced information
society is one mankind has never experienced, we must carry out more research into it and make every effort to design a truly humanistic society. While the progress of informatization spotlights our hopes for the future, we need to find out more about the shady side as well as the bright side. I have explained to you the reforms in Japan’s telecommunications system. I believe that efforts are also being made to expand and improve the telecommunications infrastructure in other countries, although the system and situations may be different. Telecommunications by nature have strong international characteristics. Therefore, international cooperation and coordination are essential to them. We live in an age of rapid technogical progress and are about to enter the advanced information society, and therefore, I feel that we must go beyond usual international cooperation and coordination by consulting one another and offering our achievements to each other. The Pacific Telecommunications Council (PTC) is the pioneer of the new type of international organization of telecommunications in the Pacific basin to promote such cooperation. As the already familiar expression, ‘Pacific Age’, attests, the world has shown an unprecedented interest in this area. I feel that the reason for this is that many nations in the area show dynamic growth and that attracts attention to the prosperous possibilities of the area. We wish to develop an affluent future for the Pacific basin through this promising field of telecommunications, by out mutual efforts. I expect PTC to continue growing as a place for cooperation.
TELECOMMUNICATIONS
POLICY
September 1985