Nov. 1, 2009 (The Yomiuri Shimbun) -- A special task force set up in the Internal Affairs and Telecommunications Ministry has begun debating what should be done to make the country's telecommunications industry its growth engine.
Representatives of communications and broadcasting industries and other experts in this field will map out the government's new information technology strategy over the next 12 months. The focus of their discussion is a review of NTT Corp.'s management structure.
The move is significant in that NTT's management structure is being reexamined 10 years after the telecom giant was reorganized in 1999. The task force should take up the issue of how to strengthen the international competitiveness of the telecom industry as a whole, with NTT at its core.
There has been protracted discussion over whether to split up NTT, which has been accused of monopolizing the country's communications network ever since it was privatized in 1985.
In 1999, NTT was reorganized into two regional carriers--NTT East and NTT West--and a long-distance and international carrier, but its integrated management was kept intact under a newly created holding company. NTT's rival companies are calling for a fresh review of NTT's management structure with an eye to its complete breakup, namely, capital separation among the group firms. ===
Cell phones, Net ascendant
However, cell phones and the Internet have overtaken fixed-line telephones as the key technology in the communications market. Unlike the regional telephone network, over which NTT once enjoyed dominance, the communications market today is not monopolized by the NTT group, whose market share in the high-speed and large-capacity communications, and cell phone services stands at around 50 percent.
Rehashing arguments advanced in the past, when the fixed-line telephone network was the mainstay of communications services would not be constructive. What is more important is establishing a system aimed at the global communications market.
European cell phone makers are exporting their products in bulk to developing countries, where they have established cell phone companies. In China, government-affiliated financial institutions are cooperating with cell phone carriers to expand services overseas.
In contrast, NTT's overseas business lags behind its foreign counterparts', and Japan's communications technologies are isolated internationally. Japanese cell phone makers were handicapped from the beginning in overseas markets because they could not export communications equipment and cell phone handsets that use incompatible formats. ===
Firm needs new mind-set
In information services, Amazon.com Inc. (NASDAQ:AMZN) and Google Inc. (NASDAQ:GOOG) of the United States are steadily increasing their customers in Japan by making full use of NTT's high-speed and large-capacity communications network. Japan's telecom industry could be overwhelmed in both hardware and information services by its European and U.S. rivals if nothing is done.
To turn the tables, it is important to have NTT shed its old style and transform it into a global company. NTT itself must correct its inward-looking management mind-set.
NTT should further open its communications network and technologies and build a robust structure that can survive international competition. Business tie-ups and integration with companies outside its group will probably be among its options.
NTT alone cannot internationalize the telecom industry. We hope the task force will aim at crafting an IT strategy in which the public and private sectors work in tandem.
(From The Yomiuri Shimbun, Nov. 2, 2009)
