Deregulation in the field of telecommunications


  1. Sweeping amendment of the telecommunications business-related legal system, all to further stimulate competition, such as revision of the regulation of rates and contract clauses, revision of the regulation of services, revision of the commission approval system, replacement of the classifications of business(Type I and II), and abolition of the KDD law.
    1. Since the liberalization of communications in 1985, the communications market has moved from an era of monopolies to one of competition, and as of April 1, 1997, the field included 183 type-I telecommunications businesses and 4588 type-II telecommunications businesses. Accompanying this, by 1995 NTT's share of the inter-prefecture communications market had fallen to 68%, and in particular, NTT's share of the market for long-distance communication for distances of more than 100 km had fallen to 52%. KDD's share of the international direct-dialed communications market had also fallen to 65%. Both domestic longest distance charges and international communications charges between Japan and the U.S. had fallen to around 25%.

    2. In addition, progress has been made in creating an environment to foster free and fair competition by formulating rules governing interconnections, which are one important means of introducing competition to the local communications markets, in addition to easing participation regulations and foreign capital regulations.

    3. However, it is necessary to further promote competition based on market principles in all fields in order to achieve qualitative improvement in citizen's lives and strengthen the competitiveness of Japan's industries. There is a growing need for diversification of services and further lowering of rates, but regulation through the Telecommunications Business Law is a major factor restricting the dynamic response of communications businesses. The market share held by new participants is still low, and communications fees as a whole are high in comparison to the advanced nations of Europe and the U.S. In addition, in order for Japanese communications businesses to respond to full-fledged international competition in the future, free management based on the principle of self-responsibility of the individual needs to be recognized in order to strengthen management through competition.

    4. Hence, it is necessary to establish free, transparent and equitable communications markets by creating fair and effective competition conditions and a system for observing adherence to these, along with securing fairness and transparency in administration and fundamentally reevaluating current laws related to the telecommunications industry, and it is necessary to enable communications businesses to utilize accelerating technological changes and also to respond swiftly to user needs.

    5. From this vantage point, easing or abolishing the following regulations should be accomplished promptly.

      1. Review of rate and provision regulations
        In order to foster lower rates and the creation of new services and flexible price setting by businesses, as a rule the approval system for rates and provisions should be abolished and a move should be made toward a reporting system, in addition to eliminating comprehensive cost formulas. In services with insufficient competition, which is strong connection to people's personal lives and national economy, a price cap system should be introduced so that incentives to cut costs have an effect on communications businesses.

      2. Review of service regulations
        Currently, services are divided into seven classifications, and changing service classification is an approval system, and consequently this is an obstacle to introducing new services and dynamically responding to user needs. Regulation of services should be eased to a reporting system, in addition to revision of the current division of service classifications.

      3. Review of business subcontracting regulations
        The current business service approval system should be reevaluated so that tie-ups and outsourcing with the aim of lowering costs and improving business efficiency can be accomplished smoothly.

      4. Review of the classification of businesses as type-I and type-II
        The current classification of businesses as type-I and type-II, which hinders free business development, should be reevaluated, and ownership of circuit facilities should be entrusted to the management determinations of businesses.

      5. Abolition of the KDD law
        In the future, it is predicted that competition will further progress in the international communications market with the elimination of the distinction between domestic and international market, the increased activity of call backs, and the lifting of bans on Internet telephones and international exclusive and public connections. Accordingly, it would be appropriate for KDD to be positioned not as a special corporation but as a private company, and the KDD law should be abolished at an early stage.

  2. Revision of the system aimed at integrating telecommunications and broadcasting, such as the rules relating to services that lie between telecommunications and broadcasting.
  3. Accompanying the development of information and communications technology, progress in digitalization and the spread of the Internet, common transmission lines for communications and broadcasting are increasingly being developed and services are appearing which are in between these two and which are difficult to separate into the two classifications of communications and broadcasting. Consideration should be given promptly to the state of these rules in response to the fusing of communications and broadcasting, and in the future, it will be necessary to undertake a major reevaluation of the state of current telecommunications business laws, broadcasting laws and cable television broadcasting laws.

  4. Revision of the technical standards relating to telecommunications terminal equipment and certain wireless facilities, and simplification of the procedures for recognizing and certifying conformity to the technical standards.
  5. Telecommunications terminal equipment and special wireless facilities must conform to technology standards established by the Ministry of Posts and Telecommunications, and it is necessary to receive recognition and certification from an institution designated by the Minister of Posts and Telecommunications.
    However, at present the examination period is extremely long and examination fees are high in comparison with other countries, and consequently, the burden on the private sector is extremely heavy and in addition dynamic response to the market is difficult. The technology standards relating to telecommunications terminal equipment and special wireless facilities should be reviewed in response to progress in technology development, and efforts should be made to eliminate examination items, reduce the time period and lower fees for examinations covering recognition and certification of conformity to technology standards. In particular, for special wireless facilities, two-fold examinations consisting of examinations by test and examinations by documentation are common, but these should be unified into an examination by documentation the same as with telecommunications terminal equipment.

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