• Kyodo

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NTT Corp. is financially strong enough to endure a proposed drastic reduction in connection fees that it charges other carriers for use of its local networks, U.S. Trade Representative Charlene Barshefsky said Monday.

“The claim of the Japanese government that NTT is too weak to endure competition is somewhat belied by its fairly aggressive acquisition (of a U.S. Internet company),” Barshefsky told reporters after giving a speech to communication industry leaders.

She was referring to a plan by NTT Communications Corp., an NTT subsidiary, to buy Verio Inc., a Colorado-based Web site manager.

The buyout plan attracted strong criticism from some U.S. lawmakers, who wrote to Barshefsky and asked her office to consider blocking the plan as long as Japan refuses to cut NTT’s access charges.

Barshefsky expressed understanding of that request, saying, “We always welcome congressional support on trade initiatives, including those with Japan.

“There is obviously great concern that basic access (to Japan’s telecom market by foreign carriers) is — whether it is by the government of Japan or NTT — being stymied,” she said.

Barshefsky said that access is currently being limited in a manner that conflicts with Japan’s commitment to U.S. deregulation initiatives on cost-based interconnection fees.

She said connection rates levied by NTT are between two and five times the average rate charged in member countries of the Organization for Economic Cooperation and Development.

Barshefsky said Internet access rates in Japan are 10 times higher on average than in the United States.

In deregulation talks with the U.S., Tokyo has proposed a 22.5 percent cut in NTT access charges over four years, but Washington demanded a deeper cut over a shorter period.

Japan has claimed that even the proposed 22.5 percent cut would hurt the financial positions of the two regional phone operators of the NTT group, indicating any further reduction would be impossible.

In their letter to Barshefsky, Rep. Billy Tauzin of Louisiana and six other Republican congressmen linked the NTT access-charge issue with the planned NTT acquisition of the U.S. Internet firm.

As long as Japan’s telecom market is closed to competition, NTT’s proposed acquisition “of a major U.S. Internet backbone cannot stand,” the letter said.

Barshefsky said she has consulted extensively on the matter with congressional members concerned.

She said the two countries will resume talks on the NTT issue in July.

“We will determine where we are at the time of the G8 summit (from July 21 to 23) and then determine what action we need to take, including the possibility of going to the WTO,” she said.