The government will impose looser regulations than previously planned on Nippon Telegraph and Telephone Corp. according to a new outline of two amendments to laws governing the dominant carrier’s operations, government sources said Tuesday.

The move signals a departure from the initial draft amendments that called for three NTT units to be designated “domineering enterprises” that should be subject to stricter rules to allow more competition.

They referred to the carrier’s two local phone service units, NTT East Corp. and NTT West Corp., and NTT DoCoMo Inc., the mobile phone arm of NTT.

The new outline will merely designate the three as “special telecommunications carriers” not subject to the initially proposed regulations, sources at the Public Management, Home Affairs, Posts and Telecommunications Ministry said.

It also calls for NTT DoCoMo to be freed from being legally obliged to obtain ministerial permission before allowing other carriers to link their networks with that of NTT DoCoMo, they said.

The new outline, approved by the Liberal Democratic Party’s panel on telecom affairs on Tuesday, will only require NTT DoCoMo to report these contracts to the ministry.

The issue of how to regulate NTT’s business operations has been the subject of fierce debate within the ruling party, as NTT and LDP legislators with close ties to the carrier blasted the initial draft amendments, claiming they would force NTT and its group companies into keener competition with rival carriers and each other.

The watered-down outline is a compromise by the ministry, paving the way for a submission of the revised amendments to the Diet in mid-April.

The initial amendments were based on a report presented in December by a government advisory panel on telecom affairs. It called for ending NTT’s holding-company structure and barring NTT from holding any equity stake in group companies, unless competition is enhanced in Japan’s telecom market within two years.

The latest outline will have the amendments worded to oblige the government to consider breaking up NTT’s holding-company structure as an “annexed provision” attached to the main text of the legislation, the sources said.

But pro-NTT LDP members remain opposed to this proposed provision even as an annexed clause, the sources said.

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