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The government launched a new three-year deregulation program Friday that features measures to promote information technology but skirts the proposed dismantling of the holding-company structure of NTT Corp.

The program was endorsed at a morning Cabinet meeting and covers 554 deregulatory items in 15 areas, including IT, education and the environment, over a three-year period beginning fiscal 2001, which starts Sunday.

The government will set up a consultative panel in the Cabinet Office to monitor the introduction of the new plan with an eye to revising it at the end of next March.

The fresh package calls for reforming the NTT group and expanding fiber-optic networks to allow for competition by common carriers and the spread of benefits of the IT revolution.

But the program fails to clearly state an intention to dismantle NTT’s holding-company structure, retreating from an earlier proposal by its advisory panel toward that end.

The plan merely commits the government to “reviewing the (NTT) structure if competition fails to advance on the telecommunications market.”

The government had earlier planned to accept the proposal, which the Regulatory Reform Committee forwarded late last year. But it faced strong opposition from the Liberal Democratic Party.

The program also backs off from a December recommendation by the Telecommunications Council — another advisory panel — that calls for completely dissolving the NTT group’s capital affiliations in two years.

The government refers vaguely to the issue in the new plan by incorporating the “e-Japan” IT strategy adopted March 19.

The strategy includes reforming the NTT structure if overall telecom fees in Japan are not sufficiently reduced. Its major objective is to lay a blueprint to provide high-speed Internet access to millions of households nationwide within the next five years.

The deregulation plan also sets hurdles against NTT reform, including a condition that Japan’s telecom sovereignty must be maintained to prevent takeovers by foreign concerns.

There are two domestic service operators under NTT’s holding-company umbrella, NTT East Corp. and NTT West Corp., as well as long-distance and international service operator NTT Communications Corp. and NTT DoCoMo Inc., the nation’s biggest mobile-phone operator.

Political pundits say some LDP politicians fear NTT’s breakup will weaken the Japanese telecom industry’s international competitiveness and that the LDP wants to secure support votes from NTT group companies in July’s House of Councilors election.

But resisting the proposal to break up NTT could draw strong criticism from the United States and European countries, which have long urged Japan to spur competition in its telecom market via measures including launching an independent industry regulator and tightening regulations on NTT.

As for other deregulatory measures, the government will consider allowing public broadcaster NHK to use scrambling technology and decoders so that only subscribers can watch its digital satellite television broadcasts. The plan also recommends the government enable private companies to run nursing-care centers, ease regulations over holding companies and stock holdings by financial institutions and examine frequency allocations to promote high-speed wireless Internet.

Summary of deregulation plan

The following is a summary of the government’s three-year deregulation program adopted Friday. The program includes measures to:

* introduce rules to prevent anticompetitive business practices by dominant telecom carriers, such as NTT Corp;

* review NTT’s structure or the overall structure of the national telecom industry if competition is not enhanced;

* consider scrambling satellite broadcasts from NHK’s digital broadcasting satellite to ensure BS programs are watched only by paying subscribers;

* facilitate construction of fiber-optic communication networks by allowing a wider use of utility poles; expand frequency allocation to promote high-speed wireless access to the Internet;

* ease regulations on holding companies and banks with stakes in other firms so that companies will not be excessively restricted in their activities;

* enact legislation to deal with soil pollution and promote emissions controls on vehicle exhaust;

* raise the number people who pass the National Bar Examination to 1,500 and change the obscure, literary style of the commercial and civil codes into a more colloquial style;

* expand emergency medical services and primary medical care for children, allowing private firms to enter the business of managing nursing homes for senior citizens.

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