NTT rises to the challenge

Press, 3 December 1985, Page 36

NTT rises to the challenge

ALAN GOODALL,

By

New Zealand Japan News Rapid growth in telecom equipment and services has followed the opening of the Japanese telecommunications market. More than 170 firms have moved in since the Japanese Prime' Minister, Mr Yasuhiro Nakasone, deregulated one of the world’s biggest telecommunications companies, Nippon Telegraph and Telephone (NTT), six months ago. But NTT is fighting back. The. former monopoly is still the giant and intends to stay that way in the face of fierce competition. The Lange Government, whose free market policies in the finance field have brought acclaim, has yet to focus on New Zealand’s Post Office monopoly. When it does, the direction to look is north. Japan has followed the United States and Britain in breaking up the telecom monopoly and the subsequent growth suggests less Ons for New Zealand.

Though critics in Japan, particularly within the computer and communications industries, warn that NTT must not be allowed too much free rein the chairman of NTT, Dr Hisashi Shinto, defended the rapid evolution of the telecom-, munications his company is leading. “The market reorganisation, following the American and British precedents, is designed to promptly transform Japan into an advanced information society,” he said. Dr Shinto is a former industrialist who moved across from private enterprise five years ago to ease NTT’s privatisation agonies. He doubled research and development spending in the agency and plugged into new technology, ready to face open competition. At 75, Dr Shinto was too quick to be caught out by the Western press when he addressed the Foreign Correspondents Club in Tokyo recently. He dodged a question on whether NTT will swing its impressive technology

research behind President Reagan’s Star Wars programme. And he warned that foreign investors chafing at the bit to invest in his company will have to wait another four years when the Diet (Parliament) will consider allowing in foreigners. But on the question of whether NTT’s 320,000 staff — inherited from the days of government featherbedding and believed to be twice as many as necessary — should be trimmed, Dr Shinto took an old bureaucrat’s line.

While the company was profitable, it could carry this staff size, he said.

In spite of the change from a government-pro-tected monopoly to a private company on April 1, NTT is still enjoying virtual monopoly status. Five conglomerates have, however, won government permission td start providing telecommunications services.

Another 170 firms, including United States and British companies, have applied to provide national networks and international services.

Behind these moves are the biggest names in Japanese trade (such as Mitsubishi, Mitsu and C. Itoh) and the computer industry (Fujitsu, NEC, Toshiba and Hitachi).

Dr Shinto is well aware that new competitors (like Daini Denden, led by the Kyoto ceramic semi-conduc-tor maker, Kyocera, and Nihon Telecom, set up by the Japanese National Railways) will enter the market with state-of-the-art technology.

He admitted that to achieve an integrated network NTT will have to convert from an analogue to a digital system. Competitors will go straight into digital. “That is our weakness,” Dr Shinto conceded.

But as a convert to private enterprise, NTT is learning fast. At last count it had set up 16 subsidiaries and affiliates to grab such profitable business areas as computer software and

satellite communications. Next it will form a company to link the four million personal computers used in Japan. (NEC and Ascii Corporation, among others, are also getting into communications for home-based computers.) ?■; Co-operation with American Telephone and Telegraph, itself restructured under government orders, has reached the point of research exchanges between Japan and the United States.

One NTT move has brought the wrath ,of : the computer giants down on its heaa. The president of the Communications Industry Association, Takuma Yamamoto, recently demanded NTT 'drop . a planned joint venture with IBM.

The link; with the world’s biggest computer maker to form a vast value-added network both inside and beyond Japan would, the computer makers complain, stifle international telecommunications competition. Fear of NTT is not delaying the other companies. They are working overtime to get into the rapidly changing telecommunications business. iji

Daini Denden, for instance, recently announced it will buy SNZ3O million worth of American digital switching equipment to open its national network in 1987.

The likes of Fujitsu and NEC, however, are worried that the once slumbering giant is learning tob fast. Dr Shinto is undaunted. “We plan to take full advantage of technologies and human resources we have accumulated,” he said, “We are constructing an information network system to meet at a reasonable cost the diversified needs of advanced telecommunications equipment users. “A trans-Japan fibre optic trunk line has already started. By the end of this year digital circuit services will be open in Tokyo, Osaka and Nagoya. “By 1988 all large cities will be connected by a digital phone network.”