Video #5 - E-Japan

Monday, January 09, 2006

sources | lesson plan

BACKGROUND INFORMATION

The recently unveiled plan called "e-Japan"; has been described as a national strategy for making Japan the world's leading Internet superpower in just five years. According to Lucy Craft, industry players say it could prove a windfall for U.S. telecom suppliers. Developments in the industry over the last five months seem to verify these claims.

In July, Japan, in response to U.S. demands, agreed to have NTT cut some interconnection charges by 22.5 percent over three years through March 2003, as NTT's higher fees were criticized as a barrier to new companies wishing to enter Japan's telecom market. In September, NTT DoCoMo and America Online concluded a $100 million deal that gives AOL greater access to the prized Japanese market.

The financial daily Nihon Keizai reported from Tokyo on October 30th that Japan's Ministry of Posts and Telecommunications plans to allow companies owning telecoms to begin cable and satellite broadcasting services. As a result, Japan's dominant carrier Nippon Telegraph and Telephone Corp. (NTT) could use its fiber-optics network to air programs without needing a license, as long as it notifies the ministry. Under current law, NTT is banned from broadcasting. The ministry's proposal aims to encourage more companies to enter the cable and satellite broadcasting business and stimulate competition. Japanese firms have lagged behind their U.S. counterparts in this market.

Reuters reported on November 16 that a government panel proposed a sweeping overhaul of Japan's dominant telecoms firm NTT. The proposal is aimed at boosting competition. The advisory panel of the Ministry of Posts and Telecommunications said Nippon Telegraph and Telephone Corp. should reduce its holdings in its subsidiaries, mobile carrier NTT DoCoMo Inc. and long-distance company NTT Communications.

Currently, parent NTT owns 100% of NTT Communications and a 67.1 percent stake in DoCoMo.

Opening up NTT's telecoms infrastructure - mainly fiber-optic cable networks, utility poles and other facilities owned by local phone operators NTT West and NTT East - for use by newcomers and rival carriers was also among the panel's proposals.

Yoshihiro Jujii, head of the advisory panel, said a final draft of the proposals would be formally submitted to the government on December 20 and would be reviewed by another advisory panel to the Post Ministry next year. The business daily, Nihon Keizai Shimbun, reported the proposals would reach parliament for consideration as early as January; but analysts said this was highly unlikely given that further discussions among NTT, its competitors and the government were likely before parliament joined the fray.

Reportedly, DoCoMo, the crown jewel of the NTT group, generating 36 percent of its profit, has long argued for greater independence so it can be more aggressive in expanding into new services and new markets abroad.

NTT Communications already offers Internet and long-distance phone services and has broken into the Internet infrastructure arena with its $5.5 billion takeover of U.S. Internet services provider Verio Inc.. The panel also recommended that NTT be allowed to enter new business areas such as broadcasting and telecoms equipment manufacturing, which are currently prohibited by the law governing NTT. Additionally, the council said it is considering a recommendation that the government fully give up ownership in NTT, an effective privatization. It currently owns 46.7 percent of the company.

In related news, Bloomberg reported on November 21 that Ambient Corp., based in Brookline, Massachusetts, said it successfully completed the first test to provide high-speed Internet and video services over standard power transmission lines with consolidated Edison Inc., which supplies electricity to New York City and nearby Westchester County. Modified lines, which currently transmit only electricity, could allow utilities to compete with telephone and cable companies in the burgeoning market for web services. The company expects to sell its product in 18 months after long-distance testing. It is conducting other tests in the U.S. with DTE Energy Co.'s Detroit Edison unit and in Japan with Sumitomo Corp..

The Associated Press reported on November 22 that NTT DoCoMo Inc. is reportedly near an agreement to buy a stake in AT&T Wireless Group for $9 billion -- giving the Japanese company a foothold in the U.S. mobile phone market while bolstering AT&T's shaky financial state. The pendulum swings both ways.

On November 26th, the same source reported that the Ministry of Posts and Telecommunications next year will introduce flat rates for telecom companies linking to the networks of NTT to accelerate Internet growth. The flat-rate system will enable NTT rivals, such as DDI Corp. or Japan Telecom Corp., to offer Internet access similar to NTT's late night "Telehodai"; service but for 20 percent less than Telehodai's 1,800 yen ($16.20) a month. Under the current system, carriers pay a fee based on the amount of time they connect to NTT's networks. The new system will enable the carriers to pay a flat charge regardless of time.

The evidence of attempted restructuring in the telecom market in Japan is mounting. "e-Japan"; seems to be well underway.

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SOURCES:

Amaha, Eriko, "Japan panel's overhaul plan not seen threat to NTT,"; Reuters, November 16, 2000 http://biz.yahoo.com/rf/001116/t98024_2.html

Anonymous, "Ambinet, Con Ed Test Web Services Over Power Lines,"; Bloomberg News, November 25, 2000 (AOL)

Anonymous, "HSBC's Yamada on Japan's Telecom Companies: Comment,"; Bloomberg News, November 24, 2000 (AOL)

Anonymous, "Japan govt to allow telecom firms to tap TV,"; Reuters, October 29, 2000 http://biz.yahoo.com/rf/001029/t115388.html

Anonymous, "Japan to Introduce Flat Charges for NTT Net Links, Nikkei Says,"; Bloomberg News, November 26, 2000 (AOL)

Anonymous, "NTT DoCoMo Said To Take AT&T Stake,"; Associated Press, November 22, 2000, http://dailynews.yahoo.com/htx/ap/20001122/bs/ntt_at_t_5.html

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LESSON PLAN

GRADE LEVEL/SUBJECT: 10-12/Economics, International Relations, World History, International Baccalaureate Programmes (IB), Current Events.

PURPOSE: To present activities to be used at a variety of classroom situation s in order to enhance student understanding of the Japanese economy and its significance globally.

OBJECTIVES:

Students will be able to:

1. define "e-Japan".
2. analyze the role that this program may play in the Japanese economy.
3. describe the history of the telecommunications industry in Japan.
4. evaluate the impact the program may have on the global telecommunications industry.
5. compare and contrast the telecommunications industry in Japan with that of the U.S..

MATERIALS:

1. Background information provided.
2. Resources on Japan available at your school's Media Center and the Public Library System in your area.
3. Background information available through Internet "search engines";.

ACTIVITIES: May be assigned as group activities or as individual tasks. They may also be designed as preparation for related presentations either by individuals or groups.

1. Write a scenario describing the global telecommunications industry of the year 2050
2. Develop a prospectus for NTT and its subsidiaries.
3. Develop a prospectus for ATT and its subsidiaries.
4. Create a Venn diagram comparing and contrasting NTT and ATT.
5. Assign research on the history of the telecommunications industry in selected parts of the world to cooperative learning groups. Allow each group to present their findings. Create Venn diagrams to compare and contrast the experiences of the chosen areas. Evaluate the development of their individual industries. Make recommendations for the future.

EVALUATION:

Individual assignments should be graded by the teacher using established criteria.

Group activities, presentations and projects may be evaluated by teachers and students using the following criteria and scale:

Content Creativity Clarity

1= Superior (A) 2= Excellent (B) 3= Good (C) 4= Fair (D) 5= Poor (F)

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