The death knell may have sounded for one of Japan’s biggest conglomerates, Nippon Telegraph & Telephone Corp, following the decision by a government advisory body to split the telecommunications giant into three companies. The controversial decision by the Telecommunications Council follows 10 years of bitter debate involving many of Japan’s most powerful industrial and political figures, as the government looks at sweeping reforms in its report on the nation’s telecommunications industry. The council has said that NTT should be split into one long distance operator and two regional operators, starting in April 1998 and finishing in 1999. It claimed that terminating NTT’s monopoly would help promote competition in the market, cut service charges and give Japanese communications companies a stronger global presence. The report has been submitted to Posts & Telecommunications minister Ichiro Hino and the council is demanding a decision on Nippon Telegraph’s future by the end of this month. Twice before, break-up has been recommended but the government has refused to act on both occasions. Although the privatization of Nippon Telegraph began in 1985, it is still 65%- owned by the government. On any break-up, the long-distance operator would immediately be allowed to offer services such as cable television, cellular phone and international phone services. This company would also take over NTT share in subsidiary companies: NTT Data Communications, cellular operator NTT Mobile Communications Network and Personal Handyphone System operator NTT Personal Communications Network. Both regional companies, servicing east and west Japan, would provide only local telephone services in their regions but they would also be allowed to provide services such as cable television and information services in each other’s areas to help offset a monopoly situation. The report also said that Japan’s former monopoly international telecommunications player, Kokusai Denshin Denwa Co Ltd should be allowed to compete in the domestic market before NTT’s break-up. Requests have also been made to the Posts & Telecommunications Ministry to draw up rules that will make it easy for competitors to access Nippon Telegraph’s vast networks, while also establishing a regulatory body to oversee any disputes. NTT president Masashi Kojima called the decision ‘extremely regrettable’ and argued that the former monopoly must be maintained as a single unit for all Japan, as a break-up would result in loss-making companies. The company also said that if the government doesn’t reach a decision by the end of the month then it should be delayed for another five years when global telecoms markets are more stable.
