Japan to bend on NTT obscene profits.
JohnG
totaltele.com
Japan set to relent in U.S.
telecoms dispute
By Linda Sieg, Reuters
06 July 2000
Japan is set to make concessions at talks next week to settle a
U.S.-Japan telecoms row over rates charged by telecoms giant
Nippon Telegraph and Telephone Corp (NTT) but just how far it will
bend is still in doubt.
Both sides are keen to resolve the high-profile row before Prime
Minister Yoshiro Mori meets U.S. President Bill Clinton ahead of a
July 21-23 Group of Eight (G8) summit Mori will host.
Mori has made information technology (IT) the top item of the G8
summit agenda as well as a key plank in his domestic economic
platform, so a failure to clinch a deal would be embarrassing.
Kyodo news agency said on Thursday that Tokyo would propose at
talks to start next week that NTT cut the rates it charges rivals to use
the "last mile" of its local lines by 22.5 percent by the end of 2001
and 41.1 percent by the end of 2002.
That would go a long way toward meeting Washington's demand that
the high-cost rates be slashed immediately by 41 percent. Tokyo has
officially offered a 22.5 percent cut over four years.
While Japanese officials have said recently that Japan should speed
up the cuts to boost the nation's lagging info-tech sector, a
government source said Tokyo was unlikely to make such a drastic
offer.
The picture painted by the Mainichi Shimbun, which said Japan
would likely offer a 22.5 percent cut over three years, was more in
line with thinking at the Posts and Telecommunications Ministry, the
source said.
NTT LAW REVIEW
Ruling Liberal Democratic Party (LDP) lawmaker Ichizo Ohara told
Reuters on Wednesday that Japan looked ready to offer a cut of 22.5
percent over two years and discuss further cuts at a later date. But
Mainichi said NTT's powerful political backers were balking at that
proposal.
Analysts have said that further cuts would depend on the fate of a
planned review of the laws governing NTT, including limits on the
operations of its two regional phone units.
New Posts and Telecommunications Minister Kozo Hirabayashi said
in an interview published on Thursday that the government planned to
revise the law, paving the way for a possible break-up of the NTT
group. That review could take two years.
"It is vital to review the structure of NTT quickly to respond to changes
in the industry," Nihon Keizai Shimbun quoted Hirabayashi as saying.
Hirabayashi took office on Tuesday in a cabinet reshuffle that
followed last month's general election.
NTT had said drastic cuts would harm its profits and hit jobs. Its local
phone companies alone employ nearly 130,000 people.
But that argument has been undermined by hefty upward revisions of
earnings forecasts for this business year.
Now NTT wants the legal revisions to give its units greater freedom. It
would also like the government to sell off its 53 percent stake to free
management from bureaucratic control.
The former state monopoly was rejigged only last year into a holding
company with two regional phone units and a long-distance carrier.
U.S. OUT FOR BLOOD?
Analysts expect fresh changes as a result of the review but sceptics
doubt whether a full-scale break-up of the group is in store, while
critics fear NTT would emerge even stronger.
Japanese players on the telecoms field - politicians, diplomats and
telecoms bureaucrats as well as NTT and its rivals - look likely to
jostle for position ahead of next week's talks.
U.S. officials, meanwhile, may have hardened their stance after
NTT's robust upward revisions of its earnings forecasts.
"The U.S. might have become more bloodthirsty," said one foreign
telecoms expert. "What was acceptable for a deal in March might no
longer be acceptable."
Assistant U.S. Trade Representative Wendy Cutler will arrive in
Tokyo on July 10 and Deputy U.S. Trade Representative Richard
Fisher will arrive later in the week.
U.S. Trade Representative Charlene Barshefsky might also get
involved if she accompanies Clinton to Japan for the G8 summit.
The United States has threatened to file a complaint with the World
Trade Organisation by the end of July if Tokyo refuses to cut the fees,
which Washington says bolster NTT's iron grip on the world's
second-largest telecoms market. |
