Japan Telecom to Mount Bold Local Challenge to NTT

TOKYO (07/04/2000) - Japan Telecom Co. Ltd., a major Japanese telecommunications company, said Tuesday it plans to mount the boldest challenge yet against Nippon Telegraph and Telephone Corp. (NTT) and take the company on in the local market.

NTT, in which the government remains a majority shareholder, has a de facto monopoly in the local loop. Despite several years of competition from local carriers affiliated with the electricity utilities and cable television network operators, NTT remains the only option for most Japanese households -- a marked contrast with the domestic and international long distance markets in which there is now considerable competition.

Speaking at a press conference Tuesday, company President Haruo Murakami said Japan Telecom plans to enter the local call market, although timing and pricing are yet to be decided.

The comments followed a report in the Tuesday morning edition of the Nihon Keizai Shimbun newspaper that said Japan Telecom will begin a service from May 2001 in Tokyo, Osaka and eight other major cities. The report said the company will charge 8 yen (8.5 US cents) per three minutes for local calls -- a rate that would make the service the cheapest in Japan.

NTT currently charges 10 yen per three minutes while Tokyo Telecommunications Network Inc. (TTNet), a carrier that operates in the Tokyo area only, charges 9 yen per three minutes.

To offer the service, Japan Telecom plans to use existing NTT lines and also to lay its own lines directly to customer premises, said Mitsuhiro Kurano, a spokesman for Japan Telecom.

The company will have to pay a fee to NTT to use its lines -- although it will avoid the high costs associated with laying its own cables. Japan Telecom will be subject to the same interconnection costs that U.S. carriers are currently lobbying NTT to reduce. Fresh talks are due to begin on the issue in Tokyo next week and a reduction in the rates could be hammered out. [See "Japan-U.S.

Telecom Talks Appear Near Climax," July 4.]Before the service is launched, Japan Telecom has to consider how best to handle the large investment that is likely needed to launch the service and also work out the technical specifics with NTT, said Kurano. The company, which has until now operated long distance services only, also has to build up its local infrastructure to handle the service.

Japan Telecom, in Tokyo, can be found online at http://www.japan-telecom.co.jp/.

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