U.S., Japan Reach Key Telecom Agreement

TOKYO (07/19/2000) - The U.S. and Japan reached an agreement late Tuesday night on Nippon Telegraph and Telephone Corp.'s interconnection rates, capping an intense bilateral negotiation that had gone on for four years, a U.S. government official announced Wednesday.

The agreement, which President Clinton called a "win-win," came just before this weekend's summit of the Group of Eight countries in Okinawa. The U.S. had threatened to lodge a formal complaint with the World Trade Organization if the countries could not reach an agreement by July 28.

U.S. Trade Representative Charlene Barshefsky said Wednesday that the deal would "save telecommunications carriers around the world more than US$2 billion over the next two years." Japan's telecommunications market, the second largest in the world, is valued at $130 billion.

"As a package, this will help create a market in Japan which is easier to enter and alternative networks that are less expensive for Japanese businesses and families," said Barshefsky.

Carriers that connect to NTT's regional switches, including many telcos outside of Japan, will see rates drop by 50 percent over the next two years, according to Barshefsky, who also said that further cuts were likely.

Japanese domestic carriers that interconnect with NTT's local switches will see a 20 percent cut in rates over the next two years, and further cuts at least 2.5 percent in the third year.

Japanese consumers have had to pay high rates to connect to the Internet via fixed phone lines. An increasing number of Japanese citizens now access the Net via mobile phones, but most Web surfers here still get onto it through PCs at home, according to a recent survey by the Ministry of Posts and Telecommunications.

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