SAN FRANCISCO (06/02/2000) - A group of U.S. lawmakers has raised objections to the proposed acquisition of Internet services provider and Web site manager Verio Inc. by NTT Communications Corp., a subsidiary of Japan's Nippon Telegraph and Telephone Corp.
The group of seven U.S. congressman has written U.S. Trade Representative Charlene Barshefsky, asking her to consider blocking the acquisition because Japan has refused to cut high local connection fees for U.S. telecommunications companies.
"If the Japanese telecommunications market is not open to competition, NTT's proposed acquisition of a major U.S. Internet backbone can not stand," U.S.
House of Representatives member Billy Tauzin, of Louisiana, and six other Republican congressmen wrote in a letter dated May 25, 2000.
They said Japan has failed to live up to commitments made under the World Trade Organization's Basic Telecommunications Agreement, which stated that participating governments would open home markets to foreign competition.
"Thus far, NTT and the Japanese government have failed to fulfill their commitments to fair, cost-based interconnection rates," the congressmen wrote.
"Until interconnection rates in Japan are reduced to cost-based levels, U.S. companies have no real opportunity to compete in Japan, and NTT's monopoly position will be protected."
The congressmen said NTT ownership of Verio's Internet backbone, along with NTT's ownership of Japan-US undersea cable operations would present a potentially anticompetitive situation for U.S. Internet consumers.
"We urge you to work with your counterparts at the Department of Justice, the U.S. Federal Communications Commission and the NTIA (National Telecommunications and Information Administration) to address this serious potential for harm to competition in the U.S. telecommunications market," the letter said.
NTT could not immediately be reached for comment about the letter. It was not immediately clear what impact, if any, their protest would have on the proposed merger.
NTT Communications has offered to pay US$5.5 billion in cash for Verio with the goal of expanding its global network and IP (Internet protocol) services [See "NTT Communications to Acquire Verio in $5.5B Deal," May 8, 2000] NTT Communications, in Tokyo, can be reached via the Web at http://www.ntt.com/index-e.html. Verio, in Englewood, Colorado, is at http://www.verio.com/.