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| Japan to Refute U.S. Criticisms of ISDN Tariffs
March 1, 1999 (TOKYO) -- Japan and the United States are due to hold
high-level ministerial talks on deregulation March 1-2.
|In the area of telecommunications, the United States has long criticized
Japan for the high cost of integrated services digital network (ISDN)
connection. The Japanese government plans to refute these criticisms,
according to government sources.
The U.S. government claims that Nippon Telegraph and Telephone Corp.
(NTT) does not base its ISDN connection charges on actual costs. Most
telephone companies in Japan use NTT's local networks to provide ISDN
and telephone services to their customers. Connection charges, then,
are the wholesale prices that a telephone company must pay to NTT for
In January 1999, NTT cut prices 30-38 percent for ISDN connections, but
the United States points out that connection charges are not cost-based
and still exceed subscriber usage charges. In the view of the Japanese
industry, the line being taken by the U.S. government is aimed at backing
U.S. telecom carriers, such as MCI WorldCom Inc., in their bid to enter
the Japanese market.
But there is criticism in Japan, too. Tokyo Telecommunication Network
Co., Ltd. (TTNet) says that ISDN connection charges are still on the
high side, preventing the company from offering an ISDN version of its
"Tokyo Denwa" (Tokyo Telephone) service.
In response to U.S. complaints, the Japanese government intends to argue
that ISDN connection charges in Japan are generally lower than subscriber
usage charges. When charges are compared in terms of call duration,
it is true that the connection charge is higher than the usage charge
for a very limited range of call times. However, looking at the total
interconnect tariffs paid by a telephone company to NTT, the connection
charge is less than the usage charge.
In regard to connection charges for telephone services, the U.S. government
claims that Japan's tariffs are between two and five times higher than
in the United States. Japan plans to prove that this is an unfair comparison
which is being leveled at only a small selection of charges where the
United States can appear to have the upper hand.
For its own part, Japan is expected to ask the United States for greater
transparency in the regulations that govern entry to the U.S. telecommunications market.
Other issues to be raised by Japan during the talks include the removal
of imbalances in international line costs borne by Internet service
providers in Japan and the United States, abolition of benchmark rules
requiring cuts in the connection charges for international phone calls
in each country, and early adoption of a long run incremental cost model
of tariff calculation, which should substantially reduce connection
All these issues have been debated repeatedly and inconclusively for
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