Where Is Japan Headed in 1997?
Industry Leaders Voice Their Views

What kind of plans do Japan's government ministries and major corporations have for the coming year, and what are their primary information technology-related concerns? To find out, we asked representatives from two ministries and five corporations, plus a university professor and a consultant, to give us their views.

All responses have been translated from Japanese. If the respondent's name is not indicated, the answers were supplied to us unattributed by one or more ministry or company representatives.

Ministry of Posts and Telecommunications (MPT)

The ministry will consider the status of foreign telecommunications carriers (such as merger of BT and MCI) with a viewpoint toward enhancing Japan's market competitiveness. To promote fair competition, the MPT will also decide on guidelines for interconnections between carriers - particularly those between NTT and other carriers. Currently, with its virtual monopoly in regional communications networks, NTT has been charging the New Common Carriers interconnection fees that amount to nearly half of the NCCs' revenues.

The MPT also plans to ease restrictions on the investment of foreign capital in Type I communications businesses (except for NTT and KDD). The current law permits only 33% participation (share acquisition) by foreign companies for Type I carriers, while there is no restriction on foreign participation in Type II carriers. A final decision on the matter will depend on the outcome of the Negotiations on Basic Telecommunications at the upcoming World Trade Organization (WTO) meeting, to be held in February. Japan has been discussing this issue with other WTO members, including the US, Canada, and several European nations, since last April to set up the balanced conditions.

Ministry of International Trade and Industry (MITI)

Based on a review of 19 ECOM projects, MITI feels a necessary first step is to set up a firm infrastructure for transactions between companies, rather than between companies and consumers. Since the realization of electronic payment systems will take time, MITI's higher priority is to work on establishing the infrastructure for company-to-company transactions, such as EDI and CALS. MITI will also clarify the business customs and systems required for the realization of electronic commerce.

The ministry has allocated ¥10 billion for its 2-year plan of ECOM activities, in which about 350 companies are currently participating. The current main projects are trials of electronic payment using credit cards.

Kokusai Denshin Denwa (KDD)

We lowered tariffs in November 1996, and we hope to continue to lower them even more. If, in 1997, the KDD Law is revised so that our handling of domestic communications becomes possible, we will develop projects and expand into that area.

What current issues or events have drawn your attention?
A domestic issue we are paying close attention to what status NTT will be accorded, and what steps domestic and overseas carriers will take in reaction. With the realization of public-leased-public line interconnection, foreign carriers will accelerate their entry into Japan's communications marketplace. International competition will continue to evolve on a worldwide scale, and international tie-ups and mergers between carriers (such as the merger of BT and MCI) is a movement that will continue.

How will KDD respond to these changes?
As a core enterprise of WorldPartners, our company is planning tie-ups with overseas carriers such as AT&T and Singapore Telecom. We would like to form partnerships with various domestic and overseas carriers (and that includes fortifying WorldPartners) to develop a diverse variety of services and to respond to the competitive situation.

On what particular areas does Japan need to focus?
To become internationally competitive, it is important to strengthen the hub function of Japan's international communications. We are promoting a plan to ring Japan's islands with a submarine, high-capacity, optical network connected to international phone lines. In order to promote this hub, further deregulation is needed, as well as cooperation between government and citizens.

Do you have any other concerns?
With progress in deregulation, Type II carriers and Type I carriers will be able to offer exactly the same kinds of services. However, Type I carriers (relative to Type II carriers) are working under heavy regulation in the area of price approval. Equal regulations for all carriers should be implemented quickly.

At the next regular Diet session, the KDD Law will be revised. If this happens, and our company is permitted to enter the domestic communications market, 1997 will be a big turning point and an exciting year for KDD.

Nippon Telegraph and Telephone Corporation (NTT)

What current issues or events have drawn your attention?

• Fierce mega-competition among carriers in a global scale, in accordance with the globalization of information and communications market and dissemination of multimedia technology (e.g., the merger between BT and MCI).
• Promotion of deregulation in other developed countries to realize fair and free competition. And what are your action plans for 1997?

What does Japan need to do to improve its information and communications competitiveness?
Activate software development and contents businesses, and lower service charges.

Fujitsu: President Tadashi Sekizawa

What current issues or events have drawn your attention?

• Deregulation, both overseas and in Japan, and the trend toward reforming the legal system;
• The trend toward standardization in network computing;
• The state of the semiconductor market;
• The merging of the communications and broadcasting industries, in the midst of continuing moves towards liberalization of communications markets.

And how will Fujitsu respond to these developments?

• By forming strategic tie-ups with enterprises worldwide;
• Putting the global network to use, picking up the pace of business operations, and trimming developmental costs;
• Shortening the product cycle and opening new markets in cooperation with other companies.

In the field of information technologies, what are the areas Japan needs to focus on?

• Setting up a high-speed, high-capacity information communications infrastructure;
• Mining the business possibilities that gain value through the Internet;
• Creating of a business marketplace and the nurturing superior creators for multimedia applications;
• Relaxing regulations in appropriate fields to stimulate brisk competition.

How should Japanese enterprises apply the new information communications technologies?
Japan's enterprises cannot avoid the march of globalization. Information communications technologies should be used to promote globalization and stimulate Japan's industries. A representative example is CALS [continuous acquisition life-cycle support], which actively uses communications to collect information from around the world, speed up decision-making, and improve white-collar productivity.

For energy resource-poor Japan, new scientific breakthroughs are an important resource. Information communications technologies should be used as a means to nurture and stimulate venture enterprises and industrial R&D.

Where does the Internet fit into this scenario?
The Internet should be used as an infrastructure for planning the stimulation of enterprise activities. Furthermore, just as with enterprises, Japan's decision-making in the international arena must be done appropriately and quickly. I think the Internet should be used with initiative, as a tool to improve the efficiency of administrative affairs and increase the level of openness of information available to the public.

Hitachi

What current issues or events have drawn your attention?
The movements of our competitors, in Japan and overseas, regarding product lineups for NTT's OCN [Open Computer Network] service and the computer telephony integration market. Also, vendors' responses to the new companies being established by world's large carriers.

In the field of information technologies, what are the areas Japan needs to focus on?
The promotion and dissemination of the Internet, and nurturing an appropriate business environment; deregulation; proper use of the information communications technologies for the Japanese market; and establishment of LAN/WAN environments.

How can the Internet contribute in these areas?
By enabling communications with foreign countries and with the mass market; as a means for public relations and advertising; and by promoting business communications with specified customers as well as in-house communications.

Justsystem: President Kazunori Ukigawa

• Enhancement of, and development of products for, network (Internet) projects, such as JustNet;
• Enhancement of intranet software, such as JustOffice Server ;
• Enhancement of componentware, such as Ichitaro 7 and Sanshiro; and
• Development of interactive entertainment products.

What are Justsystem's plans for 1997?
Through the operation of JustNet, and by using our accumulated technology, we will work actively to develop a full array of services. Tackling technologies that are key to the Internet - like Java and network computers - is important. With the aim of engendering a healthy environment for Java within Japan, in September 1996 Justsystem helped launch the Java Promotion Association to introduce examples of practical applications and maintain a joint library. We also plan to announce some new Java applications. Regarding network computers, Justsystem has tied up with Oracle for work in language processing software, because some aspects of the spread of network computers in Japan will be influenced by language processing.

In the field of information technologies, what are the areas Japan needs to focus on?
Enhancing the infrastructure. Communications tariffs in Japan are very high. If the cost is not on par with the US and Europe, we cannot hope for adequate diffusion.

Only when an adequate foundation for telecommunications is set up does doing business become possible. I think, for example, that language is an important element. People who say, "At present in Japan, I can't use the Internet as much as I thought I could," are under the impression that "Japanese is a barrier." But if there are tools that can erase the language barrier, that kind of negative thinking will cease. A browser or other Internet software that takes the handling of Japanese into account and fills this gap will definitely be developed.

How should the Internet be used in Japan?
The closed structure of internal company networks should be transformed into intranets using Internet technology. Companies need to create an open system, an environment where the comings and goings within and outside the company are seamless.

We need do as much as we can on the Internet: online shopping and online payment settlement, for example. The Internet has always been a free and level field, so without setting rules on "How should it be used?" we need to take an attitude of just using it as much as possible.

Professor Sachio Semmoto,
Graduate School of Business Administration, Keio University

What about events in other countries?
The merger agreement between the UK's British Telecom (BT) and the US's MCI Communications will spur on the globalization of communications projects. The three major groups - Britain's BT, the US's AT&T, and the Deutsche Telekom/France Telecom group, will definitely be turning their attention to Asian (including Japanese) markets.

How should Japan respond?
The first thing is to deregulate telecommunications. Furthermore, there is a need to put each carrier, including NTT, on an even, competitive footing. That would inject rationalization, openness, and globalization into the system.

What areas of information communications does Japan need to focus on?
As a communications medium in the age of multimedia, telecommunications will increase in importance. And since information transfers will become bigger and faster, and require higher quality, digitalization will be indispensable. Therefore, Japan must make efforts to avoid being late to change to digital. However you look at it, efforts by the government are required to deregulate and create measures that cope with the shortage of frequencies.

How should the Internet be used in Japan?
First of all, as a means of information communication, it should be used to electronically disseminate data from the ministries and agencies (White Papers, etc.) - and proactively used to publicize business information as well. Furthermore, data in electronic form is cheap and fast, and lends itself well to archiving and reuse, so business transactions between enterprises should take advantage of this.

Also, intranets should be used within enterprises to store know-how, share information, and move in the direction of a "paperless" environment.

How should Japanese enterprises make use of information communications?
With approval of the public-leased-public line interconnections, enterprises will be able to utilize their internal, dedicated-circuit networks and enter the communications service sector. To compete, the existing carriers will have to lower their prices or offer value-added services. With this kind of competition among communications services, the choice of cost-efficient information communications services will broaden, and each enterprise will have to decide on the most appropriate information communications enterprise or information system structure for its needs.

Consultant Kentaro Fujimoto, Consultant
Cyber Commerce Department of Nomura Research Institute

What about events in other countries?
Information communications in Asian regions took off at a speed surpassing expectations. Through favorable measures in the tax system, the infrastructure for optical fiber network, mobile communications, satellite communications has been prepared rapidly, with American and European enterprises being the main capital investors. It will be necessary for Japan to quickly change its communications policy to respond appropriately to global mega-competition.

What are Japan's strengths?
It would be better to avoid a regional breakup of NTT. Rather, the present framework of communications businesses should be enlarged, liberalized, and reevaluated. Priority should be given to nurturing operators that can compete with NTT. Also, government measures are needed to promote competition and open up opportunities for foreign companies to enter the Japanese market. Information communications will bring about a change in working structure, as seen with SOHOs (small offices/home offices). Venture enterprises, in particular, will use information communications as a competitive tool.

How should the Internet be used in Japan?
Enhancement of the infrastructure will expand Internet use by the private sector. What's needed is a drastic drop in tariffs for high-capacity dedicated lines, which play a key role in communications. To accelerate the setup of Internet "pipelines," the power supply and emergency communications conduits should be opened up for use by the industry. Regulations standing in the way of this need to be abolished.