Competition and Cooperation in the Global Telecom Market
|
NTT Worldwide Network Corporation (NTT-WN) is scheduled to debut as the NTT group's first international facilities-based (Type I) telecommunications company. Established in October 1997, NTT-WN has been preparing for the start of operations. The company will first focus on leased circuit services for corporate users, with international telephone services planned for introduction in 1999. NTT-WN announced on June 15 that they will start an ATM service beginning in October of this year. Currently, the company is also considering offering a Frame Relay (FR) service. Satoshi Fujita is president and CEO of NTT-WN. After graduating from the University of Tokyo, Fujita joined NTT in 1969. Before being appointed to lead NTT-WN in 1997, he held a variety of positions, including several general manager posts, director general of the NTT's Niigata district headquarters and vice president of NTT's Business Communications Headquarters and Global Business Headquarters. Computing Japan spoke with president Fujita in May about NTT-WN strategy and the changing role of global telecommunications carriers in the era of convergence between telephony and computers.
interviewed by Noriko Takezaki
First, could you describe the services your company plans to introduce? Satoshi Fujita: We will first introduce leased circuit services at 56/64k-2M, 45M, and 156M bps to meet the Internet connection and system-integration application needs of global-scale enterprises. Our leased circuit services initially will connect such countries as the US, the UK, China, Hong Kong, Taiwan, Korea, Singapore, the Philippines, Thailand, Malaysia, Indonesia, and Australia. Then, next year, we will begin offering international telephone services. Two prefixes have already been assigned for this purpose: 0033 for our direct-dial international call service, and 0034 for our value-added services, such as virtual private networks. The destination countries for the initial phone service will be the US, China, Korea, the Philippines, and Singapore.
In preparation for launching these services, NTT-WN recently announced the agreement of a Japan-US Cable Network Project with several major global telecommunications carriers, including AT&T, WorldCom, and Cable & Wireless. This is in addition to the China-US Cable Network Project that was announced last year. Could you explain the scope these projects? Fujita: As a step toward the construction of a global network infrastructure, last year we signed the China-US Cable Network Project. Some 14 leading carriers from around the world, such as AT&T, China Telecom, Chunghwa Telecom, Hongkong Telecom, KDD, Korea Telecom, MCI, SBC, Singapore Telecom, Sprint, Telecom Malaysia, Teleglobe USA, Telstra, and NTT-WN are involved in this project, which will connect China and the US via Japan, Korea, and Taiwan. This is a historical step towards NTT's global services. In addition to this, we have decided to join the Japan-US Cable Network Project this year. This is a significant milestone in the history of the world's telecommunications carriers, since the project is a culmination of efforts to integrate two competing cable network schemes in the region. One was the Japan-US Cable System, which was supported by WorldCom, Cable & Wireless, Japan Telecom, etc: the other was TPC-6, which was originally proposed by AT&T and KDD. Faced with the growing Internet-generated demands for large traffic volume services, however, the two groups have decided to cooperate for the construction and shared use of a large-volume cable infrastructure. Since NTT was the only common participant of the two projects, we are proud that our participation and efforts could contribute to this successful integration.
What is the current status of the project? Fujita: We expect to sign the Construction and Maintenance Agreement (C&MA) of the Japan-US Cable Network Project at the end of July, together with eight US and European telecommunications carriers - AT&T, Cable & Wireless, GST, GTE, MCI, PGE, Sprint, and WorldCom - and two other Japanese carriers - KDD and Japan Telecom. In addition to those carriers, IDC, Level 3, and Qwest will participate in the project planning. Construction for the Japan-US Cable Network Project is scheduled to start in the first quarter of next year.
What will be the capacity of this network? Fujita: The initial design capacity is 80G bps, with the potential to upgrade to 640G bps. This will be sufficient to meet the rapidly growing demands for Internet traffic and data communications in the full-fledged Internet era. We believe that this will be the information superhighway connecting Asia and the US.
It is interesting that the participants in the cable project are, in a way, competitors. Fujita: Well, the Internet has been changing the nature of the telecommunications business, blurring the conventional boundaries that separate nations as well as industries. Therefore, this is not just the time for competition, but also for collaboration among the concerned companies beyond national and industrial boundaries. Participants in the Japan-US Cable Network Project are all keenly aware of this point, and so have decided to cooperate with each other, taking a broad view of the situation. We have all agreed to introduce the latest communications technologies to offer satisfactory services to our customers. The participants well understand that, if they fiercely compete with each other to offer services in the common region, by having the separate cable networks, it will negatively impact their customers and the cable network projects themselves.
Who are your target customers? Fujita: For our leased-circuit service, the main target users are Internet service providers, Type II telecommunications service carriers and private enterprises having global activities. As an NTT group company, NTT-WN will be in charge of infrastructure and network services. On top of that, another of NTT's international service carriers, NTT Worldwide Telecommunications (NTT-WT; See the interview in the July issue.-Ed.) will provide advanced-layer services, including system integration for corporate customers. This can create dynamic synergistic effects for the NTT group as a whole.
It seems that your business will face stiff competition with global carrier consortiums, like BT-Concert and Global One. Fujita: In a way, we will compete with other global carrier alliances. But in another way, we won't. As I mentioned before, the nature of the infocommunications business has changed thanks to the growth in Internet usage. Accordingly, the activities of global carriers have also changed. As NTT president and CEO Miyazu says, we - meaning the NTT group of companies as a whole - should be global information distribution companies. In order to do that, partnering not only with telecommunications carriers, but also with companies such as those specializing in groupware, IP (Internet protocol) technology, or ERP (enterprise resource planning) will be necessary. It is also important to establish a consortium which can partner with customers and handle such needs as outsourcing. An analogy might be the restaurant business, in which restaurants used to compete with others based on the quality of the menu. However, the current competitive focus has shifted to how comfortable the restaurant is, its background music and good decor, not only the quality of the dishes served.
Which of the global carriers do you think are the trend-setters at this time? Fujita: I cannot designate a single carrier, since all of the carriers have been aggressively tackling new businesses. But, among the participants of the Japan-US Cable Network Project, for example, there are some newly emerged local exchange carriers like Qwest, Level 3, and PGE. This demonstrates that the telecommunications business scene has been drastically changing from the traditional business style.
What are your key strategies? Fujita: We have three key strategies: offering corporate user services, focusing on the Asian market, and creating smart partnerships with other companies. Regarding corporate user services, we will offer a global, end-to-end solution through the NTT group's Arcstar service. For the Asian market, we will enhance our partnerships with local companies to penetrate deeper into the market. For this purpose, NTT's efforts to create the Asia Multimedia Forum will be very helpful. I was personally involved in the startup of the forum, so I'm glad that the forum's activities have gone successfully, and I hope multimedia applications will become more popular in Asia. And by creating smart partnerships for global growth, we hope to create a firm global network connecting Japan, the US, Europe, and Asia.
Do you approach business with Asian countries in the same way as you do in the US and European countries? Fujita: For the communications business with Asian countries, we have been studying whether we should use satellites. Since local [wired] access in Asia is often not sufficient, it is necessary for us to study the feasibility of using satellites for end-to-end data communications. Also, regarding our business approach to Asian countries, I often say to our employees - particularly those who have had only experience in dealing with the US and European companies - "Don't say 'No, because'; instead, say 'Yes, but'." In other words, in dealing with Asian countries, it is important to respect the customers' conventional method first rather than pointing out the difference between their conventional method and the new method that we, the selling side, want to introduce.
What is your corporate philosophy? Fujita: All of our employees should have a "challenger spirit." Although we are a part of the NTT group, we are a baby company in the global information distribution business. In this sense, we should not stick to the conventional way of thinking and conventional business framework.
After NTT's reorganization, which is scheduled for next year, will your company merge with the NTT Long-distance/International Company? Fujita: NTT has been studying the various alternatives of reorganization of NTT-WN, NTT-WT, and other overseas subsidiaries. The merger of our company with the NTT Long-distance/International Company is one alternative. However, that has not decided yet.
|
