During his 20-some years with NTT, Tatsuo Kawasaki has worked for the company in places as far from Tokyo as New York and London. At that time, most people outside of Japan had never heard of the then-monopolistic phone company. But times are changing, and if he gets his way, everyone will know who and what NTT is. As vice president of NTT's Arcstar Business Group, Tatsuo Kawasaki is the executive charged with leading his company's push into all sorts of overseas markets. Will NTT eventually be a household word, like AT&T? Will the company make a name for Japanese telecommunications services the way Toyota and Nissan have made a name for Japanese cars? Prior to the changes made at Japan's leading phone company earlier this month, Kawasaki sat down at NTT headquarters in Tokyo with CJ's Thomas Caldwell to discuss what it all means.

By the time this interview is printed, NTT will have gone through what some are calling a "break-up," others are calling a "reorganization," and still others are calling "more of the same." What are you calling it?

Tatsuo Kawasaki: A reorganization, brought on by a new business paradigm.

How is this reorganization going to affect NTT as a whole?

Kawasaki: As I'm sure you know, the new entity will be a holding company. Besides making management more efficient, this will allow us to get into new areas, like the solutions business and new multimedia-related fields. NTT East and NTT West - the parts of the company that will be providing local dialup connections - will still be quite regulated. However, the long distance and international services arm will be providing much more in the way of enhanced value-added services.

Why do you think so many people have called this a "break-up?"

Kawasaki: Well, probably because of the comparison to the break-up of AT&T in the United States back in the early '80s. AT&T didn't call it a break-up then either, they called it a "divestiture." To me, it doesn't matter. The bottom line is we are moving away from being a traditional Japanese business and into new areas, especially in overseas markets.

Yes. It sometimes seems that NTT is opening a new overseas business every month. Your company seems to have very ambitious plans for the rest of the world. What are they?

Kawasaki: When we announced that NTT was getting into the international market, many people said, "Oh, they are going to be competing with KDD or IDC, or whoever." But we are not all that interested in the traditional services of a phone company. That sort of business is based in Japan. Its revenue base is in Japan. What NTT wants to do is provide global services to multinational customers - Japanese and foreign-based companies that have extensive worldwide operations. These customers need end-to-end solutions, not just outbound [voice and data communications] traffic from Tokyo or Osaka, but outbound traffic from New York, London, and other places. We want to be a multinational company serving multinational customers all over the world.

Who do you consider to be your future competitors?

Kawasaki: That depends on what area of telecommunications services you include. British Telecom and AT&T could be considered competitors. However, British Telecom and AT&T compete with each other and also have joint ventures going. Both companies recently announced their plans to invest in Japan Telecom (JT). In one sense they are competitors, in another they are partners. We've also announced an alliance with AT&T in the solutions business.

There have been many recent announcements of mergers and acquisitions in the telecom market, not just in Japan, but in other markets as well. Do you see the telecom industry going the way of automobile manufacturing, with a handful of very large companies controlling the industry?

Kawasaki: To some extent you can see that happening. The difference is that in the telecom business, there is a need for everyone to cooperate, otherwise nothing works. It is also fairly easy to start up your own [telecommunications] carrier if you have enough money - much easier than making cars. If you can lay cable in the ground or launch a satellite, you can become a telco. No matter what the industry, making alliances with other companies always makes sense. Whether it's Microsoft or AT&T or IBM, the idea is to give the customer what they want. These sorts of business partnerships are very common, especially in the computer industry and other service-oriented businesses.

In making alliances with other companies, what will NTT be bringing to the table? What unique NTT commodity will be introduced into the equation?

Kawasaki: The primary thing is our existing customer base. Japan is the second largest telecommunications market in the world. Many of our corporate customers are very large institutions that operate multinationally. They will be coming to us to provide them with global, cost-effective solutions to their communications needs. At the same time, we will have to work with overseas telcos to provide these solutions.

NTT is considered by many to be one of the safest places to work in Japan next to a government agency. Salaries are thought to be much higher than other companies and there is virtually no chance of being fired.

Kawasaki: (Laughter) Unbelievable!

Well, it is considered a very safe, decent place to work and I'm sure a lot of your employees are glad to be here given the current state of the Japanese economy. Yet the company is now going to be in a different arena. A more competitive one. Do you see the company changing the fundamental way in which it operates to meet these new challenges? Especially when it comes to employment practices?

Kawasaki: Fortunately, the telecommunications business is a growing business. Employees in this business currently have a much more secure life than they do in other industries. But at the same time, our industry is very competitive. NTT enjoyed monopoly status for a long time. Now that that is gone and there is a great deal of price competition, especially in the long distance market, there is no question that NTT will be in a much more competitive situation and will have to implement very efficient management structures. Our employees are being asked to change their whole outlook on what we do and how we work. NTT's business is no longer going to be just selling a "pipe." We're selling services and solutions, like an IBM or an EDS. It is a very competitive environment. We are no longer in the [telephone services] commodity business.

Although the telecommunications business is no longer just supplying access to a "pipe," NTT still owns most of the "pipe" in Japan ...

Kawasaki: Just the local portion. There are many players in the long-distance portion. In terms of domestic long-distance services along the Osaka-to-Tokyo corridor, NTT's share is about 50%. We've already lost half of the most lucrative domestic long-distance market to other players. NTT is not as dominant in Japan as it once was.

Does this mean that we can look forward to domestic phone rates dropping drastically over the next year?

Kawasaki: Yes, I think so. Not just traditional voice services, but Internet access services as well.

What about Internet charges? Since it is by definition an international service, how do you see this price structure changing?

Kawasaki: We're greatly expanding our IP services. There will be many developments in this area over the coming months.

What about the cost of access to local back-haul circuits? There are many new undersea cables being connected to Japan. But when the cables are landed, getting them connected to the local infrastructure is not that easy. Do you see this changing anytime soon?

Kawasaki: The cost per kilometer to lay cable on land verses the cost to lay cable on the ocean is very different. In Japan, the cost is higher than most places given the geography of the country. If you have ever seen a cable being laid on a Tokyo street you will know what I mean. The local connection will always be expensive. It is just the way things are.

So you don't see that changing?

Kawasaki: No.

Given the global nature of the telecommunications business, what role would you like to see NTT take? What would you like to see NTT famous for in other countries?

Kawasaki: As I mentioned before, NTT does not want to be in the commodities business. We don't want to be just another phone company. We can buy capacity from other vendors if we need it. NTT wants to be known as a partner that companies, government institutions, and other organizations can rely on to provide complete telecommunications network solutions.