# DEVELOPMENT OF POLICIES FOR THE NEW INFORMATION AND COMMUNICATIONS ERA

## Competition Policy of the Telecommunications Industry for the Promotion of the IT Revolution

In July 2000, the Ministry of Posts and Telecommunications (MPT; now the Ministry of Public Management, Home Affairs, Posts and Telecommunications or MPHPT) consulted the Telecommunications Council with respect to the implementation of a competition policy for the promotion of the IT revolution aimed at, among other things, the creation of conditions ensuring fair competition in the telecommunications industry. In December 2000, the Telecommunications Council compiled its first report on this subject. Based on this report, the MPHPT submitted to the 151st ordinary session of the Diet a proposal for the partial revision of the Telecommunications Business Law, which was passed and issued in June 2001 and subsequently came into effect in November 2001. The principal revisions made to the aforesaid law include the following: 1) the provision of asymmetrical regulations; 2) the development of a system for wholesale telecommunications services; 3) the setting up of a telecommunications business dispute settlement commission; 4) the development of a system for ensuring the offering of universal services (basic telecommunications services); and 5) the expansion of the scope of businesses in order to allow more freedom in the management of NTT East and NTT West.

## Provision of Asymmetrical Regulations

In view of the fact that the telecommunications business is of a highly public nature and is the foundation for people's lives and socioeconomic activities, the MPHPT submitted to the 151st session of the Diet a proposal for the partial revision of the Telecommunications Business Law which was aimed at introducing, in addition to the existing regulations mainly focused on bottleneck facilities, minimal rules to ensure the continuous prevention and elimination of monopoly abuse of the market. The proposed revision was passed on June 15, 2001 and came into effect on November 30, 2001. At the same time, the MPHPT created a mandatory ministerial ordinance in order to, among other things, define a standard of dominant telecommunications carriers in the mobile telecommunications market as those possessing more than a 25% market share in terms of revenue in a certain operating area.

## Creation of a Telecommunications Business Dispute Settlement Commission

In the telecommunications sector 1) business disputes of an intricate nature involving network connections among telecommunications carriers have been on the rise, and as a result 2) there has emerged a need for strengthening the conflict resolution function to provide for the quick and efficient resolution of business disputes, which are becoming more complex in nature and occurring more frequently. Under the circumstances, the MPHPT submitted to the 151st session of the Diet a proposal for the partial revision of the Telecommunications Business Law aimed at strengthening the system of resolving disputes in the telecommunications industry. This law was passed in June 2001 and came into effect in November 2001. As a consequence, the Telecommunications Business Dispute Settlement Commission was created.

## I mplementation of a Universal Service Fund

In March 2002 the MPHPT submitted to the Telecommunications Council a ministerial ordinance related to the introduction of a system for a universal services fund. The scope of the basic telecommunications services that are applicable under the ordinance include fixed-line telephones, public pay phones, and emergency messages. Grants to be issued by the fund are calculated by using the earning cost offsetting method whereby losses in unprofitable areas are offset by profits in profitable areas in order to derive a true cost that is in effect the portion of losses that have not been offset by profits. The above mentioned partial revision and the related ministerial ordinance are expected to come into effect along with the fund system which is to be implemented in June 2002.