# Section 2

# Development of Information and Communications Policies

## 1 Development of telecommunications policies

## (1) Competition review in the telecommunications business field

MIC has conducted the competition review in the telecommunications business field, since FY 2003 to evaluate the market situation as it moves toward IP and broadband so that the current market situation can be reflected in government policies.

In FY 2004, MIC evaluated the area of the mobile communications and the IP phones in addition to the area of the internet access and the intra-company network that had been evaluated in FY 2003.

The main results of the competition review for FY 2004 include:

● In the mobile communications market, it is unlikely that the NTT DoCoMo will exercise its market power by itself; however, there is a concern that some carriers may exercise market power together based on their coordination.

● In the ADSL market of the area of the Internet access, it is unlikely that NTT East/West will exercise its market power either alone or in a coordinated manner with their competitors.

● The FTTH market in the area of the Internet access is divided into two submarkets, that is, “collective housing” and “detached housing”. In the former submarket, it is unlikely that NTT East/West will exercise its market power either alone or by coordinated with their competitors. In the latter submarket, which is a duopoly with NTT East/West and a group of subsidiaries of electric power companies, it is also unlikely that NTT East/West will exercise its market power either alone or by collusion.

## (2) Consideration of the framework for competition rules to address the transition to IP-Based Networks

Telecommunications networks in Japan is in the rapid transition from Public Switched Telephone Networks to the IP (Internet Protocol)-Based Networks and the environment surrounding the telecommunications businesses is changing drastically toward the coming IP era. Along with this, advancement and diversification are taking place in business models of the telecommunications carriers which go beyond the traditional framework.

Thus, MIC holds meetings of “the Study Group on a Framework for Competition Rules to Address the transition to IP-Based Networks” since October 2005 in order to discuss the basic concepts of competition rules as of around the beginning of 2010s when the transition to IP will be substantial, in preparation for the coming era of full-scale IP services and to clarify the direction of discussions on policies for connections and tariffs.

## (3) Ensuring universal services

The universal service system is a cost-bearing system introduced in June 2002 by a partial amendment to the Telecommunications Business Law in June 2001 to ensure provision of universal services throughout the country.

After the introduction of the system, market competition in the telecommunications sector has drastically changed in the following ways:

1) competition throughout voice services is promoted due to the penetration of mobile and IP phones;

2) competition in basic fee for fixed-line phones is expected due to the introduction of the new subscriber telephone service using dry copper dedicated lines; and

3) basic fee cost increase due to transferring NTS (Non Traffic Sensitive) cost to the basic fee cost.

Responding to such changes, MIC consulted the Information and Communications Council on “the framework of universal services fund system,” and the discussions were made on the scope of the universal service, cost calculation methodology, and the framework of contribution. In response to the report submitted by the Council in October 2005, the ministerial ordinance was revised and a new system has been implemented since FY 2006.

## (4) Introduction of Mobile Number Portability

Mobile Number Portability (MNP) is system under which mobile phone users can retain the same phone number before and after they change mobile phone carriers. It is then expected to increase user convenience and promote competition among carriers. On the other hand, since the operators have to incur substantial costs for the reconstruction of networks by the introducing of the system, MIC had held “the Study Group on Mobile Number Portability” comprising experts and related parties to discuss users’ view and effects of the system since November 2003. As a result, a report was finalized in April 2004, including some issues to be paid attention, and commented that the MNP should be introduced at the earliest possible time in fiscal 2006. In response to the report, MIC compiled and issued “the Guidelines for