On the other hand Japanese CATVs have not been well developed and could not be competitors to NTT. In Japan CATV has been defined as broadcasting because it was a rescue alternative to TV broadcasting in the regions where radio could not be well utilized. Because Japanese CATV program must carry strict public content unlike the U.S. CATV, it cannot provide entertainment service freely as business strategy.

Another difference between Japan and U.S. must be noticed to explain the delay of bypass and development of local competition in Japan. The U.S. long distance carriers have never missed the opportunity to invade local loop by constructing their own local network or acquiring local telephone companies or wireless service providers. To compete with local network, it is a mandate for long distance telecom carriers to realize any kind of cost saving. Compared to this U.S. environment, it is strange to see that Japanese long distance carriers depend upon NTT local network and they only complain unequal access or disadvantages of new entrants. In our institutional arrangement there cannot exist carriers which are only engaged in leasing cables because all carriers are divided into Type I or Type II. This is another cause that NCC cannot compete in the local market.

### V. CATV and Broadcasting

Japanese government has taken strictly conservative policy toward broadcasting service and CATV although several deregulatory measures have been adopted recently due to political pressures from U.S. government. CATV has become a pivot for enhancing competition in telecommunications industry in the U.S. and U.K. where liberalization of CATV industry was realized in 1980's and early 1990's. Japan has been much behind these countries and the development of CATV has been quite slow. Figure-6 gives us the number of subscribers and CATV facilities in city areas. The penetration rate of CATV is 4.7% in 1994 in comparison to 61.8% in the U.S.. The market size of CATV industry is incomparable between Japan and U.S.. In 1992 the total turnover of the U.S. was $21.5 billion whereas that of Japan was ¥53 billion, almost one fortieth of the U.S.. The greatest CATV service provider, TCI acquired 9.56 million subscribers in the U.S. whereas Japan Network Service, Japan's greatest CATV company, could find only 100 thousand subscribers in 1993. How can we explain these large differences? There exist institutional answers to this question: In Japan TV broadcasting has been well advanced in that we have had 2 public channels and 6 private ones compared to the narrow national land. CATV has been defined as a rescue alternative to TV broadcasting and recognized as a minor complement.

But the real problem lies in the regulatory environment in Japan. First, the tariff of CATV service has been quite expensive because service rate must be based upon accounting cost which could not be low unless subscription rate could reach a certain critical mass. In other words CATV providers could not fix their rates strategically to attract customers under the Japanese regulatory regime. Second, so called localism principle must be observed and competition between incumbent and new comers has been prohibited. Third, CATV service is a kind of public service and the