Nippon Telegraph and Telephone (NTT), the Japanese telecoms giant, was privatised in 1985, but it still operates an effective monopoly which has worked against innovation. And because of its huge size, it is bound by restrictions that prevent it from spreading into related businesses, such as video services, as it could steamroller any opposition.
Cable television networks cover 96 per cent of the US, compared with just 19 per cent in Japan. There are 57 million subscribers of cable TV in the US, and a mere 1 million in Japan. The US has 11,075 cable operators, Japan just 149. And cable television companies in Japan cannot link up with local phone companies, as they have done in the US, because there are no local phone companies, only the monolithic NTT.
On the information superhighway, the statistics are similar: the penetration of personal computers is three times higher in the US than in Japan. And while 52 per cent of PCs in the US are connected to a local area network of some kind - such as electronic mail, bulletin board or database access - only 8 per cent of personal computers are so connected in Japan.
But if there is anything that Japan's economy is good at, it is catching up with the West. Indeed the entire raison d'etre of Japan's economic development in the past 100 years has been precisely to catch up with, and if possible outdo, the West, which for so many years thought itself intrinsically superior to Asia. To the West's arrogant over-confidence, Japan has consistently brought a humble readiness to learn, adapt and innovate.
Railways, telegraph, heavy manufacturing - all were quickly appropriated by Japanese engineers and businessmen at the end of the last century and in the early years of this century from their studies overseas, and brought back to Japan. After the war, the country started again, principally in textiles, electronics and cars. None of the Japanese products that are now flooding world markets and racking up the country's huge trade surpluses was invented in Japan. But nor did Picasso invent paint-brushes or the formula for oil paints.
Now the government has turned its attention to the burgeoning multimedia business. A special advisory body, the Telecommunications Council, has spent the past 14 months drawing up a detailed report on the revolution in interactive telecoms systems. The report, Establishing the new information infrastructure for the 21st century, is due out at the end of the month, but a draft copy has already been leaked to Nihon Keizai Shimbun, Japan's main financial newspaper.
It is phrased in the same urgent tones and contains the same exhortations for yet another nationwide leap in development and productivity as so many previous economic action plans of the past. The gap between the telecoms industries in the US and Japan will place the country 'in a precarious position' in the 21st century.
The report lays out a plan, and a timetable, for Japan to catch up with the US. By 2010, says the Telecommunications Council, everyone in Japan should have access to a sophisticated, interactive telecoms network. At the heart of the plan is a proposal to lay down a nationwide fibre-optic cable network, which will be able to transmit the hugely expanded information flow between providers and users of services. This fibre-optic network will cost some Y53,000bn (pounds 344.23bn), according to the Council's calculations.
The fibre-optic network should be laid down in the main cities, covering 30 per cent of the population, by the year 2000. By that year also, all schools, hospitals, libraries and other public institutions should be connected to the network.
One of the most interesting aspects of the report is that it recommends that the financing of the network be largely left to the private sector. Observing the effects of deregulation and competition in the US telecoms market, the council says the government should limit itself to guaranteeing low-interest financing and offering tax incentives to companies that get involved. This was apparently a controversial recommendation, as some bureaucrats felt the government should play a much larger role. But the Council, perhaps looking at how the Japanese car and electronics industries profited from a mixture of government support and intense inter-company competition, came down against a broad role for the public sector.
It raises the question, however, of which private sector companies will get involved. On the telecoms side, there is only one contender - NTT. On the broadcasting side, the cable companies are still too small to make any big investments, and TV networks are limited in what new business areas they can take on.
The report none the less insists that there must be a systematic attack on the barriers that separate telecoms and broadcasting - both legal restrictions and less visible obstacles originating in bureaucratic 'administrative guidance'. There are no business link-ups at all between telecoms companies and broadcasters in Japan.
This month the Posts and Telecommunications Ministry is setting up a separate panel to recommend ways of changing the nation's broadcasting system from analogue to digital. There was a storm of protest when one of the ministry's top officials said in February that Japan should switch its High-Definition TV standard from analogue to the more flexible digital system, but few people in the industry would deny that digital is the way of the future. It is central to linking up telecom and broadcasting systems for the multimedia era, and follows on naturally from the main recommendations of the Telecommunications Council report.
There are some omissions in the report - notably on the difficulties that will arise with other ministries in implementing the new network. The Construction Ministry, which jealously presides over the most corrupt part of Japanese industry, will need to be co-opted for the laying down of fibre-optic cables. And the development of databases will need the assistance of the Ministries of Health and Education. Crossing the borders of bureaucratic fiefdoms is notoriously difficult in Japan. For that reason, the Telecommunications Council report stresses the threat to Japanese competitiveness from overseas, hoping that 'foreign pressure' will galvanise officials into action.
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