Japan to reduce regulatory pressure on incumbent NTT


The company’s rivals say the decision to repeal the ‘NTT Law’ could give the telecoms giant an unfair competitive advantage in the domestic market

The Japanese government has approved a bill that would revise regulatory controls placed on the country’s largest telco, NTT, when the company was first semi-privatised 40 years ago.

NTT operated as a telecoms monopoly in Japan until 1984, at which time the government moved to liberalise the sector and introduce competition. As part of this process, a so-called ‘NTT Law’ was introduced that put limitations on NTT in an effort to create a more equal playing field for new market entrants.

Among these stipulations were the separation of NTT’s fixed-line, enterprise, and mobile businesses, as well as assurances that the company would remain under Japanese control, including retaining a government stake of at last a third and assurances that only Japanese nationals would hold executive positions.

It also obliges NTT to make the results of its R&D efforts public due to the company being publicly funded.

Now, 40 years on, and NTT has made a habit of lamenting what it views as uneven regulatory scrutiny, arguing that it is hindering the company’s ability to compete on the global stage.

By last year, these arguments had finally found support within the Japanese government with communications minister Matsumoto Takeaki arguing that the pace of technological change within the industry meant that “system reforms must be carried out quickly”.

Draft legislation was quickly drawn up that relaxes many of NTT’s existing pain points, including removing the need to disclose R&D results and allowing foreign nationals to hold executive positions (provided two-thirds of the executive committee remain Japanese).

Unsurprisingly, this proposition has been met with widespread condemnation from the domestic telecoms industry. NTT’s rivals released a joint statement arguing that the existing proposition will give NTT too much power and saying that more time should be taken to introduce balanced regulatory reform.

“Matters related to fair competition, universal service obligations, and restrictions on foreign investment have a significant impact on national interests and people’s lives, including from the perspective of the security of Japan’s telecommunications infrastructure, and it is necessary to listen carefully to the voices of local businesses and the public in considering such matters,” read the joint statement.

“We will continue to oppose the ‘repeal’ of the NTT Act and strongly request that more careful policy discussions be held.”

The government, however, is in no mood to hang around. Last summer, the Kishida administration indicated that it wished to divest of its 34.25% stake in NTT, a move that could raise almost $33 billion.

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