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Regulatory Governance and the Implementation of Universal Service: A Comparative Study of the US and Japan
Unformatted Document Text:  Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 13 to come from the Communications Act of 1934 of the US because Japanese government and bureaucracy then was under control of the US at the time of enactment of the law (p.204). In 1985, the Telecommunications Business Law (TBL) was enacted as the basic law to regulate the telecommunications business as a whole, after the market was opened to competition. Two provisions of the law concern universal service. The Article 7 of the law said that “Any telecommunications carrier shall not discriminate unfairly in providing telecommunications service” and the Article 34 said that “Any Type-1 carrier shall not, without due reason, refuse to provide telecommunications service within its service territory” 15 (Hayashi, p.204). However, these prescriptions guarantee only quality. As for a narrow sense of universality, the NTT (Nippon Telegraph and Telephone) Corporation Law prescribes the following: NTT shall…contribute to the securement of provision of stable nationwide telephone services throughout Japan by providing such services indispensable to the people’s life at appropriate conditions and impartially… These provisions imply that given the fact that the number of new entrants was relatively small and weak in competitiveness in local market until 1995 in spite of the introduction of competition, NTT, the leading carrier, was imposed a special responsibility for universal service (Hayashi, p.205). NTT as the Universal Service Provider Japan opened its telecommunications network to competition in 1985, when the NTT Public Corporation was privatized. In August 1986, NCCs (New Common Carriers) began leased- circuit service and in September 1987 they entered the market for long distance service. But Japan has had different notions from Western developed countries in what constitutes ‘fair competition’ and a ‘level playing field’ 16 (Hayashi, p.201). Due to this reason, there has been no actual rebalancing or access charge system and NTT must execute its universal service responsibility only through a conventional cross-subsidy system. For example, in FY 1993, Denwa) to provide prompt and stable public telecommunications services at a reasonable price to anyone universally and equally” (Hayashi, 1997, p.204). 15 The Telecommunication Business Law allows for two types of carriers, Type-1 carriers that own facilities and Type-2 carriers that do not and must lease circuits from Type-1 carriers. MPHPT (former MPT) regulates Type-1 carriers, requiring both fitness and necessity approvals to obtain operating permission. Type-2 carriers fall into two categories, Special and General. Special Type-2 carriers are those with extensive national and international facilities (Bernt & Weiss, 1993). 16 Even after the introduction of competition in Japan, all telecommunications providers are subject to regulation in their operation under the MPHPT’s (former MPT) guidance. More specific explanation will be provided in the latter part of this paper.

Authors: Park, Namkee.
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Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 13
to come from the Communications Act of 1934 of the US because Japanese government and
bureaucracy then was under control of the US at the time of enactment of the law (p.204). In
1985, the Telecommunications Business Law (TBL) was enacted as the basic law to regulate the
telecommunications business as a whole, after the market was opened to competition. Two
provisions of the law concern universal service. The Article 7 of the law said that “Any
telecommunications carrier shall not discriminate unfairly in providing telecommunications
service” and the Article 34 said that “Any Type-1 carrier shall not, without due reason, refuse to
provide telecommunications service within its service territory”
15
(Hayashi, p.204). However,
these prescriptions guarantee only quality. As for a narrow sense of universality, the NTT
(Nippon Telegraph and Telephone) Corporation Law prescribes the following:
NTT shall…contribute to the securement of provision of stable nationwide
telephone services throughout Japan by providing such services indispensable to the
people’s life at appropriate conditions and impartially…
These provisions imply that given the fact that the number of new entrants was relatively
small and weak in competitiveness in local market until 1995 in spite of the introduction of
competition, NTT, the leading carrier, was imposed a special responsibility for universal service
(Hayashi, p.205).
NTT as the Universal Service Provider
Japan opened its telecommunications network to competition in 1985, when the NTT Public
Corporation was privatized. In August 1986, NCCs (New Common Carriers) began leased-
circuit service and in September 1987 they entered the market for long distance service. But
Japan has had different notions from Western developed countries in what constitutes ‘fair
competition’ and a ‘level playing field’
16
(Hayashi, p.201). Due to this reason, there has been no
actual rebalancing or access charge system and NTT must execute its universal service
responsibility only through a conventional cross-subsidy system. For example, in FY 1993,
Denwa) to provide prompt and stable public telecommunications services at a reasonable price to anyone
universally and equally” (Hayashi, 1997, p.204).
15
The Telecommunication Business Law allows for two types of carriers, Type-1 carriers that own
facilities and Type-2 carriers that do not and must lease circuits from Type-1 carriers. MPHPT (former
MPT) regulates Type-1 carriers, requiring both fitness and necessity approvals to obtain operating
permission. Type-2 carriers fall into two categories, Special and General. Special Type-2 carriers are those
with extensive national and international facilities (Bernt & Weiss, 1993).
16
Even after the introduction of competition in Japan, all telecommunications providers are subject to
regulation in their operation under the MPHPT’s (former MPT) guidance. More specific explanation will
be provided in the latter part of this paper.


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