Dec 21,2000

Japan Agency Demands That NTT
Take Steps to Improve Competition

By Peter Landers
Staff Reporter of The Wall Street Journal

TOKYO -- Japan's antitrust watchdog demanded that Nippon Telegraph & Telephone Corp.'s biggest unit take steps to promote competition, concluding that the unit might be violating the law by blocking rivals in the high-speed Internet business.

The move by the Fair Trade Commission, following a two-month investigation, didn't recommend punishment against NTT East Corp.

In a statement, NTT East said it was "highly regrettable" that its actions had drawn suspicion and it pledged to follow the commission's recommendations.

NTT's market domination has come under increasingly close scrutiny in the last year. The U.S. government has called on Japan to make the environment fairer for NTT's competitors, while some Japanese business leaders have blamed the former telecommunications monopoly for holding up the progress of the Internet in Japan.

The FTC, wading into an area that had been the province of the Ministry of Posts and Telecommunications, offered considerable support to NTT's critics in its report. It said NTT East had taken many steps to block rivals in the business of providing digital-subscriber-line service. DSL providers use special equipment to make data travel up to 10 times faster over NTT's copper phone wires, but they need access to NTT's facilities to make the business work.

The FTC said NTT East barred DSL companies from doing their own installation work, requiring them instead to hire contractors designated by NTT. When DSL companies held talks with NTT East technicians about installing equipment, NTT East salespeople for competing services sat in, thus gaining potentially valuable information about the business plans of NTT's rivals, the commission said. It concluded that NTT East might be in violation of Japan's antitrust laws.

In its statement, NTT East said it has worked hard to promote competition and denied that it violated any laws. The commission said the situation has improved somewhat since its investigation began but said officials would continue to monitor NTT for possible antitrust violations.

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