Text: USTR July 18 Press Release on Japan Interconnection Rates

(USTR Barshefsky announces interconnection rates agreement) (900)







U.S. Trade Representative (USTR) Charlene Barshefsky announced an

interconnection rates agreement with Japan July 18 that will improve

U.S. access to Japan's $130 billion telecommunications market.





"This deal opens Japan's telecommunications market to genuine

competition and should save telecommunications carriers around the

world more than $2 billion dollars over the next two years,"

Barshefsky said in a USTR press release. "In the information age,

lowering these interconnection rates will unleash enormous economic

opportunities for U.S. telecommunication carriers and Internet

services providers, as well as for Japanese consumers and the Japanese

economy as a whole."





According to the release, Japan has agreed to open new points of

access for subscriber lines; to reduce the cost for competition to

interconnect with the dominant carrier, NTT; and to conduct rate and

regulation reviews.





Following is the text of the press release:







(begin text)







OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE



EXECUTIVE OFFICE OF THE PRESIDENT



WASHINGTON, D.C. 20508







July 18, 2000







UNITED STATES AND JAPAN AGREE ON INTERCONNECTION RATES







President Clinton hailed the agreement announced today by United

States Trade Representative Charlene Barshefsky substantially lowering

Japanese telecommunication interconnection rates. The agreement was

reached as part of the Enhanced Initiative on Deregulation and

Competition Policy and is included among new Japanese deregulation

commitments secured in the Third Joint Status Report of the U.S.-Japan

Enhanced Initiative on Deregulation.





"This important agreement on interconnection rates will help further

reduce regulatory barriers to trade between the United States and

Japan," said President Clinton. "It will level the playing field for

America's cutting edge technologies and increase the number of

Japanese consumers connected to the Internet. It's a win-win for the

United States and Japan, and represents an important step as we

prepare to discuss the impact of information technology on the global

economy at the G7/G8 Summit."





"This deal opens Japan's telecommunications market to genuine

competition and should save telecommunications carriers around the

world more than $2 billion dollars over the next two years," said

Ambassador Barshefsky. "In the information age, lowering these

interconnection rates will unleash enormous economic opportunities for

U.S. telecommunication carriers and Internet services providers, as

well as for Japanese consumers and the Japanese economy as a whole."





The telecommunications commitments will substantially improve U.S.

firms' access to Japan's $130 billion telecommunications market. Under

the deal struck early Wednesday morning in Tokyo, Japan has agreed to

lower its rates for regional access by 50 percent over two years and

local access by 20 percent over two years. These cuts will be

front-loaded and made retroactive to April 1 of this year and there

will likely be further substantial cuts in the third year (2002).





Ambassador Barshefsky also announced that "Japan also agreed to

further liberalize its telecommunications market by opening up the

'last mile' to competition -- unbundling' subscriber lines. This will

allow new entrants to lease those lines at cost-based rates to provide

services such as high speed Internet access."





FACT SHEET US-JAPAN AGREEMENT ON INTERCONNECTION RATES







Background: Over-regulation of new entrants in Japan's

telecommunications sector and weak controls over the powerful dominant

carrier, NTT, have stifled competition in Japan's $130 billion

telecommunications market and deprived the Japanese economy of the

benefits of innovative services and low prices. In an attempt to

address these problems, the United States has called for a

"Telecommunications Big Bang," pressing for elimination of unnecessary

regulations and stronger safeguards against anti-competitive behavior

by dominant carriers.





Accomplishments:







To address these problems, Japan has agreed to:







-- Reduce the cost for competition to interconnect with NTT's system

by about 50% at the regional level (of greatest importance to U.S.

companies) and 20% at the local level over the next two years (2000

and 2001). These cuts will be retro-active to April 1, 2000.





-- Conduct a thorough review of NTT's interconnection rates in 2002,

based on an improved rate calculation model. This process should

result in additional and substantial rate reductions in 2002.





-- Open new points of access ("unbundling") to NTT's network and enact

rules to ensure fair usage rates and conditions in order to allow new

entrants to compete in providing high-speed Internet services.





-- Enhance new entrants' ability to build new networks by 1)

eliminating restrictions on new competitors' ability to construct

their own networks in the most efficient way, and 2) removing certain

road construction restrictions and promoting measures to improve

access to underground tunnels controlled by NTT and electric

utilities.





-- Determine by March 2001 if interconnection with NTT DoCoMo, Japan's

largest wireless provider, should be regulated more strictly because

of DoCoMo's "dominant" market power.





Benefits to the U.S.:







These agreements will improve U.S. firms' access to Japan's $130

billion telecommunications sector, the second largest in the world.

Lowering interconnection rates to the levels agreed above will in

itself save competitive carriers over $2 billion over the next two

years. The benefits for new competitors should be even more

significant in 2002, as interconnection rates will likely drop even

more sharply. Japanese consumers will benefit from better service and

lower costs. Interconnection cuts will reduce the cost of

business-to-business transactions and Internet usage. They will also

stoke Japan's economic recovery, stimulating trade between the world's

two largest economies.

 



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