Structural Changes and Regulatory Challenges in Japanese Telecommunications

Abstract

The structure of the telecommunications industry in Japan has been changing revolutionarily. The changes are observed in five phases: (1) development of competition into the local call market, (2) diffusion of broadband Internet and development of inter-platform competition, (3) rapid growth of cellular services and Internet access via cellular, (4) decline of POTS (plain old telephone service), and (5) structural changes from vertical integration to layered structure and development of media convergence. These changes require total review of the regulatory framework that was formed in the POTS era. In this chapter, I propose to review: (a) essential facilities regulation, (b) a universal service system, and (c) a flat-rate pricing system of the Internet to solve problems that are likely to distort the new industry structure and would stress the importance of a regulatory system that is competition, technology, and content neutral.