|Trade Policy Country/Regions
January 16, 2018
|U.S.-Japan Interconnection Agreement |
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
EXECUTIVE OFFICE OF THE PRESIDENT
USTR PRESS RELEASES ARE AVAILABLE ON THE USTR WEBSITE AT WWW.USTR.GOV.
FOR IMMEDIATE RELEASE CONTACT: BRENDAN DALY
JULY 18, 2000 AMY STILWELL
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
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.”
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
! 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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Source: USTR, http://www.ustr.gov
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