Japan tweaks NTT Law, but rival telcos still not happy

The Japanese government has enacted an amendment to legacy regulation that was hampering NTT, much to the chagrin of the telco's major rivals.

Mary Lennighan

April 17, 2024

3 Min Read

Japan's telecoms incumbent announced the law change on Wednesday, which will, amongst other things, free it from obligations regarding the sharing of R&D information and allow it to have non-Japanese directors on its board.

Essentially, the move is about enabling NTT to compete on a more level playing field with its international peers, which is pretty timely given the ongoing global battle to claim leadership in 6G mobile. It should also allow the Japanese state to monetise its shareholding in NTT, something it seems keen to do.

The rules in question are known as the NTT Law and date back to NTT's time as a public company. A debate over changes to the law has been raging in Japan for months, if not years, with the telco's rivals insistent that alterations would be harmful to consumers; the law covers areas such as universal service obligations and fair competition.

KDDI, Softbank and Rakuten Mobile banded together to oppose any changes. In addition to pointing out potential issues for consumers, they also highlighted the fact that allowing foreign investors into NTT could constitute a threat to national security, the telco being in possession of national infrastructure that dates back to before its privatisation.

But the government made it clear that it would push ahead with reform and it has now got its way.

In a statement announcing the changes, NTT focused on the fact that it is no longer required to share and publish the results of its various research endeavours, something it long claimed was detrimental to its business. Potential partners have refused to do business with NTT because of that requirement, the telco has said, which is naturally a problem in an industry where collaboration on technological development has become the norm.

Given that global equipment makers, telcos and other related parties are vying for 6G leadership, while at the same time working together to make the next generation of mobile technology a reality, it may well have a point.

It also noted that rules on the appointment of foreign directors have been relaxed, which it said "will contribute to the flexible management of our company." Presumably this rule would pave the way for foreign investment into NTT, although the telco did not specify as much. It did, however, indicate that it would be in support of similar rules being extended to its rivals.

"We believe that it is necessary to discuss such regulations not only for our company but also for all major telecommunications carriers from the perspective of Japan's economic security, as well as regulations on foreign investment," NTT said, in a Japanese language statement, translation courtesy of Bing.

Its rivals issued a joint statement of their own, skipping past the finer points of the amendments that came into force today and instead focusing on the bigger picture. The revised act includes provision for the government to look further at the act and to carry out more changes, including potentially abolishing it altogether, as soon as 2025. And the three telcos are vehemently opposed to that.

"Provisions that include the abolition of the NTT Act and set a time limit for consideration may lead to hasty debate," the operators said, again in Japanese.

"We will continue to oppose the 'repeal' of the NTT Act, and strongly request that more careful policy discussions be held based on the supplementary resolutions on the state of the NTT Act, including the review and strengthening of the discipline to maintain and protect the 'special assets' of [NTT Corporation], which was built at the expense of the public during the Nippon Telegraph and Telephone Public Corporation era," they said.

Ultimately, this all boils down to the government and NTT having got their way to an extent, but with more sweeping changes on the horizon. And that means yet more heated debate in Japan.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

Get the latest news straight to your inbox.
Register for the Telecoms.com newsletter here.

You May Also Like