Japan s s Best Practice for Telecommunications Market

Transcription

1 Japan s s Best Practice for Telecommunications Market WTO Basic Telecommunications Agreement 10 th Anniversary Symposium Panel C: Regulatory Challenges/Best Practices February 20, 2008 Shun SAKURAI Director-General for Policy Coordination Ministry of Internal Affairs and Communications (MIC), JAPAN

2 Contents 0 Brief Introduction 1 Development of Regulatory Framework (1) Deregulations on Market Access (2) Asymmetric Regulations on Dominant Carrier 2 Future Challenges

3 Outline of Japanese Telecom Competition Policy From monopoly Further promotion to of competition competition Deregulation of market entry restriction (1997) Strengthening of Introduction of Abolition of foreign investment asymmetric regulations market principles regulation (except for NTT and Establishment of USF NTT regional companies) mechanism (1997) Setting up of Privatization of Reorganization of NTT (1999) Telecommunications NTT PC interconnection rules Business Dispute (introduction of LRIC Committee model)(2000) From ex-ante regulation to ex- post regulation 2004 Abolition of Type I and Type II II business categories Drastic deregulation of price and tariff regulations Introduction of Competition review Future Challenges Agreement on Basic Telecommunication Time limit for submitting Initial Offer Final conclusion of DDR Age of Telephony Emergence of Internet Penetration of Mobile Communication Transition to Full IP-based networks Review of competition rules through transparent procedures Ministry of Internal Affairs and Communications 3

4 The Number of Japan s s service subscribers Telecommunication Service Users Number of Broadband Service Users (Unit: thousand) 120,000 12,000 10, ,000 Fixed 固 定 電 Communications 話 ( 加 入 電 話 +ISDN) (telephony) Mobile 移 動 電 Communications 話 ( 携 帯 電 話 +PHS) (telephony) Broadband 高 速 超 高 service 速 インターネット 加 入 者 数 IP 電 Telephony 話 As of June ,078 (Unit: thousand) 16,000 千 14,000 DSL 13,786 12,000 80,000 8,000 10,000 60,000 6,000 54,217 8,000 FTTH 6,000 9,663 40,000 4,000 27,150 4,000 CATV FWA 3,691 20,000 2,000 15,276 2,000 0 '90/3 '92/3 '94/3 '96/3 '98/ 3 '00/3 '02/ 3 '04/3 '05/9 '06/3 '06/9 '07/ /12 01/3 01/6 0 1/9 01/12 02/3 02/6 03/9 02/9 02/12 03/3 03/6 03/12 04/3 0 4/6 04/9 04/12 05/3 05/6 06/9 0 5/9 05/12 06/3 06/6 Population: 127,053 Households: 51,713 (As of March, 2003 / Thousand) Ministry of Internal Affairs and Communications /12 07/3 07/6

5 Japanese Broadband Service in Global Comparison Broadband prices (100kbit/s) (US dollar) Speed of DSL (Mbit/s) Japan 0.07 Japan Korea 0.08 Korea Netherlands 0.14 Singpore Sw eden 0.23 Sweden Singapore 0.24 Finland Italy 0.3 Taiw an,chaina 0.34 Netherlands France 0.36 Taiwan,Chaina Finland 0.36 Italy United States 0.49 France Germany 0.51 Kazakhstan The U.K. a 0.63 The U.K. Lithuania 0.69 Portugal Hong Kong,China 0.83 Brazil Portugal 0.93 Bosnia Herzegovina 0.93 Iceland Canada 1.01 Hong Kong,China Macao,China 1.07 Poland Brazil 1.08 Germany Belgium 1.21 Philippines Source : ITU Internet Reports 2006 digital.life (December Ministry of Internal Affairs and Communications )

6 Development of Regulatory Framework (1) Deregulations on Market Access

7 Deregulations on Japanese Telecommunications Market NTT (Type I) I) KDD (Type I) I) Other Type I Carriers Type II Carriers Radio Stations for Telecom Business Restrictions on Foreign Capital Participation Prohibited 1/5 1/3 Prohibited 1/3 No restriction 1/3 1/5 * Incumbent operator provided domestic telecom service exclusively ly ** incumbent operator provided international telecom service exclusively Market Access Procedures abolished abolished abolished Type I Telecommunication Business Telecommunications business provided by facility-base Permission from authorized Minister Telecommunications Business All telecommunications business in Japan Type II II Telecommunication Business Telecommunications business provided by service-base Notification or Registration to authorized Minister Notification or Registration to authorized Minister Permission from authorized Minister Ministry of Internal Affairs and Communications 7

8 The number of Competitive Carriers 14,296 13,726 14,000 12,000 10,000 8,000 Opening of the Japanese Telecom Market (1985) 6,000 4,000 2, Ministry of Internal Affairs and Communications 8

9 Japan s s Telecom Market (FY 2005) overall A. Sales Transition of Major Japanese Telecommunication Market Others \697.4 billion Japan Telecom \343.5 billion \15 trillion The sales of major telecommunications carriers have increased three-fold since Vodafone \ (Softbank) \ trillion au (incl. Tu-ka) \ trillion KDDI \ trillion KDD fixed \619.3 billion \10 trillion \15.7 trillion KDD \223 billion NTT DoCoMo \ trillion NTT \ trillion \5 trillion NTT \5.134 trillion \5.357 trillion Group NTT Com \ trillion NTT West \2.296 NTT East \ trillion FY85 FY05 Note 1: The above diagram is created from the financial statements (total sales revenue) based on accounting regulations for telecommunication carriers submitted by carriers that provide basic telecommunication services and the financial reports based on the accounting regulations for telecommunication operations submitted by certified telecommunications carriers (the total sales profits of telecommunication businesses and other operations except for TEPCO showing only the sales profits for their telecommunication operations). Note 2: The sales of NTT DoCoMo and the sales of KDDI fixed and each category of au were created by settlement short lines. Ministry of Internal Affairs and Communications 9

10 Japan s s Telecom Market (FY 2005) segment B. Major mobile phone market Vodafone \ trillion au \ trillion Willcom \209.8 billion Approx. 53% NTT DoCoMo \ trillion Approx. \9 trillion C. Major long distance/international market D. Major local market Japan Telecom \343.5 billion Fusion \70.1 billion JSAT Approx. 51% \40.1 billion Space Communications \17.9 billion K-Opticom \92.1 billion NTT West \2.296 trillion J-COM Group \83.6 billion CTC \32 billion Other power companies \151.8 billion Approx. 92% KDDI \619.3 billion NTT Com \ trillion NTT East \ trillion Approx. \2.2 trillion Approx. \4.5 trillion Ministry of Internal Affairs and Communications 10

11 Deregulations in Japanese Telecommunications Market (2) Asymmetric Regulations on Dominant Carrier

12 Enhancement of Regulations on Dominant carriers Provision in Reference Paper 1.1 Prevention of anticompetitive practices in telecommunications 1.2 Safeguards 1985 Business improvement order Prohibition of unfair, discriminative treatment Accounting separation Firewall with dominant carriers Development of interconnection accounts 2.2 Interconnection to be ensured Development of rules for interconnection Rules for interconnection tariff Unbundled charge LRIC Line sharing Unbundling rule for Fiber optics 2.3 Public availability of the procedures for interconnection negotiations 2.4 Transparency of interconnection arrangements Authorization of interconnection tariffs Establishment of dispute settlement body for telecommunications carriers 2.5 Interconnection: dispute settlement Ministry of Internal Affairs and Communications Arbitration / Order by Minister 12

13 NTT's Market Share Share of facility (subscribers line) [as of ] 0% 50% 100% Metal+Fiber optics fiber optics only 78.9% 92.5% Share of service [as of ] 0% 50% 100% Fixed-line phone 88.2% FTTH 70.5% Mobile phone NTT DoCoMo DSL 37.4% 51.1% Market share of broadband operator [as of ] ACCA 7.6% e-access 14.1% others 3.5% Softbank BB 37.4% NTT E/W 3 7.4% DSL KDDI 6.3% USEN 5.3% Pow er Com panies 10.2% others 7.8% FTTH(total) NTT E/W 70.5% KDDI 5.3% others 15.6% Pow er Com panies 6.7% USEN 11.4% NTT E/W 60.9% FTTH(for FLAT) Pow er Com panies 13.8% KDDI 5.9% others 2.5% NTT E/W 77.8% FTTH(for detached residences,b usiness) Ministry of Internal Affairs and Communications 13

14 The Era of Broadband -Development of DSL service- 16 (millions) Others Approx. 62.0% NTT E/W Approx. 38.0% 10 End-Mar.07 DSL Autumn 2000 Establishment of collocation and unbundling rules for access networks of NTT E/W Cable Modem 2 0 FTTH Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Unbundling rules are stipulated by detailed function and facility. e.g. Metal subscriber line, Optical subscriber line >> Unbundling regulation on Access line has provided further opportunity of non-facility based supplier to enter telecom market. At the same time, the provision of collocation rule has been established. >> Service suppliers who want to interconnect with major supplier can set up their facilities in the major supplier s building Ministry of Internal Affairs and Communications 14

15 Access Charge for Line sharing of DSL (JPY) Establishment of Line Sharing Regulation NTT East NTT West FY2000 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 Ministry of Internal Affairs and Communications 15

16 The Era of Broadband -Development of FTTH service- (millions) DSL Cable Modem FTTH Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07 Ministry of Internal Affairs and Communications 16

17 The Telecommunications Business Dispute Settlement Commission Total Number of Mediation and Arbitration Number of Mediation by Case Collocation 4 8.3% Interconnect or not 3 6.3% Interconnecti on Agreement 2 4.2% 20 Mediation Arbitration other % 10 0 FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007* * As of December Payment on Interconnecti on % Ministry of Internal Affairs and Communications 17

18 Future Challenges

19 New Competition on Promotion Program 2010 Comprehensive Review of Competition Rules to Address the Transition to IP Based Networks (Comprehensively implemented by early 2010s) 1.Promotion of Facility Competition Review of Designated Telecommunications Facilities System 2.Review of Interconnection Policies Review of Calculation Method for Interconnection Charges of NTT East and West 3.Review of Universal Service System 4.Review of Tariff Policies 5.Other Main Policies Review of Calculation Method for Calculating Interconnection Charge of PSTN (concluded in 2007) Review of Calculation Method for Interconnection Charges for Fiber Optic Networks (dealt with after the submittal of an application by NTT East and West) Calculation method for interconnection charges in relation to next-generation networks 19 Ministry of Internal Affairs and Communications

20 Basic Framework for Network Neutrality Network neutrality (from the user perspective) (1) IP-based networks should be accessible to users and easy to use, allowing ready access to content and application layers. (2) IP-based networks should be accessible and available to any terminal that meets the relevant technical standards, and should support terminal-to-terminal (or end-to-end ) communication. (3) Users should be provided with equality of access to telecommunications and platform layers at a reasonable price. Note: In this case, "the user" refers not just to end users but also includes content providers and other related companies that conduct business using IP networks. Policy evaluation parameters for ensuring network neutrality Equal access to networks Neutrality of telecommunications layer with respect to other layers Equitable cost distribution of networks Neutrality of cost sharing models for upgrading the communications networks Specific policies deployed in an integrated manner for parameters Ministry of Internal Affairs and Communications 20

21 Universal Service in the Transition to IP Networks Present 2010 Ensuring all regions can have broadband access (National Broadband Strategy 2010) early 2010s PSTN Approximately 30 million FTTH subscribers (NTT mid-range corporate strategy) Market integration through the spread of broadband and IP (phased disappearance of service demarcation) IP Network Service Supply System Universal System for telephony Subscriber line access Public telephones Emergency calls Provision by NTT East / West Transition Period (Phase 1) Full IP networks (Phase 2) (PSTN is maistream) (Coexistence of PSTN and IP network) (Completion of shift to IP network) Scope to be included as universal provision Inclusion and/or exclusion of mobile service, broadband service, IP phone service rational of the change of the concept from universal service of IP to universal access Voice service becomes just one component of broadband services. How public telephones and emergency notification will be handled with regard to the spread Eligible Telecommunications Carriers (ETCs) The way to ensure last resort of universal service provision Requirements for ETCs, taking into consideration factors such as the diversity of primary entities providing broadband infrastructure (ex: local governments), etc. Relationship between network maintenance costs and service maintenance costs Service area requirements ETCs are expected to meet Rational for fee regulations (price-cap system), etc. Mechanisms for Preservation Cost calculation which assumes PSTN (system where costs are borne in relation to the number of numbers owned) Cost Calculation Method Cost calculation method for multiple transmission configurations (fixed, wireless, etc.) Measures for avoiding increased cost burdens upon users Cost Allocation Method Rational for specifying beneficiaries and for cost allocation method in case the range of universal service is enhanced Other Issues to be considered for the transition period How long will PSTN be preserved? Other Measures to replace number priority DB existing in the each The way to preserve universality with 21 local central office regard to factors other than geographic disparity The way to finance the cost for removing legacy networks. 21 Ministry of Internal Affairs and Communications

22 Thank you.