Sayonara

Japan breaks up a monopoly

In the U.S., Britain and now Japan, 1984 has been the twilight year for telephone giants. First, on New Year's Day the breakup of American Telephone & Telegraph became effective. Then, in early December, Britain sold majority control of the government-owned British Telecom to private investors in the largest stock sale ever. Last week the Japanese Diet joined the trend. It voted to end the state monopoly of Nippon Telegraph and Telephone (fiscal 1983 sales: $18.4 billion), the country's phone company. Beginning in April the government will offer half of NTT's shares for sale over a five-year period, and could eventually sell up to two-thirds of the stock. The firm will immediately become Japan's largest private employer, with 318,000 workers--six times the work force of Toyota.

The move will throw open the tightly controlled Japanese telecommunications industry to foreign companies. Said Harry Edelson, managing partner of Edelson Technology, a venture-capital firm: "It's equivalent to opening up the U.S. postal system to competition." Japanese and foreign firms will be able to sell products and services that until now have been the exclusive province of NTT. Corporate powerhouses like the Japan Highway Public Corp. (1983 sales: $2.9 billion) already plan to offer long-distance services. Kyocera, an electronic-products company, intends to build microwave transmission systems.

American companies should gradually benefit from the spinoff, but experts warn them not to expect too much too soon. "U.S. firms won't be able to make a quick killing," says Fritz Ringling, an industry analyst with the Gartner Group. "The Japanese are looking for long-term relationships, not short-term flings." Among the American companies eager to expand their telecommunications activities in Japan are IBM and AT&T. Both have formed ventures with Japanese partners to develop telecommunications networks that will link computers together.

The U.S. Government will be closely watching the NTT spinoff. Washington has long urged Tokyo to open the important telecommunications market to American companies. This year Japan is exporting some $38 billion more to the U.S. than it is buying from Americans.

Telecommunications sales account for $1.2 billion of that gap. Said U.S. Trade Representative William Brock: "If fairly implemented, this legislation could result in a significant market opening."

The breakup of NTT's monopoly could prove a boon to Japanese telephone users. The 32-year-old NTT has been slow to innovate, sometimes leaving customers with costly service. The price for a call between Tokyo and Osaka, which is currently 40-c- for 45 seconds, could soon be slashed in half.