Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness

By Martin Fransman | Go to book overview

7 The Future of NTT

CHAPTER OVERVIEW

The chapter begins with an analysis of NTT's vision, its set of beliefs regarding what the company should be doing and how it should be doing it. This vision is referred to as the "'NTT Way'". What is the NTT Way? A key feature is the belief that the company should be technology- or innovation- driven. This belief, in turn, accounts for NTT's increasing expenditure on R&D as a proportion of revenue and its continuation of controlled competition after 1985 under its Track Three joint R&D and procurement procedure. It is shown that this belief was important for NTT even before competition in telecommunications services was introduced in Japan after 1985, and that it accounts for the significant amount of innovation that occurred in the company before this date, leading to a substantial reduction in telephone tariffs. (The differences in vision between NTT and its US and UK counterparts--AT&T and BT--and the corresponding differences in their competences and innovation are examined by the author in a companion volume, Visions of the Firm and Japan.)

The rest of the chapter is devoted to a detailed analysis of the three winds of change buffeting NTT. The first is increasing competition. Where is this competition coming from and what impact is it having on NTT's financial performance? What role is being played by the Ministry of Posts and Telecommunications (MPT)--NTT's regulator? Do the competitive pressures mean that NTT will have to change its way and reduce the extent to which it is technology-driven?

The second wind of change is the threat of divestiture, that is the breakup of NTT similar to that of AT&T in the 1980s. The detailed examination of this issue reveals that NTT has been under the threat of divestiture since before it was partly privatized in 1985. However, with help from powerful allies, NTT has so far managed to avoid divestiture. In 1990, for example, although divestiture was proposed by MPT, the proposal was defeated. Who were the major protagonists and antagonists? Why did the attempt at divestiture fail? Divestiture is on the agenda again for 1995/6: is the outcome likely to be any different from before?

The third wind is globalization. Japan is the only major country in the world to separate domestic from international telecommunications services, the former the domain of NTT and the latter of KDD. As a result of this regulation, NTT has been unable to follow rivals such as AT&T and BT/ MCI which have decisively entered the emerging markets for global telecommunications services. For those observers who see a Japan Incorporated, a well-oiled consensual machine bringing harmoniously

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