Epoch-making decision in internetworking: NTT's open network declaration from a historical perspective

Heated debate still continues in Japan as to whether or not the world largest common carrier Nippon Telegraph and Telephone Corporation, NTT, be divested. As NTT's declaration of network opening (hereafter open network declaration, or OND) was made public in the midst of this controversy, it was sometimes mistaken as a counterproposal to escape from breaking up. However, its significance will become apparent when we trace the history of interconnection as well as competition in Japan. This article tries to identify several precedents of network opening, and to place OND appropriately in the public policy under competitive environment. The first section analyzes the performance of the telecommunications market and points out how barriers to competition have been eliminated or kept intact since its liberalization in 1985. The second section observes liberalization from a longer-term perspective, beginning in the early '70s, and describes how computer communication developed. The third section surveys how OND may change the business environment. The final section draws attention to the future, when many subnetworks are interlinked through OND, and emphasizes the importance of a dispute-settling mechanism for interconnection.