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Japan, U.S. to continue talks on NTT hook-up rates Wed.

WASHINGTON, Jan. 18 Kyodo

Unable to bridge gaps over cost-computing methods, Japan and the United States agreed Tuesday to continue talks on interconnection fees charged by Nippon Telegraph and Telephone Corp. (NTT) for another day, negotiation sources said.

During high-level talks in Washington, Japan presented a cost-computation model that would result in a 16.7% reduction in NTT access charges over a period of around four years, the sources said.

The proposal falls far short of Washington's recent request for a 50% immediate cut from this year.

The U.S. has long claimed the interconnection fees levied by NTT on other carriers wishing to offer intracity services in Japan are much higher than those of U.S. local carriers and European telecom firms.

High access rates in Japan have limited the development of the country's telecommunications sector, especially Internet services, it says.

Japan pledged to revise its phone access charge system within 2000 to reflect market-based costs when Japan's then Prime Minister Ryutaro Hashimoto met with U.S. President Bill Clinton in Birmingham, England, in May 1998.

Japan said the revision is based on the so-called long-run incremental costing method, which reflects theoretical costs necessary to build new local circuits in the most efficient manner.

The Telecommunications Council, an advisory body to the Japanese posts and telecommunications minister, has recently proposed two cost-setting formulas that could serve as a basis for a new NTT access charge system.

The first formula envisages a 16.7% cut while the other predicts a 41.1% reduction.

The 16.7% reduction means lost revenues of 430 billion yen for NTT while the 41.1% cut would cost NTT 700 billion yen.

The U.S. recently said expected reductions under the two formulas are insufficient.

The NTT access-charge issue is seen as the biggest stumbling block in ongoing Japan-U.S. enhanced deregulation talks, which are scheduled to end by March 31.
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Comment:Japan, U.S. to continue talks on NTT hook-up rates Wed.
Publication:NTT Topics
Article Type:Brief Article
Geographic Code:9JAPA
Date:Jan 24, 2000
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