Ministry clashes stall fiber network deployment

Ministry clashes stall fiber network deployment

paul mortensen

Turf conflicts by some of Japan`s powerful ministries are stalling the spread of a nationwide fiber-optic infrastructure, according to Keidanren--The Federation of Economic Organizations, a group of Japan`s industrial leaders.

This year, with a computer networking industry set to boom--for which the Ministry of International Trade and Industry sets industrial policy--the MITI has aggressively moved into the Ministry of Posts and Telecommunications` sphere of influence--communications. To counter and to bolster its own territory, the MPT is expounding the policies of fiber to the home and multimedia.

With the stalemates growing among government ministries, Keidanren has urged the ministries to unite as if they constituted a single information ministry. It warns that if power struggles break out among ministries eager to protect their own turf, progress toward a national fiber-optic telecommunications infrastructure will be crippled.

During the past 10 years, two ministries--MPT in charge of telecommunications and broadcasting, and MITI in charge of industrial policies for computer and telecommunications hardware makers--have been aware of the eventual convergence of their spheres of influence, but have done little to work together. This arrangement worked well because computers were perceived as standalone devices. At present, approximately 8.5% of Japan`s personal computers are linked to local area networks; in the United States, 52% are network connected.

Prompted by the U.S. mobilization for a national information infrastructure, the MPT established its own timetable for a fiber-to-the-home infrastructure (to the year 2010). The architecture has since been modified to fiber to the curb. But the fiber infrastructure was less a concept to capture the public`s imagination--as it might have been in the United States--than a bid to gain control of key multimedia industries, notes an analyst at the Nikko Research Center.

With the MITI and the Ministry of Construction also submitting proposals for infrastructure and multimedia developments, the MPT risks losing control over its responsible technologies. Rising to the challenge, the MPT is trying to force as many of the new technologies as possible into its traditional sphere of influence--communications.

For the fiber-optic cable sector, the MITI is arguing to the Ministry of Finance that the business of fiber connections should be controlled by its industry policy makers rather than by the MPT communications policy makers. However, by strategically working on the fiber-to-the-home policy and grouping all fiber businesses into this category, the MPT might pull off a major coup.

To do this, however, the MPT needs additional support. It claims more than 200 local government agencies have written to the ministry, requesting interest-free loans to aid in constructing fiber networks. With these petitions, the MPT is pressuring the Ministry of Finance to include such interest-free loans in the 1995 budget provisions.

A $330 billion investment

Market research is another tool being used to strengthen the MPT`s case. An MPT research group estimates fiber to the home will require an investment of more than $330 billion by the year 2010. Economic savings, however, could total $8 million by the year 2000 if key medical, welfare, government, administration and education policies are improved.

These savings would derive from shorter hospital stays and the elimination of hospital visits made possible by remote diagnostics and other telecommunications-based services.

The MPT has also projected Japanese corporations will invest $270 billion in the construction of fiber-to-the-home networks between 1995 and 2000. The ministry hopes to support commercial development projects by providing interest-free loans totaling $8 billion during the next six years.

Currently, interest-free loans to private firms are not permitted. Therefore, the MPT is negotiating with the Ministry of Finance for special exemptions. But the Ministry of Finance is more likely to grant exemptions to the industrial policy maker, MITI.

Izumi Aizu, project director for the Center for Global Communications at the International University of Japan in Tokyo, calls the MPT`s projections "illusory," as no ministry knows how much a nationwide fiber network will cost or what its benefits will be worth by the year 2010.

Network builder

For investors in Nippon Telegraph and Telephone Co., which is expected to be the primary builder of the network, the proposed fiber infrastructure carries dubious cost/benefits as reflected in NTT`s depressed share prices. Still, in its bid to seek favor with the MPT and stave off its breakup (for which a government decision is predicted this year), NTT has restated its intention to install 120,000 kilometers of fiber, or 20% of the total planned network, by the year 2000.

Other ministries have also produced fiber network plans. For example, the Ministry of Construction intends to set up a nationwide fiber network by laying fiber along 400,000 kilometers of roads. Work forces controlled by the ministry are busily digging trenches along main roads to bury conventional cables. Since 1986, workers have installed 700 km of fiber.

Last year, as part of the government`s 10-year public works plan and to open Japan`s markets wider to imports, the original 1991 to 2000 budget of public works in Japan was expanded to $4.30 trillion. This public works expansion and MPT`s plans might affect the import of optical fiber cables.

The Tokyo Customhouse reveals some encouraging trends: Optical fiber imports in 1993 at 885 tons and worth $52.6 million increased 62.9% and 17.8% in volume and value, respectively, from the previous year. U.S. companies accounted for 98% of all fiber cable imports. Overall, fiber imports are three times greater than in 1989.

The Ministry of Education also has a belated interest in networking. During the next three years and at a cost of $41 billion to $52 billion, an interministry 6-megabit-per-second fiber network connecting 50 to 60 government research centers will be constructed. The Science and Technology Agency (affiliated with the MITI) is nominally in control. However, the National Center for Science Information, is maneuvering to gain command.

To aid in future network connections, NTT has begun its own tests. It has achieved 92-Mbit/sec data transmissions between computers located 900 km apart. The company conducted the tests by constructing networks that connected LANs at the Institute of Medical Science, the University of Tokyo, the Supercomputer Laboratory of the Institute for Chemical Research and Kyoto University.

Another player in networking and a potential challenge to NTT`s assumption that it will have sole control of creating Japan`s information infrastructure is the alliance formed by the Tokyo Telecom Network Co. Tokyo Electric Power Co., one of the alliance`s partners, has been quietly laying a fiber network alongside its power transmission lines.

For several years, Tokyo Electric has been discussing linking with regional power companies and cable operators throughout Japan to form a nationwide network. However, as yet, no laws have been passed to allow across-regional groupings of electric power companies for telecommunications. As electric power companies fall within the MITI`s sphere of influence, the MPT is wary of letting that group get too powerful.

Another power company on the move is Kansai Electric Power Co. in Osaka. Together with its affiliated companies Osaka Media Post and Kansai Cable Service Co., the power company will kick off joint networking experiments this month. Services include automatic reading of electric meters, telephony with cable-TV transmission and transmission of road traffic information. The group will use a low-cost multipurpose fiber network.

According to Aizu, ministerial and NTT`s experiments with networking are often outmoded. For example, from 1980 to 1985, the all-host paradigm of standalone computers and the separation of television, telephony and telecomputing took place; from 1985 to 1990, the host/slave paradigm of single networks--integrated services digital network--occurred; and, from 1990 to 1995, the client/server paradigm or "network of networks" epitomized by Internet experiments happened.

From 1995 to 2000, Aizu foresees the all-server paradigm--an open data network that is open to change. The trouble is, says Aizu, many MPT policies still focus on the host/slave paradigm or earlier ones. q

Paul Mortensen writes from Tokyo.

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