Minister ASO Visits the U.S. and Germany
Minister ASO (left) and Minister CLEMENT
Outlines of meetings concerning ICT are as follows:
1. Meeting with FCC Commissioner MARTIN
2. Meeting with Mr. Ted KASSINGER, Deputy Secretary
of Commerce and Mr. Michael D. GALLAGHER, Acting Assistant Secretary of
Commerce for Communications and Information and Administrator of the National
Telecommunications and Information Administration (NTIA)
3. Meeting with Federal Minister Wolfgang CLEMENT,
the German Ministry of Economics and Labour
|Costs for introducing MNP (about 92.8 billion yen - 141.1 billion yen) < Benefits from MNP introduction (about 273.3 billion yen - 355.1 billion yen*)|
*: Direct benefits + indirect benefits
Benefits of MNP surpass the costs necessary for introducing MNP.
Chapter V. MNP as it should be
Section 1. Necessity for introducing MNP in Japan
Considering user needs, trends in MNP in foreign countries, expected effects, etc., it is expected that MNP will promote users' convenience and competition among mobile carriers in Japan. Thus, it is appropriate to introduce MNP.
Section 2. Procedures for introduction
Since MNP will greatly improve as well as promote users' convenience and competition among mobile carriers, it can be thought that MNP shall be a service that is to be uniformly provided by all mobile carriers. It is appropriate for all mobile carriers to provide MNP at the same time on a two-way basis. In addition, it is appropriate to introduce MNP into all mobile systems, including 2G and 3G.
[Procedures for MNP]
In order to promote MNP use, procedures for MNP shall be based upon ease-of-use for users. It is preferable to enable users to use all services of newly selected mobile carriers.
When a newcomer enters the mobile market, in order to ensure users' convenience, it is appropriate for the newcomer to prepare MNP functions upon initial market entry.
[e-mail address portability]
With respect to e-mail address portability, this is a significant problem of Internet services involving not only mobile carriers but also all Internet access providers, because transfer/succession of domain names are to be resolved. Judging from results of the questionnaire surveys, needs for e-mail address portability are comparatively fewer than those for MNP. In addition, there are substitutable services such as transfer services and services for informing new addresses. Thus, it can be said that for the time being there is no need to implement e-mail address portability.
Section 3. Methods to realize MNP
From the viewpoints of the lowest possible introduction costs, minimum impacts on networks of fixed telecommunications carriers, various methods to implement MNP were considered. According to findings thereof, the basic MNP methods for "interconnection from fixed networks" would be a "transfer method," considering merits that development of network functions would be minimized at calling-party side fixed telecommunications carriers; and those for "interconnection between mobile telephone networks" would be a "redirection method," considering merits that telecommunications facilities would be efficiently used and costs for modifying facilities would be lowered than the IN method.
Section 4. Cost sharing method
It is vital to recover facilities investment for MNP through appropriate measures after mobile carriers have shouldered costs for their own facilities. As for such costs for investment, since it would be ensured that all users, in addition to MNP users, should enjoy benefits of MNP, it is thought to be appropriate to require not only MNP users who enjoy the direct benefits to mainly shoulder the costs; but also other users who enjoy the indirect benefits to indirectly shoulder the costs. The following methods may be employed to recover the costs:
? MNP users and mobile carriers are to shoulder costs for i) facilities pertaining to mobile telephone networks and ii) operating expenses pertaining to operations and maintenance.Mobile carriers shall enable subscribers to use MNP with ease-of-use by encouraging subscribers to use MNP.
? MNP users are to shoulder costs equivalent to actual expenses, such as handling charges for porting procedures upon request from the users.
Section 5. Procedures pertaining to MNP
It is preferable that procedures for using MNP should be ones through which potential MNP users can apply for MNP with ease-of-use. In order to prevent troubles with mobile telephone users who want to use MNP users and faults of interconnection pertaining to online processing, etc., mobile carriers are requested to fully coordinate proceedings among carriers involved, fully inform mobile telephone users who want to use MNP users of details of MNP and make efforts to implement MNP.
In addition, since personal data (proprietary information) are closely related to mobile telephone numbers than ever before, it is critical for mobile carriers to manage personal data appropriately.
Some stated that it is preferable to shorten the porting lead time (a time from the completion of application for MNP at an office of a mobile carrier (or a dealer) to a date and time for porting activation at the gaining mobile carrier). For realizing one-stop shopping, it is vital to carefully identify issues, such as debt information on delinquents, etc. Thus, detailed deliberations thereupon, including possibility of one-stop shopping, shall be made.
Section 6. Schedule
In order to introduce MNP, establishment of detailed specifications, methods for cost recovery and adjustment, development of operation rules, development of software, confirmation of interconnection with all telecommunications carriers, etc. are needed. These processes would take a length of time. Since MNP is expected to be introduced at the earliest possible stage, it is appropriate to implement MNP at the earliest possible date in FY2006.
Chapter VI. Toward implementation
[Measures to be taken by mobile carriers]
It is requested to begin deliberating upon detailed specifications of MNP implementation, methods for cost recovery and adjustment, development of operation rules, etc. as soon as possible. Upon deliberation thereupon, it is preferable that careful consideration be made for avoiding hindrance of users' benefits and realizing MNP at the earliest possible stage.
Since procedures for porting MNP are expected to be simple and easy-to-understand, opinions from users should be considered. It is vital to consider establishment of a mechanism for accepting complaints and procedures for complaint settlement.
Of these matters, with respect to matters to be deliberated upon by all telecommunications carriers to be interconnected, it is thought that all carriers involved would establish a forum for discussion. Also, in order to ensure transparency, it is appropriate to develop and establish standards thereof at the Telecommunications Technology Committee, a domestic standardization organization. With regard to interfaces between carriers, operation rules, etc. necessary for interconnection, it is essential to disclose them to all interested carriers, including newcomers, without restriction on use. Furthermore, with respect to user fees pertaining to MNP, it is required that the fees shall not be decided by negotiations between carriers.
[Other measures to be taken by carriers]
Upon development of specifications, modification of systems, interconnectivity tests in introducing MNP, etc., understanding and collaboration among carriers are required for smoothly and surely realizing MNP.
[Measures to be taken by the government (MPHPT)]
In order to smoothly and surely realize MNP, MPHPT is required to i) develop guidelines for introduction methods, realization methods, cost sharing methods, procedures for MNP use, introduction schedule, matters to be considered in providing MNP service; and ii) prepare necessary regulatory frameworks. In addition, MPHPT is requested to follow up deliberation among carriers and, if necessary, support and direct their efforts.
As for mobile telephone users, MPHPT is requested to make efforts to raise public awareness on detailed information on MNP services and precautions for MNP use, before and after the introduction.
[Outline of the report from the Study Group]
Chapter I. Background of reestablishment of
the Study Group
Section 1. Situation before the current model
Instead of the conventional historical cost methodology, a Long-Run Incremental Cost methodology has been used to calculate interconnection charges since FY 2000, for which long-run incremental cost model have been developed. The Study Group on Long-run Incremental Cost Model developed a primary model in September 1999 and a secondary model in March 2002, and the Telecommunications Council requested that figures calculated based on the first model should be applied to the interconnection charge calculations for FY 2000 to FY 2002 and those based on the second model to the calculations for FY 2003 to FY 2004.
Section 2. Background of reestablishment of the Study Group
The Telecommunications Council, to which a case of interconnection charges for FY 2003 to FY 2004 was referred, recommended in its report on March 28, 2003, that MPHPT should investigate a method for calculating interconnection charges from FY 2005 that take into consideration major changes in environment such as a reduction in traffic and a slowdown in new investments. The Study Group was therefore reestablished to amend a model for calculating interconnection charges from FY 2005.
Chapter II. Changes in the business environment
Section 1. Reduction in fixed telephone traffic volume
The end-to-end traffic volumes through switches of NTT East and NTT West have fallen sharply in both the number of calls and total traffic since FY 2001. The number of registered users has also been declining since FY 2001. Fixed telephone traffic is likely to continue to decline in both the number of calls and total traffic due to the following three reasons
- Marked growth in mobile phone usage
- Considerably increasingly the number of subscribers to high-speed and ultra-high-speed Internet
- Growth in demand for VoIP services
Section 2. Slowdown of new investment in fixed telephone facilities
Equipment investment by NTT East and NTT West has sharply decreased since FY 2000. NTT stated that traffic would inevitably shift from fixed telephone lines to the IP telephone network, and so, in principle, they would stop investing in the fixed telephone network, reduce the fixed telephone network costs, etc. Slowdown of investment in the fixed telephone network will therefore continue. The depreciation cost is also declining in line with the slowdown of investment for fixed telephone network equipment.
Chapter III. Review of models
Section 1. Considerations, basic policies, etc.
Currently, the Study Group investigated the following three points based on the context of its reestablishment:
(1) Reflect the slowdown of new investment in the fixed telephone network
(2) Reevaluate and review the relations between traffic and cost changes
(3) Other special issues to be considered
Section 2. Specific considerations
Out of the six issues listed for discussion, the following four were investigated:
- Review of economic lifetime based on the slowdown of new investment (Section 3)The other two items were withdrawn because of the difficulty of making specific proposals.
- Consideration of the costs of excess facilities in a period of demand declination (Section 4)
- Reflection of facilities shared with data transmission services (Section 5)
- Revision of input values, etc. (Section 6)
Section 3. Review of economic lifetime based on the slowdown of new
NTTﾕs slowdown of investment in facilities has resulted in lower depreciation expense, which means that economic lifetime has been extended. To reflect this fact in the long-run incremental cost model, a new method for adjusting the current economic lifetime, was formulated.
Section 4. Consideration of the costs of excess facilities in a period
of demand declination
When demand peaks and starts to decline, some of the facilities at the peak become dormant assets, without being eliminated or removed. The Study Group considered a method for estimating the costs of excess facilities and decided that it was not appropriate to calculate such costs because such calculation conflicted with the objective of the long-run incremental cost model.
Section 5. Reflection of facilities shared with data transmission
To calculate the volumes of telephone and the ISDN facilities using models more correctly, logic has been established for considering those facilities which are shared with data transmission services, demand for which has soared in recent years, in addition to sharing with leased lines that have been considered current models.
Section 6. Revision of input values, etc.
Some of the economic lifetime and other input values were revised, when the marine interoffice transmission sections that had selected duct facilities in the air or underground like those on the ground were revised this time to select proper submarine cables or wireless facilities.
Chapter IV. Evaluations and notes
Section 1. Calculation results and evaluation
The results of calculation are given below. When calculated using the traffic volume for FY 2002, the group center (GC) and zone center (ZC) interconnection cost decreased by 93.4 billion yen, down 11.2 %, from 831.7 billion yen, the current model cost, to 738.3 billion yen. The subscriber line transmission cost decreased 57.9 billion yen, down 6.2%, from 933.8 billion yen to 875.9 billion yen.
In the terms of unit costs of major unbundling elements, the calculation results are as follows:
(1) Regarding the Tandem switch function, extending the economic lifetime of switches reduced the annual cost by 3.5%.
(2) Regarding the Interoffice transmission function, as a result of sharing facilities with data transmission services, 60 percent of the trunk optical cables between the GC and IC are applied to telephone lines and 40 percent to leased lines and data transmission services in order to ensure proper allocation of costs. Extending the economic lifetime of conduit lines, etc. resulted in a fall of 9.2% in annual costs.
(3) With regard to the Local switch function, as a result of the sharing of facilities with data transmission services, 60 percent of the optical cables between RT and GC are applied to telephone lines and 40 percent to leased lines and data transmission services to ensure the proper cost allocation. The reduction in cost resulting from revising the economic lifetime of metal cables reduced the number of feeder remote terminal , but increased the number of remote terminals. The annual cost dropped by 11.6%.
(4) Regarding the subscriber line transmission function, extending the economic lifetime of conduit lines and metal cables reduced the annual cost by 6.2%.
Section 2. Updating input data
The Study Group pointed out that national census data should be updated and appropriate input data collected in the future.
Section 3. Considerations when revising the models
Considerations when revising the models in the future are as follows:
(1) Reflect advanced technologies, etc. in the modelsIt is extremely difficult to strike a balance between confidentiality regarding telecommunications carriers data and ensuring the transparency and disclosure of discussions. It is necessary, however, to maintain such a balance when revising the model in the future.
Key considerations when reflecting new technologies in models: the logic for selecting Feeder RTs in ADSL services requires increasing attention to be paid as ADSL services spread, so the model adopting VoIP should not deviate too far from the network configuration of the incumbents, etc.
(2) Reflect structural changes in demand in the model
As the demand for data transmission services is expected to increase, it will be necessary to consider models based on the network architecture of data transmission services.
(3) Considerations concerning model assumptions
Because model and actual facility construction are based on different assumptions, various points must be considered in the cost calculation, but this should be done when pricing is discussed in the future.
(4) Establishment of a review system to ensure transparency and disclosure
International Affairs Department,
Ministry of Public Management, Home Affairs, Posts and Telecommunications
1-2, Kasumigaseki 2-chome, Chiyoda-ku, Tokyo 100-8926, Japan
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