(1) The competitive situation

The introduction of competition into the international telecommunications market has produced definite results since the Japan's telecommunications system reforms of 1985, including significant rate reductions and service diversification through competition among three carriers including KDD and two NCCs.
However, rates need to be further reduced, taking into consideration the rate disparities between calls made from many countries to Japan and ones from Japan.

(2) KDD's role

The following roles have been undertaken by KDD as a special corporation specializing in international communications.

1. Provision of universal services
   KDD supplies international telecommunication services to 232 countries and regions of the world, including places that are called only a few times a year. Approximately 110 countries and regions cannot be reached using the NCCs, but only through KDD, and their combined traffic accounts for less than 1% of the total. Thus, as a special corporation, KDD guarantees services in unprofitable areas, and by so doing provides a universal service to the people of Japan, guaranteeing them a means of communication with the rest of the world.

2. Emergency measure
   KDD has put in place measures to prevent disruption of international communications during emergencies. For example, during the Persian Gulf War and the UN PKO (Peace-Keeping Operations), KDD ensured that Japanese living overseas had access to international communications, while in Japan, following the Great Hanshin and Awaji earthquakes last year, it made an INMARSAT portable earth station available free of charge and set up free public phones for international calls using an INTELSAT satellite.

3. Development of international info-communications infrastructure
   KDD plays a key role in responding to demands for fast, large capacity and high quality info-communications in international telecommunications by providing international info-communications in East Asia. For example, KDD plays a lead role in the construction and maintenance of trunk cables in the Pacific, such as the Trans- Pacific Optic Undersea Cable (TPC-5) which will come into full operation this year, and is participating in the construction of optic undersea cables linking the Asia-Pacific, Europe and Asia.
   KDD has helped set up and expand international satellite communications lines, as Japan's representative to INTELSAT and INMARSAT.

As mentioned in 1. (2) above, KDD has played an important role in the international telecommunication market. However, the market environment is ripe for dramatic change.

(1) Worldwide alliances in international communications

In recent years there have been a significant increase in the number of alliances or joint ventures among international telecommunications carriers in different countries, in a bid to respond to the info- communications needs of multi-nationals. Japanese providers should also positively respond to these trends.
As noted above, if Long-Distance NTT enters the international telecommunications market after a review of the status of NTT, cooperation between Japanese carriers and foreign carriers will be more multifarious. In this situation, KDD should play a central role in future international cooperation with carriers of every nation, calling on its accumulated expertise in service supply and technical know-how.

(2) Progress of domestic/international cross entry

As mentioned, promoting mutual entry into different markets is an important element in activating the info-communication market. Between domestic and international markets, in the satellite telecommunications field, domestic carriers have already begun to provide an international service, and an integrated domestic/overseas mobile telecommunications service using LEO satellite is planned. At present, KDD and NTT, have the same special status, dividing up the domestic and international markets between themselves. Since KDD does not have the advantage of bottleneck facilities that are enjoyed by NTT, KDD is likely to help promote competition in all areas of the info- communications field if it is able to enter the domestic communication market.

(3) More competition in international communications

The mutual entry into the domestic and international markets described in (2), above, would promote competition in the international telecommunications market.
In addition, two NCCs based on foreign capital and employing non- INTELSAT satellites entered the Japanese international communications market last year.
If the overall deregulation planned to be introduced in 1997 of the basic voice service in the international VAN goes ahead, then international telecommunication services would not only benefit from competition between Type I telecommunications carriers but also direct competition between Type I telecommunication carriers and international special Type II telecommunications carriers.
This development of competition in the international telecommunications market is expected to make a significant contribution to reducing prices and diversifying services.

(4) Expansion of NCCs service areas

In the past, when NCCs wanted to expand their service areas, they were required in principle to lay direct lines to the other countries. However, as almost 120 areas can now be reached by direct lines, flexible routing by relaying through third-party countries, rather than through direct lines, can reach the remainder.
Consequently, NCCs would most probably expand their service areas by relaying through third-party countries, and the number of areas serviced by more than one carrier would increase. Depending on the situation, KDD's role in guaranteeing universal international telecommunications services would possibly change.

(5) Development of international info-communications infrastructure

KDD has taken the lead in laying and operating undersea cables. However, there have been some recent examples of NCCs being engaged in the landing of undersea cables, such as NPC (Northern Pacific Cable, between Japan and the United States) and FLAG cable (for the tentative laying of cables between Japan and the United Kingdom, via 11 other nations.)
The development of cooperation between international carriers in laying cables and the technical advances which are reducing the costs involved should mean that not only KDD but also other carriers could lay cables in a more competitive environment in the future. Use of non- INTELSAT satellites in international satellite communications is growing. Taking into account the promotion of competition, INTELSAT and INMARSAT, in which KDD participates as Japan's representative, are reexamining their roles and operations.

1. Taking account of the changes in the environment as mentioned in 2., the status of KDD, which has played such roles as guaranteeing universal services as a company with special status in international telecommunications, should also be reviewed. .

2. Given that KDD has no "bottleneck" facilities, before the restructuring of NTT, KDD should quickly receive permission to provide domestic telecommunication services (e.g., long-distance telecommunications, mobile communications) in order to promote cross market entry between domestic and international fields.

3. A study should be conducted to consider the ultimate abolition of the KDD Law, paying due attention to the extent to which Long- Distance NTT enters the international telecommunications market and how far NCCs expand service areas in the future, when service areas guaranteed by carriers other than KDD have become comparable to KDD's.

4. When considering the abolition of the KDD Law, the security of Japan and Japanese nationals must be fully taken into consideration.