NTT East and NTT West recently announced that they have formally applied for government approval to lower interconnection rates that they charge other carriers for access to NTT's networks.

 

If approved, NTT East will reduce the interconnection rate it charges other carriers by 7.6%, while NTT West will lower their rate by 12.4%. The lower connection fees will apply to all leased lines, public phone lines, and DSL (Digital Subscriber Line) networks across the nation. It will take effect immediately, retroactively covering all fees levied since the beginning of fiscal 2004. Access rates for fiber optic lines will not be lowered.

 

NTT expects the rate revisions to eat into their revenue, estimating a loss of 9 billion yen (US$86.3 million; US$ 1 = 104.32 JPY) for NTT East and 14 billion yen (US$134.3 million) for NTT West for fiscal 2004. NTT attributed the decision to successful efforts at reducing costs, but consistent complaints from rivals Softbank and KDDI likely influenced the telecom giant.

 

Three years ago Softbank burst onto the scene with Yahoo BB ADSL (Asymmetrical Digital Subscriber Line) service, forcing open the Japanese market. Softbank has been widely credited as the driving force behind the fierce competition that has lowered ADSL broadband access prices in Japan to among the cheapest in the world and increased the penetration rate to one of the highest in the world.

 

In early October 2004, Softbank announced that it would roll out high-end, fiber-optic broadband service known as FTTH (Fiber-to-the-Home) in order to further compete with NTT. Softbank has been unable to lower prices for FTTH as dramatically as it did with ADSL because of NTT's high access charges. NTT's terms of privatization obligated the company to allow access to their lines, but NTT's Chief Executive Norio Wada recently declared that NTT would seek to overturn the obligation to open up its fiber-optic infrastructure. Softbank CEO Masayoshi Son responded this week by publicly accusing NTT of trying to stifle competition.