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US, Japan strike deal on ending telecom rate row
TOKYO, July 19: Japan and the United States agreed today to throw open the world's second biggest telecoms market to greater competition, ending one of the thorniest disputes between the world's two biggest economies, says Reuters.
The agreement came after nine days of talks in Tokyo centred around former state monopoly NTT's (Nippon Telegraph and Telephone Corp) “last mile" interconnection rates, which Washington had argued were too high, choking competition and preventing Internet-led growth In the recession-weary economy.
Paving the way for a smooth meeting between leaders of two trading partners in Japan this week. Tokyo will deregulate Its telecoms market
"The substantial cuts in interconnection rates ensure greater competition in Japan," US Trade Representative Charlene Barshefsky told Reuters. "It also means greater access (for competing carriers) and leads to the creation of highspeed networks.”
That will start with cuts In fees that other carriers pay NTT to offer their own telephony services by 20 per cent al the local level over the next two years.
But who did best?
But experts were already questioning how substantial concessions on both sides were and whether they were really beneficial for both sides.
"1 don't think anyone particularly, got a good deal, to be honest," Kate Lye, telecoms
analyst at Warburg Dillon Read told Reuters.
"The rate cuts that were agreed on were certainly far less than the US was targeting I think the key point, though, is that It's the 20 per cent cuts at the local level that's the most Important, because It makes up 80 per cent of the traffic.”
Barshefsky emphasised that the deal Included a 50 per cent cut in rates at the regional level for long-distance access, saying these were crucial for foreign businesses that wanted a piece of Japan's SI30 billion telecoms market.
Barshefsky also promised there would be "further substantial cuts” in 2002.
Japan's top government spokesman Hidenao Nakagwa said Japan would seek further large cuts after two years, confirming that Japan had conceded to a major sticking point in the talks.
That deal will save telecommunications carriers In the United States, around the world as well as in Japan more than $2 billion, Barshefsky said. The measures will kick in retroactively on April 1.2000.
"This important agreement on Interconnection rates will help further reduce regulatory barriers to trade between that United States and Japan." President Bill Clinton said in a statement.
It will level the playing field for America's cutting edge technologies and increase the number of Japanese consumers connected to the Internet."
Japan had been anxious to clinch a deal before Clinton meets Prime Minister Yoshiro Morl on Thursday, just before they had off to the southern island of Okinawa for the Group of Eight (G8) summit of leaders of the United States, Japan. Britain, Canada. Germany. France. Italy and Russia on July 21-23.