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The Changing World Of Telephones

Author:Tim Boyle, Issue: March 1999, Topic: Telephone

The explosion in cellular phone (keitai denwa) usage in Japan, among other factors, is bringing about a revolution in the telecommunications industry. It was only a few years ago that NTT dominated the domestic phone service just as KDD had no competition for overseas calls. Being virtual monopolies, there was little pressure on them to liberalize service and reduce costs. How times have changed!

First, other domestic long-distance phone companies were allowed to compete for the market, and two major competitors to NTT soon emerged. DDI and Nihon Terecomu advertised cheaper rates than NTT, though with the caveat that since NTT still had a monopoly on local phone service, both DDI and Nihon Terecomu had to use NTT lines at both ends of the connection. Thus, a person using their services still had to pay NTT for a local phone call at both ends in addition to the long distance rates to either of the other companies. Thus, everyone still had had an NTT bill, which included their base monthly rate plus one's regular local calls plus the 20 yen per 3 minutes (now 90 seconds) for the long distance connections if you were using one of the other long-distance companies. Since both DDI and Nihon Terecomu's rates were so much lower, however, except for very short calls, it was still somewhat cheaper than straight NTT. A call of only a few seconds, however, would be a minimum of 30 yen, whereas with NTT alone, you might have gotten away with only the 10 yen charge.

Little has changed since this system was first introduced about 10 years ago, except that the local phone charges have gone up while the long distance charges have gone down. What has changed the market in recent years is the rapid increase in cellular phone use. Several companies now vie for market share, with NTT's DOCOMO having the lion's share of about 60 percent of the market. Nevertheless, the competition is fierce and the options often bewildering.

Each company has a variety of payment plans, with options ranging from a high monthly charge with low rates for calls (which is better for those using their phone a lot) to plans with lower monthly charges but higher phone rates. The cheapest plans allow one to place calls only during certain non-peak times. Likewise, some systems can be used nation-wide, while others have much more restricted ranges in which connections can be made. Gone are the days when a lack of choice made the choice easy!

The competition for new customers has likewise meant numerous gimmicks, such as charging only a very nominal fee or sometimes nothing at all for the phone itself if you signed the dotted line. Of course, the phones would be last year's models that hadn't been sold yet, but while they might not have all of the latest gadgets and functions, they still work okay, and so if you want to get a keitai anyway, that's still a good way to go.

Rumors Fly That NTT Will Abolish Expensive Phone Line Rights System In the good old days, when a short-term foreign resident came to Japan and needed a phone, it involved a great expense to get a line installed. NTT's system required that one purchase the rights to a line for a hefty 76,400 yen plus an installation fee. This amounted to a forced investment in the development of the phone system, though unlike stocks, no returns were paid on this investment. In fact, NTT would not (and still will not) buy the rights back when a person no longer needs a phone. One's only option for recouping the funds was to sell the line to someone else, often at a significant loss.

When I first got my own phone line more than 10 years ago, I paid 63,000 yen to somebody who was leaving, plus another 10,000 yen to NTT to change over the ownership and transfer it to the phone I already had been using (on a borrowed rights to phone line, for want of a better term). Recently, phone lines have been going on the gaijin market for as low as 40,000 yen. Why the difference? Supply and demand, along with the time of year, is part of the answer. (March is when many people leave and so prices are lower this time of year.) Another factor, however, appears to be the persistent rumors that NTT is going to scrap the whole system, which would make these lines worthless sometime in the future.

Is there any truth to these rumors? That depends on who you talk to. As would be expected, NTT officially denies any such plans. After all, if they were really planning on doing that at some specific point in time, announcing it ahead of time would cause chaos in the phone market (more than there already is, that is!). It would seem, however, that continued competition and new options will eventually force at least some change in the system, perhaps a gradual phasing out of the fee over time. In fact, that is already happening de facto, as the price of phone line rights on the open market are already far below NTT's official rates. The only people who would buy a line right from NTT directly would be those without adequate information, namely that one can get the exact same thing for almost 50% off from an individual or broker.

Speaking of brokers, I decided to call a few up to see what prices they would buy and sell at. The first place I called said they would sell me a line for 45000 yen, and then when I asked what they bought lines for, the lady said, "That's a really strange question." When I said I was just trying to get information, she indignantly hung up. Hmmmm! A change in tactics was necessary. The next place, I just asked what they would buy it for, and was told that they could only buy a line if it had been disconnected for at least a month, at which time it would be worth 30,000 yen. The regulation concerning the line having had to be disconnected for a month or more was due to the fact that it takes a month for the charges for calls to be cleared. For someone who needs to use his phone until the time he leaves Japan, this would seem to present a major problem.

When supply is high and demand is low, such as this time of year, when many are leaving and few new people are arriving, there is the possibility of someone not finding a buyer before he or she leaves Japan. What can be done in this case? NTT could not give me an answer to this hypothetical question, except to say that a third party could not do the paperwork in place of the owner, even if they had a proxy form, etc. (such as can be done with an automobile, for instance). A call to a broker brought out the information that the only way to sell a line is to do that prior to leaving the country. Once you leave Japan, you cannot sell the line (though you can put it in hibernation if you plan to return to Japan in the future). (The question presupposed that one would be leaving Japan alive. What would happen if one leaves Japan by the alternative, they didn't say!) Thus, if you don't have a buyer, then your only option is to get a friend to put the line in his or her name (in other words, buy it from you), and then sell it to someone else later on.

This, in effect, is exactly what a broker does. Hopefully, your friend wouldn't gouge you by buying low and selling high, as a regular broker would. But what about this business of a broker not being willing to buy a phone line unless it's been disconnected for at least a month? At least NTT did agree that they could, in certain situations, clear a line of its bills immediately if the person goes to the NTT office after the line has been disconnected (which you tell NTT in advance) and requests to pay the bill. The person must indicate that they are going overseas and won't be around to pay the bill when it comes. If you have proof of payment, then, of course, a regular broker would be willing to buy the line, but hopefully, you would be able to either find a buyer before you leave or at least a friend to serve as broker (who won't do as the name implies and leave you broke!)

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