ECONOMIC SPOTLIGHT - TELECOM IS KEY JAPAN MINISTRY
Japan's little-known Ministry of Posts and
Telecommunications (MPT) has emerged as an international force
to be reckoned with, political analysts said.
    MPT, thrust into the spotlight by trade rows with the U.S.
And Britain, is in a position of strength due to its control of
a lucrative industry and its ties with important politicians,
they said.
    "The ministry is standing athwart the regulatory control of
a key industrial sector, telecommunications and information,"
said one diplomatic source.
    "They are a potent political force," the diplomatic source
said.
    But MPT is finding domestic political prowess does not
always help when it comes to trade friction diplomacy, analysts
said.
    "The ministry was a minor ministry and its people were not
so internationalized," said Waseda University professor Mitsuru
Uchida. "Suddenly they're standing at the centre of the world
community and in that sense, they're at a loss (as to) how to
face the situation."
    Most recently the ministry has been embroiled in a row with
London over efforts by Britain's Cable and Wireless Plc to keep
a major stake in one of two consortia trying to compete in
Japan's lucrative overseas telephone business.
    The ministry has favoured the merger of the two rival
groups, arguing the market cannot support more than one
competitor to Kokusai Denshin Denwa Co Ltd, which now
monopolizes the business.
    It has also opposed a major management role in the planned
merger for any non-Japanese overseas telecommunications firm on
the grounds that no such international precedent exists.
    The ministry's stance has outraged both London, which has
threatened to retaliate, and Washington, which says the merger
plan is evidence of Japan's failure to honour pledges to open
its telecommunications market.
    Washington is also angry over other ministry moves which it
says have limited access for U.S. Firms to Japan's car
telephone and satellite communications market.
    Much of MPT's new prominence stems from the growth of the
sector it regulates.
    "What has been happening is an important shift in the
economy which makes the ministry a very important place," said
James Abegglen, head of the consulting firm Asia Advisory
Service Inc.
    A decision to open the telecommunications industry to
competition under a new set of laws passed in 1985 has boosted
rather than lessened MPT's authority, analysts said.
    "With the legal framework eased, they became the de facto
legal framework," said Bache Securities (Japan) analyst Darrell
Whitten.
    Close links with the powerful political faction of the
ruling Liberal Democratic Party (LDP) nurtured by former Prime
Minister Kakuei Tanaka are another key to MPT's influence, the
analysts said.
    "Other factions ignored MPT (in the 1970s), but the Tanaka
faction was forward looking and ... Recognized the importance
of MPT," Uchida said. Many former bureaucrats became members of
the influential political group, he added.
    The ministry also has power in the financial sector due to
the more than 100,000 billion yen worth of deposits in the
Postal Savings System, analysts said.
    MPT has helped block Finance Ministry plans to deregulate
interest rates on small deposits, a key element in financial
liberalisation, since the change would remove the Postal
Savings System's ability to offer slightly higher rates than
banks, they said.
    Diplomatic sources, frustrated with what they see as MPT's
obstructionist and protectionist posture, have characterized
the ministry as feudal.
    Critics charge MPT with protecting its own turf, limiting
competition and sheltering the former monopolies under its
wing. Providing consumers with the best service at the lowest
price takes a back seat to such considerations, they said.
    But many of the ministry's actions are not unlike those of
its bureaucratic counterparts in much of the Western world
including Britain, several analysts said.
    "The United States is really the odd man out," Abegglen said.
"For a government to take the view that it wants to keep order
in utilities markets is not an unusual and/or unreasonable
view," he said.
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