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UNCLAS SECTION 01 OF 07 TOKYO 001117 
 
SIPDIS 
 
STATE FOR EAP/J - PLEASE PASS TO USTR MCHALE 
COMMERCE FOR ITA DICKSON, LEE, AND NTIA HEINEMAN 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ETRD ECON JA ZO EAGR
SUBJECT: U.S. Telecommunications Policy Delegation 
Meetings in Tokyo, October 16-18 
 
SUMMARY 
------- 
 
¶1.   (SBU) A USG delegation visited Tokyo October 16- 
18 for telecommunications policy consultations at the 
Ministry of Internal Affairs and Communications (MIC) 
and for meetings with U.S. and Japanese Telecom/ICT 
industry representatives.  U.S. Coordinator for 
International Communications and Information Policy 
Ambassador David Gross led the delegation, which 
included FCC Chairman Kevin Martin, USDOC/NTIA 
Assistant Secretary for Communications and Information 
John Kneuer,  FCC Deputy Chief of Staff Emily 
Willeford, FCC Acting International Bureau Chief John 
Giusti, Deputy Assistant USTR Jonathan McHale, Senior 
Advisor to USDOC Under Secretary for International 
Trade Alex Feldman, State/EB/CIP Director for East 
Asia/Pacific Communications and Information Policy 
Richard O'Brien, and USDOC/NTIA Telecom Policy 
Specialist Ashley Heineman. 
 
¶2.   (SBU) The delegation's half-day meeting with MIC 
focused on agenda items for the November ITU 
Plenipotentiary Conference and on other topics of 
mutual interest, including broadband deployment, 
growth of IP based applications, and mobile market 
competition.  Both sides noted significant overlap in 
views on preventing mission creep at the ITU, with its 
associated budget increases and undesired forays into 
Internet governance.  MIC explained its new 
Competition Program 2010, which, if is as 
comprehensive as advertised, could solve a number of 
competition and market entry problems in Japan's 
telecom market.   A luncheon reception hosted by MIC 
followed the consultations, with all of MIC's vice 
ministers in attendance, along with CEOs and senior 
officers from most of the major Japanese telecom 
operators and equipment manufacturers. The delegation 
also met with members of the U.S. Chamber of Commerce 
in Japan for an overview of Japan's commercial and 
economic environment and its implications for ICT 
industries.  Additional meetings with NTT, Softbank, 
KDDI, NTT DoCoMo, and eAccess provided the delegation 
with perspectives on the Japanese market from the 
country's top telecom/ ICT companies.  Embassy Tokyo 
Emin Hans Klemm, Econ Counselor Daniel Fantozzi, 
Econoff Nicholas Hill, and Econoff Marilyn Ereshefsky 
attended various meetings with the delegation.  End 
Summary. 
 
MIC CONSULTATIONS 
----------------- 
 
¶3.   (SBU) PRELIMINARIES ------- The MIC meetings 
began with a courtesy call on Minister Suga.  The 
Minister welcomed the delegation and expressed 
appreciation that key personalities in the USG's 
telecom policy team had traveled to Japan to meet with 
MIC.  In congratulating the Minister on his recent 
appointment to the post in the new Japanese 
government, Amb.Gross noted the close working 
relationship they had already established while Suga 
was a Vice Minister.  Chairman Martin and A/S Kneuer 
both noted the value in exchanging views on various 
approaches to telecom policy and regulation.  Minister 
Suga expressed confidence in the continued U.S.-Japan 
telecom/ICT relationship, both bilaterally, and in 
multilateral fora such as the ITU.  He expressed his 
hope that the United States would support Dr. Yuji 
Inoue, Japan's candidate for Director of the ITU's 
Telecommunications Standardization Bureau.  Following 
the meeting with Minister Suga, the delegation joined 
the MIC team for a half day session of consultations 
on multilateral issues and topics of mutual bilateral 
interest.  Participants on the MIC side included: 
 
Hideo Shimizu, Vice Minister for Policy Coordination 
Hiroya Izumi, Director, Intl Affairs Dept. 
Masaaki Sakamaki, Director, Mobile Satellite 
Communications Div. 
Chono Hikaru, Director General, International Affairs 
Department 
Yasu Taniwaki, Director Tariff (Competition Policy) 
 
TOKYO 00001117  002 OF 007 
 
 
Division, Telecom Bureau 
 
Highlights of the discussions as follows: 
 
¶4.   (SBU) ITU BUDGET ------- Amb. Gross noted that 
the United States is a strong supporter of the ITU but 
believes that the Union has not achieved all the 
possible efficiencies and economies that are possible, 
nor has it sufficiently prioritized its activities to 
maximize effective use of limited resources.  The 
Union's management needs to do everything possible to 
achieve full efficiency and effectiveness in its 
delivery of activities related to its core 
competencies and mandate within existing resources. 
He said the U.S. view is that each Sector, with 
membership input, must reexamine its budget and 
programs to make sure that the activities in which it 
engages offer the maximum value to members and the 
most efficient use of its resources.  For that reason, 
the United States has a policy of zero nominal growth 
and therefore believes that the contributory unit 
should be maintained at the current level of 318,000 
Swiss francs. 
 
¶5.   (SBU) Regarding sector membership, Amb. Gross 
said that the United States also believes that the 
role of the sector members in the ITU is vital to 
helping the ITU retain its preeminent role in the 
telecommunications field.  Raising the level of 
contributory unit for Sector Members would discourage 
participation and the important contributions that 
Sector Members make, particularly in the 
Radiocommunications and Standardization sectors. 
 
¶6. (SBU) Amb. Gross pointed out that the ITU Council 
plays an extremely important role as the mechanism for 
member states to provide active oversight of the ITU's 
management and financial administration between 
Plenipotentiary conferences.  He said the United 
States believes that it is absolutely essential for 
member states to exercise this responsibility in order 
to maintain the integrity and reputation of ITU 
worldwide.  He asked for support in adopting a 
balanced Financial Plan, linked to the Strategic Plan 
that will be adopted, that meets the Union's 
priorities while maintaining the level of contributory 
unit unchanged at 318,000 CHF per unit and the ratio 
of contributory unit for the Sector Members at one- 
fifth. 
 
¶7.  (SBU)  The Japanese side also expressed great 
concerns with ITU budget, but was of the view that it 
was critical that contributions increase to address 
problem, perhaps by increasing both the number of 
sector members and their contributions.  MIC noted 
that the Radiocommunication (ITU-R) and 
Standardization (ITU-T) sectors are pillar issues for 
the ITU and it does not want them to slow down work as 
result of a budget deficit.  MIC said it is working on 
a proposal to prioritize issues.  Japan's official 
stance is to work hard not to increase contributions 
and not burden sector members too much. Considering 
the situation, MIC believes some sort of increase is 
unavoidable because it is extremely important for the 
ITU to continue core functions. Personnel costs are 
increasing, which are necessary to conduct activities. 
As a first step, any contributory increases should be 
voluntary. 
 
Amb. Gross noted that members need to be cautious 
whenever revamping cost structures and that it is 
still not clear why such a large portion of the budget 
goes toward personnel costs.  MIC shared the U.S. view 
on this point, and stressed the need to focus on 
budget priorities with increases only as a last 
resort. 
 
¶8.  (SBU)  ITU ELECTIONS ------ Amb. Gross said the 
United States considers the leadership of the ITU to 
be a critical issue for the Plenipotentiary Conference 
and is highly interested in potential candidates for 
the various leadership positions.  He expressed the 
United States' highest regard for Japan's candidate 
 
TOKYO 00001117  003 OF 007 
 
 
for Director of the ITU's Telecommunications 
Standardization Bureau. He thanked Japan for putting a 
candidate forward, noting that the bureau would be 
well served if Dr. Inoue were elected, given his 
strong management skills.  Amb. Gross promised that 
the United States would consider all candidates 
carefully, particularly with respect to their 
performance in the field as well as the positions and 
views expressed by their governments on a range of key 
policy issues. Regarding U.S. candidacies, Amb. Gross 
pointed out that the U.S. has held a seat on the ITU 
Council for many years and is a candidate for another 
four year term.  In addition, the U.S. has held a seat 
on the Radio Regulations Board (RRB) as a 
representative of the Americas for the last eight 
years, and has a candidate for the seat, Ms Julie 
Zoller, whom we hope Japan will support.  MIC said 
Japan would support the U.S. candidate and hope for 
U.S. support for Inoue. 
 
¶9.   (SBU) FUTURE OF THE ITU ------- Amb. Gross told 
MIC that the United States believes the current 
structure of the ITU is sound and provides sufficient 
flexibility to respond to the needs of the membership. 
At the same time, the ITU must continue to implement 
measures to improve the oversight and accountability 
of its functions. In the U.S. view, the ITU Council 
should play an important role as the mechanism for 
Member States to provide active oversight of the ITU's 
management and financial administration between 
Plenipotentiary Conferences. 
 
¶10.   (SBU) Amb. Gross said the ITU should collaborate 
with other relevant organizations to ensure that the 
growth in IP networking delivers maximum benefits to 
the global community and he referenced several U.S. 
submissions being made to the ITU on Resolution 101 
(IP)-based networks; Resolution 102 on Management of 
Internet domain names and addresses; Resolution 133 on 
the Role of administrations of Member States in the 
management of internationalized (multilingual) domain 
names; and Resolution 130 regarding the Role of the 
ITU in information and communication network security. 
 
¶11.  (SBU)  MIC replied that Japan also believes the 
current structure of the ITU should be maintained, but 
wants to avoid situations where too much power is 
given to one person or country.  MIC is also concerned 
that under the current structure, it takes too long to 
reach decisions (in Council for example), making the 
ITU is ineffective in some ways.  Amb. Gross agreed 
that the Council needs to become re-focused on policy 
issues, and that it needs to be supported by elected 
officials who can work together.  He noted that 
Council would benefit from sub-groups to work on some 
issues such as finances. 
 
¶12.   (SBU) ICANN ------ A/S Kneuer provided an 
overview of the transition of the technical management 
of the Internet to the Internet Corporation for 
Assigned Names and Numbers (ICANN), and explained how 
the MOU has functioned as the vehicle for transition. 
A/S Kneuer also noted the public consultation 
conducted prior to the recently updated MOU known as 
the Joint Project Agreement (JPA) and he credited wide 
support of ICANN's management with its willingness to 
deal with concerns about transparency and 
accountability.  He said his agency's role is to now 
make sure ICANN follows through and that it 
incorporates the views of its constituents -- 
including governments as it moves forward.  He 
welcomed Japan's participation in the ICANN Government 
Advisory Committee, as well as on a bilateral basis 
with the USG.  A/S Kneuer noted that ICANN will report 
on its progress twice annually, which should not be a 
simple reporting exercise but rather a mechanism for 
ensuring real progress. 
 
¶13.   (SBU) MIC replied that Japan likes the JPA and 
believes it will provide greater accountability and 
transparency.  MIC called it a "perfect match" to 
their comments provided in the consultation process. 
MIC offered its support and continued assistance.  MIC 
 
TOKYO 00001117  004 OF 007 
 
 
said it understood that the EU will be preparing an 
Internet governance proposal for ITU Plenipotentiary 
and questioned whether the U.S. has any thoughts on 
this. 
 
¶14.  (SBU) Amb. Gross replied that the USG has held 
discussions with the EU, but that we don't know for 
sure what they will do at Plenipot.  In any case, the 
USG will hold firm that ITU should focus on 
infrastructure and security issues, believing that 
this fulfills WSIS obligations and will enhance 
cooperation. 
 
¶15.   (SBU) BROADBAND ------- Chairman Martin provided 
an overview of steps taken by the USG to facilitate 
continued broadband expansion.  He said a key goal of 
the FCC is to ensure that no regulations exist to 
impede this growth and that the United States had seen 
progress in build-out over the past year. 
 
¶16.   (SBU) Mr. Taniwaki of MIC gave an overview of 
the current broadband market in Japan, noting the 
gradual decline of DSL and increase of fiber, 
suggesting that fiber to the home may become 
mainstream in the near future. A drastic shift to 
broadband and a move from horizontal integration to 
vertical was noted as well as a resulting need for a 
new competition model to deal with such a shift.  MIC 
presented its "New Competition Promotion Program 
2010," MIC's roadmap for new telecom (including 
broadband) policies to be developed and implemented by 
¶2010. Taniwaki said the goal is to strike a balance 
between facilities based and service based competition 
in order to maximize network capacity and services 
available to the public. He said MIC needs to 
encourage new technologies like WiMAX, and to get NTT 
to open up its next generation networks to competing 
services.  He added that the transition to Internet 
protocol based services, including IPTV, is just one 
pillar of the 2010 policy review, but a very important 
one.  The review also will examine Net Neutrality, 
more flexible dominant carrier regulations, and a 
regulator model such as the FCC-- i.e., a single, 
independent regulator for both telecom and broadcast. 
Taniwaki acknowledged that creating such a regulator 
would encounter difficult legislative hurdles. 
 
17 .  (SBU) Chairman Martin noted that MIC's 2010 
program emphasizes the opening up NTT conduits, poles, 
etc., as well as fiber networks.  He asked MIC how it 
intends to approach a policy on requiring NTT to open 
its local fiber for competition.  Taniwaki replied 
that it was too early to say how this would be handled 
but in his views, competitors will access to NTT 
before they eventually build their own networks. 
Currently, there is no requirement for NTT or others 
to open up fiber but as an interim measure, it would 
be needed. He said MIC has asked local governments to 
develop specific plans for opening up government 
networks for use by local carriers. 
 
¶18.   (SBU) UNIVERSAL SERVICE ------ MIC reported that 
Japan's universal service fund will start operation 
this year. Amounts and contributions will depend on a 
carrier's subscription numbers. Only carriers with 
public switched networks will receive funding under 
current structure. MIC will set up a study group to 
look at universal service funding mechanisms and will 
have a recommendations and a decision by the end of 
next year. 
 
¶19.  (SBU)  DIGITAL TV ------ Chairman Martin provided 
a U.S. DTV update. He noted that the U.S. standard is 
not suitable for use with personal mobile handsets. 
A/S Kneuer explained the U.S. voucher program for 
transitioning households to DTV, as well as public 
safety interoperability and advanced wireless 
components of the DTV transition process. Legislation 
makes NTIA responsible for administering a set top box 
assistance program for consumers with non DTV sets. 
He said that by early 2007, NTIA expects to have rules 
in place for issuing assistance coupons, well in 
advance of the required 2008 deadline. 
 
TOKYO 00001117  005 OF 007 
 
 
 
¶20.   (SBU) MIC noted that 98% of households in Japan 
can receive DTV. 
 
MEETING WITH AMCHAM 
------------------- 
 
¶21.  (SBU)  In a meeting with representatives of the 
U.S. Chamber of Commerce in Japan, delegation members 
briefed on their meeting with MIC and on their 
upcoming meetings in Beijing.  AmCham members stressed 
that the USG must continue its economic engagement 
with Japan and express hopes for a reinvigorated 
bilateral economic dialogue leading to an Economic 
Integration Agreement.  Members suggested that given 
U.S. telecom companies' lack of success in Japan, it 
would take major reforms in the telecom sector to 
attract new interest.  Whether Prime Minister Abe 
would move in that direction was unclear at such an 
early stage in his term of office.  Amb. Gross 
underscored the USG's commitment to maintaining a high 
level of engagement with Japan across the entire range 
of our relationship. 
 
MEETINGS WITH JAPANESE ICT COMPANIES 
----------------------------------- 
--------- 
¶22.   (SBU) Thanks to excellent advance work by 
Embassy Tokyo, the USG delegation met with the CEOs 
and senior executives of Japan's top telecom and ICT 
companies.  In discussions with  NTT, Softbank, NTT 
DoCoMo, KDDI, and eAccess the common theme on the 
Japanese side was bringing broadband (fixed and 
mobile) to all of their customers and moving into 
deployment of fourth generation mobile services that 
would converge the fixed and mobile networks.  At 
DoCoMo and KDDI showrooms, the delegation saw 
demonstrations of mobile phone television and other 
cutting edge applications now making their way into 
the Japanese market.  The delegation was particularly 
impressed by Softbank's presentation on technology 
that permits hi-quality video applications (movies, 
games, etc.) to run over standard copper wires to 
customers' residences. 
 
 
¶23.   (SBU) NTT MEETING ------ The USG delegation met 
during the afternoon of Oct. 16 with NTT President and 
CEO Norio Wada and his most senior executive staff. 
Discussions focused on challenges NTT faces in rolling 
out fourth generation mobile services while trying to 
manage fixed-to-mobile convergence in an uncertain 
regulatory environment.  The meeting underscored the 
similarity of questions facing regulators and 
incumbents in both our countries.  The meeting, which 
lasted for well over an hour, was also notable for NTT 
including virtually its entire senior management team. 
 
¶24.  (SBU) During the meeting, NTT officials noted 
that they are seeing declining market share in fiber 
to the home due to competition with utilities.  To 
stay on top of the market, NTT will begin next 
generation network (NGN) trials for its employees in 
December 2006, and will expand to its regular customer 
base in 2007. 
 
¶25.   (SBU) NTT frustration at not being permitted to 
benefit from the efficiencies of sharing DoCoMo 
services with NTT West & East. NTT also noted that 
there needs to be incentives for sharing of network 
facilities, which in the company's view, applies to 
the network neutrality issue of burdening the carrier 
with the cost of the network while the content 
providers ride for free. 
 
Amb. Gross questioned NTT on what they hope to 
accomplish by moving to NGN.  NTT response was that 
they hope to achieve cost reductions, integration, and 
new services.  NTT said they are experiencing a 
"hollowing out" in the public switched network and 
that traffic is shifting to IP.  Chairman Martin 
enquired into NTT's experience with fixed-mobile 
convergence (FMC).  NTT replied that it is frustrated 
 
TOKYO 00001117  006 OF 007 
 
 
here, too, because while they are prevented from 
offering FMC services - even a simplified bill - KDDI 
can. 
 
¶26.  (SBU)  SOFTBANK MEETING ------ At Softbank, the 
delegation was treated to a demo of new on-line home 
entertainment services and a discussion of the 
company's market strategy conducted by Masayoshi Son, 
founder and CEO.  Son stated that Softbank is the 
first telecom company in the world to be totally IP 
based and because of this, has not had to wait to 
employ ITU NGN standards recommendations (Softbank 
uses Cisco routers and other existing IT solutions). 
One hundred percent of Softbank's broadband 
subscribers are using VoIP, which has no charge for 
domestic calls, $.02 per minute for international 
calls, uses regular handsets, and according to Son, 
consistently has the same quality as calls on the 
public switched network.  Son spent a significant 
amount of time explaining its technology that permits 
hi-quality video applications to run over standard 
copper wires to customers' residences, and very little 
time discussing mobile services.  Son claims that 
running copper on the last loop only, at distances up 
to 1km, he can deliver 30MB service to a customer, but 
that the majority of his applications need as little 
as 4MB, with 8MB providing satisfactory capacity to 
nearly any private consumer.  He stated repeatedly 
that he could accomplish comparable performance levels 
in the United States, even with unconditioned wire and 
with the longer drop loops in the United States 
compared with Japan. 
 
¶27.  (SBU) Son expressed concern over the danger of 
re-monopolization by NTT as it moves from copper to 
fiber.  For its fixed network operations, Softbank is 
completely dependent on the copper in the last mile, 
and under current rules, NTT can remove copper from 
customer premises with four year notice to customer, 
whether or not the customer agrees.  Son suggested 
that the competition issues created by this situation 
should be of interest to the USG.  The U.S. delegation 
made no reply to that point. 
 
¶28.   (SBU) NTT DoCoMo MEETING ------ CEO Masao 
Nakamura chaired the meeting, which included senior 
officers of the company.  DoCoMo envisions that it 
will phase out 2G services in the near future and will 
stop the sale of 2G handsets to spur this transition. 
DoCoMo predicts customers will not mind, since they 
already replace handsets every 28 months at a price of 
approximately 60,000 Yen (about $500).  The company 
says customers will also reap the benefits of more 
efficient network management on 3G.  For example, 3G 
service is less expensive for data than 2G.  DoCoMo 
has begun the transition already and its flat rate 
Imode package is available on a 3G network but not 2G. 
The company hopes to get more spectrum from MIC under 
a special allocation program as an incentive for 
growing its 3G business.  Its current 3G (800 Mhz) 
space is close to capacity.  Asked about recent 
announcements that it would be launching Blackberry in 
Japan, DoCoMo said that it would initially be pitched 
purely for "business" use.   DoCoMo officials noted 
that they were preparing to deal with the launch of 
local number portability, scheduled to start October 
¶24.  Under the new rules, customers can port phone 
numbers for a nominal fee, but not their email 
addresses served by the mobile provider.  Given the 
popularity of email addresses tied to mobile 
providers, many expect a great reluctance by customers 
to switch mobile phone companies. 
 
¶29. (SBU)   KDDI MEETING ------ Hosted by Vice 
Chairman Sadanori Amano and President/CEO Tadashi 
Onodera, the discussion focused on KDDI's bid to 
become the "ubiquitous solution company."  KDDI is the 
sole provider of both mobile and fixed line services 
in Japan, if NTT and its DoCoMo subsidiary are 
considered as separate companies.  KDDI's strategy is 
to offer triple play services on both of its 
platforms, and to continue to look for alternate fixed 
line deliver opportunities, such as via fiber owned by 
 
TOKYO 00001117  007 OF 007 
 
 
the TEPCO power company and partnerships with cable 
television companies.  KDDI has already launched 3G 
mobile services and is developing a next generation 
fixed and mobile integrated network.  KDDI officials 
said this "Ultra 3G" will integrate both mobile and 
fixed access into the next generation infrastructure 
to offer a wide range of services in a seamless 
environment for the customer. 
 
¶30.  (SBU) EACCESS MEETING ------- According to 
eAccess founder, Chairman, and CEO Sachio Semmoto, the 
key to the company's survival against the incumbent 
NTT has been its ability to acquire the means to 
compete across several platforms and to implement 
innovative and cost effective solutions to technical 
challenges.  Even so, the company is frequently on the 
defensive. Roaming agreements, which will be very 
important to attract new customers, are still not 
achieved.  eAccess sees NTT as the only viable roaming 
partner as KDDI is on a CDMA system and eAccess uses 
GSM.  The company does not think the other GSM 
operator, Softbank, has sufficient coverage.  So far, 
negotiations with NTT have not met with much success. 
 
¶31.   (SBU) As an example of the "nimble and out-of- 
the-box" thinking that has allowed eAccess to gain a 
foothold in Japan, Semmoto showed the USG group an 
Internet protocol residential distribution hub 
specially built for the company by the Chinese firm 
Huawei.  Weighing less than 100 lbs. it replaces a 
rooftop unit weighing nearly two tons.  Asked whether 
the company had tried sourcing from the USA, eAccess 
said it contacted U.S. vendors, but only Huawei was 
able to meet the specifications at the right price 
point. 
 
¶32.  (SBU) This cable has been cleared by the 
Washington agencies concerned.  The single, 
comprehensive cable is at Washington's request. 
 
SCHIEFFER