NTT pressed to cut charges

High costs may slow internet adoption, claims the US

Japanese telecoms giant NTT is facing fresh pressure to cut the fees it charges its rivals to use its networks.

The US and Japan began talks on Monday, ahead of the Group of Eight summit next week.

The US has threatened to file a complaint with the World Trade Organisation by the end of July unless the issue is resolved.

The US argues that unless NTT cuts these charges the world's second largest telecoms market will remain uncompetitive.

NTT's grip

NTT is a former state monopoly, which controls 90% of local connections to homes and businesses.

It charges its rivals a fee to allow them to complete calls through its nationwide network of local phone lines.

It is expected to offer to cut its inter-connection rates by 22.5% over three years, a one-year reduction from its original offer.

The US is not expected to be happy with this offer. Its fear is that the telecoms industry could change dramatically over the next three years.

The US originally demanded a 41% cut in interconnection fees. NTT fears that drastic cuts in rates could harm its profits and hit jobs.

Pressure is growing from the US business community for NTT to cut its rates.

"I believe those changes need to be addressed by a joint statement from the Japan-US business council and hopefully by the two governments in an immediate and appropriate fashion," said Michael Armstrong, chairman and chief executive of AT&T.

"What are the limitations that could be removed to allow the internet economy to grow at a rapid rate? Certainly at the top of that list is the access cost to the internet for the average consumer," said Thomas Engibous, chairman of Texas Instruments.