National information infrastructure

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MITI’s (1994) proposal for an “advanced information infrastructure” has similar goals to the MPT report. Noting the limited use of information technologies by public agencies, it emphasizes five priority areas: education, research, medical/social services, government administration and libraries. It outlines specific plans in each of these areas for linking government agencies, private homes and creating on-line databases to support these goals.

As with the MPT report, it notes the need for new standards for the information infrastructure, and also measures to facilitate the use of copyrighted material in new multimedia software. Such software is a major priority of the MITI report, which advocates the creation of various multimedia information centers (for creating content) and various programs and reforms to improve the software development capabilities of Japanese industries.

MITI is focusing on applications for the NII, not on creating the communications infrastructure itself, which is clearly MPT's turf. MITI sought the support of other ministries for its NII plan by including them as partners who would receive funding for their own NII applications. MITI's role was to be catalyst, coordinator and project manager. This was an attempt to carve out its own niche and enlist other parts of the government bureaucracy in support of its plan (Interviews with MITI officials, October 1995).


The quasi-private Nippon Telephone and Telegraph is active in the NII debate in Japan, and its views are taken very seriously for two reasons. First, even if it should lose its national monopoly on local service, NTT will be the central player in the implementation of a Japanese NII. Secondly, NTT has a large telecom R&D budget: for fiscal 1993, this amounted to ¥288 billion as compared to ¥35 billion for MPT (MPT data). NTT’s R&D and procurement have historically played major roles in the competitiveness of Japanese industry, not only in telecommunications, but also in computers and semiconductors (Anchordoguy, 1989, pp. 39-42, 138-140).

Continuing such research is a major part of NTT’s own vision, which would include digital packet-switching, high-speed transmission, low-priced optics, image encoding and voice/character recognition and translation technologies (NTT, 1994).

The NTT plan outlines the various services the firm intends to offer, but at the same time advocates government assistance as essential for the development of the information infrastructure. As with the other reports, it lists software and content as areas where Japan lags the U.S., using comparisons between the two countries such as the number of on-line databases and even dubious comparisons such as the number of universities offering degrees in TV/motion picture production.

The Reality: NII in the Japanese Context

Government vs. private roles

Despite the perceived importance of such networks, the up-front costs are such that few consumer-oriented system will be self-supporting in the foreseeable future. As Egan (1991) explains:

Broadband telecommunication poses a very difficult “chicken and egg” problem for society…First there are the “high-tech” supply-side economists, who claim that we should immediately adopt and deploy new digital fiber optic and radio technologies, based on the assumption that consumers will find new applications for them. Then there are demand-side economists, who claim that until there is a demand driver, we should not spend money on new technology for fear that we may create an expensive solution for which there is no corresponding problem (p. ix).

But under Egan’s bifurcation, few examples of pure demand-side approaches can be found among early adopters of NII technology: the current approach in many technologically advanced nations (including Japan, Singapore and the U.S.) is supply-side. For our purposes, a more useful distinction may be drawn over the center of policy leadership, corresponding to Zysman’s (1983) distinction between government (state) and business leadership of industrial development.

How much of a government role is appropriate (or necessary) in developing a NII? As the “info highway” metaphor suggests, a NII fits the classical definition of a public good—something whose benefit is spread throughout society. This would imply a government-dominant model of encouraging telecommunications development. Dutton, et al., note that such an assumption that “telecommunications are a public utility rather than a private commodity” (1987, p. 22) is common to “wired cities” plans dating back to the 1960s. To emphasize the importance of the public nature of telecommunications, U.S. Vice President Gore (1993) cited the Titanic disaster as an example where the profit-making nature of radio communications caused messages to go unreceived that would have prevented the collision or speeded up rescue operations.

On the other hand, every developed or developing nation has one or more telecommunications companies, with heavy investment in wiring, right-of-way, switching facilities and staff. These companies must either play a key role in a digital communications network or eventually go out of business, obviously an option few telecom executives are considering. Similarly, many countries have cable television companies delivering broadcast (one-to-many) video service that would also be supplanted by interactive (two-way) video carried on an NII.

Such communications service companies see both an opportunity and a threat in plans for a NII. Most are working hard to earn a role in the government’s plans. At the same time, in many companies they are also working to preempt government leadership, by launching pilot projects to demonstrate a NII can be built without state intervention.

One key issue is the risk (for either government or industry) in building a national system before the technology and its uses are well-defined. As a U.S. industry group noted, “it is impossible to predict accurately the future path of the market or technology” (Council on Competitiveness, 1993b, p. iv).

Even government-led systems assume a role for private funding, since few governments have the billions of dollars required to wire geographically remote locations door-to-door. In these cases, government funding may be limited to seed projects, with regulatory powers used to direct private funding through incentives (increased rate of return) or coercion (mandated universal service). Of course, where the telecom or cable companies are completely or partially nationalized, the distinction between government and industry leadership becomes one of national budgeting and intra-governmental power struggles, as can be seen in Japan.

At this point, it seems that the Japanese government has decided to concentrate on the twin roles of regulator and promoter, while allowing the private sector to build the infrastructure and develop commercial products. This division of labor is not so different from that in the U.S., although the form it takes is different. The Japanese ministries play a larger role as both regulator (MPT) and promoter (MPT, MITI and others), while the U.S. system is more diffuse, with important roles played by Congress, the bureaucracy, the courts, and state and local governments.

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