View from Tokyo: Japan picks up the phone as alarm bells ring

For some time before beginning work as the Independent's Tokyo correspondent, I lived with a Japanese family in Kozoji, a medium-sized town of about 10,000 people outside the city of Nagoya. Not wanting to impose international phone bills on the household, I went looking for a payphone.

But each phone I tried turned out to be limited to domestic calls, which are handled by Nippon Telegraph and Telephone (NTT). For international calls one needs a phone that has been hooked up to Kokusai Denshin Denwa (KDD), the main international carrier, and these are quite rare. In despair I called the telephone operator, who politely informed me that there was no international payphone in the entire town, but that one was available in the neighbouring town - 'which is only 15 minutes by bicycle from where you are'.

To those used to thinking of Japan as the world leader in high- tech gadgets, the Stone Age state of the country's telecommunications networks might come as a surprise. For a country where toilet seats have variable heat settings and video recorders have so many dials they look like the control panels in a 747, one might have thought that making a call to one's private banker in Switzerland would be a breeze.

But even in the relatively cosmopolitan capital, it can be hard to find an international payphone. And while mobile phones have become the required accessories for people living in Hong Kong, Bangkok, Manila or Singapore, they

are still virtually unknown in Tokyo.

The reason: these technologies cut across bureaucratic frontiers, involving licensing and deregulating from more than one department in more than one ministry of the legendary blue-suited mandarins who preside over Japan's economy. The result: paralysis, as each civil servant jealously holds on to his own power to administer the regulations in his own little fiefdom.

Now, however, the Ministry of Posts and Telecommunications appears to have been woken up with a start by the 'multimedia craze'. The huge interest in emerging multimedia technologies in the US, and the expensive cross-investments being made by telecommunication, entertainment and cable companies have suddenly made the ministry afraid that Japan risks falling behind in a key new area of high-tech business.

Dialling multimedia

Last week the Minister of Posts and Telecommunications, Takenori Kanzaki, announced he would begin promoting the market for multimedia. And he said he would lend his weight to the installation of the fibre-optic cable networks needed to link up consumers to producers of the various audio-visual interactive products. Mr Kanzaki said that by the year 2010 the multimedia market could be worth 123,000bn yen ( pounds 723bn) in Japan alone, and that it could employ 2.4 million people.

This was a big turnaround. Up until now, bureaucrats have blocked any development of multimedia technologies through an effective ban on combining telecommunications and broadcasting. The giant telephone company NTT is not allowed to offer any other services apart from simple domestic telephone calls. And until last month cable broadcasters were kept small and fragmented by a regulation banning any company from owning more than one local cable station. This regulation, which has now finally been lifted, prevented any of the cable companies from becoming large enough to invest in their own telecoms networks.

Mr Kanzaki did not give any details on who would pay for installing the fibre-optic network, which it is estimated will cost Y45,000bn. But he did say that the ministry will try to have the cables laid down by 2010, five years sooner than previously envisaged.

Apart from the fear of falling behind in a new emerging technology, the prospect of creating new jobs at a time when many of Japan's traditional industries are seeking ways of laying off workers is welcome to the government. Before Christmas, the Ministry of Labour announced that the latest unemployment figures had edged up again to 2.8 per cent; each month they are rising by about 0.1 per cent, and economists see no end to the trend.

Although minute by Western standards, the idea of unemployment rising above 3 per cent strikes fear into the heart of the Japanese government, since so much of the country's economic success has been built on the virtual guarantee of a job for everyone. But with Japan's wage costs now way above those of any of its competitors, and so many companies carrying surplus employees on their payrolls, something has to give.

Nikkeiren, Japan's federation of employers' associations, is about to issue a report calling for a nationwide wage freeze this year to help preserve jobs.

This will be the first shot in the annual wage-bargaining round, which always takes place in the spring. Nikkeiren's report will emphasise the importance of preserving Japan's system of lifetime employment, whatever the short- term costs to employees' salaries.

Nikkeiren's wage proposals are usually taken as the guidelines for management when they sit down to 'bargain' with trade unions. This year the unions say they will call for wage rises of 5 to 6 per cent, although in the end they invariably cave in to the rate offered by management, which has been calculated with the 'assistance' of the Ministry of Labour.

Highway to hell

Meanwhile the Japanese car industry, once thought unstoppable, is beset by the twin troubles of a domestic recession and a high yen. As the US announced that car sales for last year had increased by 8 per cent to 14.2 million units, Japan's domestic car market shrank by 8.4 per cent to 4.89 million units. Several of Japan's car makers, including Nissan and Mazda, are already wading through red ink, and even the giant Toyota will be lucky to announce a small profit this year.

Exporting cars is now becoming increasingly difficult for Japan - not because of trade barriers but because they are simply too expensive after the yen's appreciation in 1993.

And even though Japan now builds more cars in the US than it imports from home, it is still losing share in the enormous American market.

After years of lax management and sloppy investment decisions, the big three US car makers have begun to make cars as good as, or better than, their Japanese rivals. When Chrysler launched the new Neon, a compact car selling for less than dollars 9,000, the press in Tokyo quickly dubbed it the 'Japan-Car Killer', since no Japanese manufacturer could even remotely match the Neon's price tag.