NTT pressured to delay L-mode launch


With L-mode, users can access NTT DoCoMo's i-mode Net data services

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L-mode to access i-mode

Rival carriers protest "unfair" competition

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By Kristie Lu Stout
CNN.com Writer

TOKYO, Japan (CNN) -- Japan's government is pressuring two Nippon Telegraph and Telephone (NTT) carriers to revamp their plan for the L-mode fixed line Net service.

The Telecommunications Ministry will allow NTT East and NTT West to launch the Internet service only if they agree to open their networks to rivals, according to the Nihon Keizai Shimbun business daily.

Analysts say that with L-mode, NTT is hoping to replicate the success of the popular i-mode service as it faces a decline in pay phone use and fixed-line subscriptions.

L-mode to access i-mode

With L-mode, customers can access i-mode Internet data services at home via fixed-line phones equipped with liquid crystal displays.

The service would use phone numbers as e-mail addresses, making Internet content more accessible to a new niche market -- people unfamiliar with personal computers.

"This product is very applicable for Japanese seniors," says Kiyohisa Ota of Merrill Lynch Telecom Research Japan.

"Older Japanese are not accustomed to using a keyboard. The L-mode service will have a simple 10-key access to the Internet."

Rival carriers protest "unfair" competition

NTT East and NTT West applied for permission to provide the new service, but rival carriers such as J-Phone and KDDI are opposing it on the ground of unfair competition in the Internet services sector.

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"This is seen by the government as an abusive market position." - Nick Ingelbrecht, Gartner Group

NTT East and NTT West currently enjoy a dominance of 95 percent of the fixed line market in Japan.

J-Phone and KDDI are concerned that NTT's L-mode service would provide access to i-mode but not to their respective J-Skywalker and Au Internet data services.

"NTT is using and consolidating its market dominance by taking its fixed line subscribers to another family service," says Gartner Group mobile analyst Nick Ingelbrecht.

"This is seen by the government as an abusive market position."

The companies had hoped to offer the service in April, but ministry sources told the Nihon Keizai that government approval is unlikely to be granted until half a year later.

"The delay is due to the fact that they are not opening access soon enough," says Ota.