調査・研究

［概要］

I. Introduction
　
　It is widely accepted wisdom that, in telecommunications sector, competition is better than monopoly and private initiative excels state ownership in performance. Upon the basis of this philosophy, a number of advanced countries initiated policy programs for privatization and liberalization. Move toward promoting competition became more visible since the early 1980s when the US, the UK., and Japan engineered institutional reform in telecommunications area at almost similar period.
　It is undeniable that telecom reform in each countries influenced each other. However influence is not the kind of "learning" on the part of the late industrializers to catch up with the early starters, as it has been the case of industrial revolution, so much as that of "cross referencing" to cope with rapidly unfolding information revolution. Considering the "simultaneous" development of institutional reform as well as "competitive" reinforcement of policy initiatives,１ it may be the case that policy makers and concerned authorities studied the cases of other counties for the purpose of using them as a reference for justifying the policy prescriptions they had already in mind rather than to passively adopt the experience of foreign countries as a model.２
　By locating the recent controversies over the NTT breakup in comparative perspective, I would like to achieve two main purposes in this paper. First, I intend to take a renewed look at the popular conception on telecom reform. It is often believed that privatization is closely linked to deregulation and promoting competition necessitates deregulation. In most cases deregulation goes hand in hand with reregulation. Also though the belief in the primacy of market over the government intervention underlies the privatization move, locating government and the market as a conflicting and mutually substituting entity is not pertinent. Government and the market are "mutually engaged" through the combination of competition and regulation.
　Second purpose of this paper is to search for a Japanese style of policymaking which is neither unique nor universal. Countries have shared policy goals for promoting competition and privatization, but they may have different policy tools available to them. Policy ideas and rhetoric can be "learned" but the policy-making process can never be "copied." With regard to the Japanese way of policymaking, there is a strong perception that single actor, either politician or bureaucracy, can and do predominate the policymaking process. It is my argument that this is either a myth or at least an exaggeration.
　At below, I will first compare the experience in the US and the UK with the Japanese case of telecom reform, and then examine the controversy over the NTT break-up for the purpose of identifying Japanese way of telecom reform. The final section will discuss the challenges for the Japanese-style policymaking in the coming years.

II. Cross-National Understanding of Telecom Reform
　　: Reviewing Three Popular Stereotypes　

　In this section, I would like to review misconstrued conception on the telecom reform by cross-comparing telecom reform in the US, the UK, and Japan. It seems to me that there exist three popular stereotypical thinking. First, privatization and liberalization are often equated with ‘deregulation.' Second, telecom reform is understood as ‘enforcement' from the public officials on the regulated business. Third, government and the market are perceived as ‘mutually substituting' entities. I will critically review these points one by one.
　The crux of telecom reform in advanced countries has been liberalization, or de-monopoly, and privatization, or de-state ownership. However, these processes are not necessarily linked to "deregulation." In most cases of deregulation, government combined liberalization with "reregulation."３ It should be emphasized that American case of AT&T breakup was not the case for privatization. AT&T had been regulated "private" company, not public corporation. History of American telecom sector has been that of legal dispute between dominant private actor, AT&T, and active challengers armed with innovative technology. Competition "preceded" institutional reform. It is not coincidental that legal dispute between AT&T and MCI, armed with microwave technology, opened a way for deregulating the telecom sector in the US. Even though deregulation in entering the market to prevent rent-seeking activities of the monopoly firm had proceeded, new measures of "company-specific" reregulation were introduced in order to make "leveling field" among competitors. So called "asymmetric" regulation was applied to the AT&T.４ Breaking-up the AT&T was a way to promote competition. In contrast, British and Japanese experience belongs to the category where "statutory monopoly" was challenged by political initiative.５ Monopoly had been maintained by legal protection, not by competitive edge against challengers. British case for telecom reform is near to the Japanese case in that state corporation was privatized. However, two critical differences should be mentioned. First, in addition to taking legal actions to deregulate entry to the market, British government did not hesitate to establish a competing enterprise against the BT, which had been privatized. Second, an independent regulatory organ, OFTEL, was set up to effectively remove discussion from the parliamentary arena. It was designed to minimize political interference while promoting competition among private actors. As the British government took the duopoly policy in telecommunications, "company-specific" reregulation was inevitable as well. In Britain, entry is granted at a cut-price level in which case "re-regulation" involves a transfer of wealth from the dominant entry to the competitors, which is actually the form of hidden cross-subsidy. Japan also relied on the combined measures of deregulation and reregulation. In order to promote competition, "legal monopoly" of the NTT has been abolished for the purpose of opening the sector for the new entrants. At the same time, reregulation was focused mainly on the NTT to facilitate challenge to the NTT. In sum every country introduced policy prescription for deregulation in such areas as equipment market, entry barriers, and toll charge. But, given the overwhelming sunk investment of the dominant entity, the new entrants may not be able to compete on costs. In this case stricter regulation may be needed in order to allow competitors to enter and to make a profit.６ Reregulation had been applied, but it should be emphasized that reregulation was not for its own sake but for the sake of promoting competition. Much of the present competitive activity in telecommunications is due to economic opportunities created by asymmetric regulation.７

　Another popular perception on the privatization is that the policy agenda had been forcefully carried out by the leadership of pubic officials. Either political control or bureaucratic dominance is considered as a goal. However, it is my sense that privatization process was not smoothly implemented without the "consent" of the private sector. Private sectors took the approach of "winning by losing."８ It is well known that AT&T breakup was carried out by the modified final decision of the court. However, it was the consent of the AT&T to accept the decision without further petitioning. In actuality, AT&T had triumphed, shedding itself of the old business of local exchange services while being freed to enter the dynamic world of computers.９ Also it is fair to say that AT&T break-up was prepared by the intense competition among "private" actors which were motivated to enter profitable market. When new competitors failed to get what they want from the FCC, they changed their strategies and looked for relief in the antitrust courts. In 1974 these competitors persuaded the Justice Department to file a mammoth suit against AT&T, which AT&T ultimately lost.10 As for the British case, it is undeniable that the leadership of Thatcher made big difference. British privatization was definitely driven by politically motivated Conservative restoration against the Labor government policy that produced huge fiscal deficit. But this does not mean that the birth of BT and ensuing competition are decided exclusively by the party politicians. BT obtained legal permission to participate in international business. Japanese experience also attests the argument that the consent of the private sector is crucial. It is true that the agenda of administrative reform was set by the LDP with a view to revitalizing the conservative dominance. But NTT had reasons to consent the privatizatio plan. As will be shown at the next section, NTT and Zendentsu supported the idea of privatization in the early 1980s. Also recently NTT had desire to get into the international business. There was much to be gained from the new adventure. Hence, in all countries the regulated took the strategy of winning by losing. There have reasons to consent to the idea of privatization. When there was nothing to gain from institutional reform, private sector opposed it by mobilizing all possible means as the controversy over the NTT breakup will show us.

　Finally the relationship between the government and the market should be reexamined carefully. It sounds as if privatization is a measure for substituting government intervention with private market initiative. Economic hardship of the 1970s, especially stagflation, threw doubt on the Keynesian doctrines. Rival ideas associated with monetarism have made considerable headway in the economic world, and many governments have found new reasons to celebrate the private market economy.11 Reagon administration took the lead in applying supply-side economics and monetarist policies, which were called Reagonomics. This trend provided rationale for privatizing economy in advanced countries in the 1980s. Thatcher's conservative rebuttal against the labor party politcs was based on the renewed interpretation of Keynsian economics in times of economic difficulty. Oil shock and ensuing economic hard times made Keynsian solution of economic problems hardly attainable. Thatcher's drive was to redirect the national governance from Keynsian welfare state to neoliberal private initiative. On the other hand, Japan successfully overcomed economic hardship compared with other advanced countries. Though government deeply intervened in economic affairs, economic affairs were managed by "reciprocal consent" between government and the private sector. Administrative reform was initiated to break the political balance between conservative and progressive camp to conservative's favor in a high growth economy. In this sense, neoliberal reform in Japan takes a "preventive," not post hoc, vein. Privatization was a political wisdom to avoid conservative crisis. Also the agenda of administrative reform stemmed from the confidence that Japan economy achieved the goal of catching up with early industrializers. Privatization was designed to rationalize the rigidified public sector in a economy. "Learn from the Japanese private sector" may be the prime motive of the admistrative reform. In no countries do we find the excessive government intervention nor the excesses of unbrindled capitalism. Theoretical economic literature seems to favor competition among a few large firms over either the regulated monopoly or the classical competitive market as the best market structure to encourage "innovation" in a high-tech industry.12 How to encourage "innovation" for taking competitive edge was the primary concern of the governments. This does not mean that government completely retreated from regulatory practice. Instead government designed new strategies to engage in the market. Depending on the national circumstances, countries have relied on different ways to restructure relationship between government and the market.
　Much of the stereotypical understanding of telecom reform stemmed from "perspective-oriented" theorizing with comparative focus.13 First theory-oriented work starts from assumptions constructed all too often on "ethnocentric" or parochical experience. Unconsciously it may be "predesigned" to blame the case that does not match the assumptions. Second, accordingly, theoretical concern is driven to highlight comparative "distinction" across the countries, especially "differences" in policy performance or political outcomes. Third, distinction of the cases is explained by differences in "static" elements such as political instituions or bureaucratic organization.

　In contrast to the perspective oriented studies, Iio Jun suggested more story-telling style study to examine the process of privatization.14 "Process-oriented" explanation provides us with rich description of reality, but it leaves something to be desired in telling us what to do next especially when comparative insight is ignored. Through the indepth analysis of labor engagement in neoliberal reform, Otake Hideo asserts that Japanese policymaking process is shifting from corporatism without labor to corporatism with labor.15 However, it is doubtful whether the Japanese system can be categorized as corporatist. 　

III. Controversy over the NTT Break-up　

　Recent controversy over the NTT break up well illustrates the political dynamics of telecom policy making in Japan. Controversy over the management form of the NTT dates back to the year 1982. When Rincho sent a report to the prime minsiter on July 30, 1982, it said that NTT had better be reorganized into a headquarter and plural local companies within 5 years. As Rincho was an extra-cabinet advisory council for a prime minister, policy agenda had been set up at a minimally controllable cite on the part of the opposition party. Agenda was set up by Rincho and the bill was made by MPT officials under the directives of the LDP. Policy affairs council, or bukai, within the LDP had been the center of policy outlining where voice of opposition party can never be inserted. As far as the agenda-setting is concerned, political manipulation by the opposition parties was prevented from the outset.
　It is meaningful to note that NTT and Zendentsu had little reason to oppose the privatization itself. Even though NTT and Zendentsu were opposing the idea of the NTT break-up, they are in basic agreement with the government policy over privatizing the NTT. Managers of the NTT, especially Shindo played a crucial role in persuading NTT employees to bring in the spirit of private entrepreneurship. Speak the Japanese language, not Denden language, was his catch phrase. It is well known that Zendentsu put pressure on the Socialist party members to positively consider the NTT privatization while asking them to say no to the NTT break-up. Zendentsu also made direct negotiation with the key LDP members like Tanaka Rokusuke, Kanemaru shin and other telecom zoku to gain maximum benefits from the deal.16 First of all, as a successful company with cumulative profits, NTT and its employees had been disgruntled about the"uniform" wage increase with other public corporations like JNR, which produced huge deficit.17 Zendentsu wanted to obtain due compensation from their company by freeing their wage control from the Diet. Second, it is clear that NTT expected a realm of freedom in their business plan by untying themsleves from the Diet screening. Furthermore, NTT wanted to escape from the public criticism that the company as a public corporation had been managed with inefficiency and lack of entreprneurship. One way to get out of public criticism was to shift ownership from the public corporation to private business.

　When the Denden Kosha was privatized in 1985, a suppementary clause was inserted in the NTT Law, which defined that the management form of the NTT should be reviewed within 5 years. LDP leaders, especially Hashimoto, took the lead in defining the terms.
　With the liberalization of the telecom, the relationship between the MPT and the NTT had been drastically changed. The creation of the Bureau for Telecommunications Policy within the MPT in 1983 symbolizes the move. In the past, NTT was indirectly regulated by the MPT and the Diet was a cite for debate. But MPT acquired a legal status to be in charge of telecommunications policy after the telecom reform. Even though NTT was a giant, it turned into "a" company in the telecom sector from "the" company identified with the telecom sector itself.18 MPT became key ministry in charge of growing industrial sector. MPT has drafted all the bills related to the tecommunications policy with close consultation with the ruling party.
　In 1990 when the target year arrived, MPT initiated a drive to push the NTT break-up as was written in supplementary clause no. 2 of the NTT Law. No political actors could avoid the situation that the future management form of the NTT should be discussed. MPT received recommendation from the Deliberative Council for Telecommunications Policy (Dentsushin) in October 1989 in which the option of regional separation like electricity companies was included. MPT prepared a final report on March 2, 1990, where the management efficiency and the integrated long distance and local services by the NTT were questioned. MPT suggested the divide between the long-distance and local call company as well as the separation of mobile communications from the NTT. NTT and Zendentsu made it clear that NTT breakup would benefit nobody. Zendentsu's political partner SDPJ also had no intention to say yes to the NTT break up. On the other hand, NTT announced its own rationalization plan in November 1989 to avoid the breakup of the company. According to the plan, over the five year term from 1989 to 1994, first, NTT would cut its employees from 270,000 to 230,000. Second, change for the long distance call will be 200 yen for 3 minutes in 1994 from 330 yen in 1989. Third, to facilitate the connection with new common carriers, Special Bureau for Fair Transaction will be set up. With these self-initiated rationalization plan, NTT tried its best to avoid the worst case scenario for the company.19

　A wind of postponing the NTT break up came from unexpected direction. MOF has taken control of selling the NTT stocks to the public after the privatization of the NTT. All the NTT stocks had been managed by the MOF with a principle that two thirds of them should be sold out to the public with a time span. It is striking to note that neither dealine for selling out the stocks not the method of selling them was defined by law. For this reason, MOF should take responsibility for selling stocks according to the market principles. prices. MOF officials were expected from the public and political circle that the NTT stocks should be managed properly in terms of its price, timing, and amount. As the incoming money was supposed to be used for redeeming a national loan, MOF had no manuvering space for allocating the money on their own initiative. Instead MOF officials undertook many responsibilities to sell the NTT stocks in a proper manner. Even the MPT, main ministry in charge of telecom affairs, had no say over the NTT stock issues. While MPT was in charge of drafting a policy bill for the future of the NTT, it had no authority to intervene the financial dealings concerning the NTT stocks. In fact the MPT had no reason to meddle into the affairs. One third of the stocks, which are not to be sold, belong to another category called Special Account for Industrial Structure, profits of which are managed and used by the MPT. It was set up for the need to preserve a minimum influence over the telecom sector by the government. Government viewed the partial NTT stock ownership as a policy tool for guaranteeing universal coverage and just distribution of network even after the privatization. However, except those portions, MPT was an outsider in stock dealings.
　MOF began selling the NTT stock from 1986. The price for the NTT stock was 1,197,000 yen when MOF first sold them, and the price went up higher and higher, reaching 3,150,000 yen in April 1987. However, NTT stock price went down in 1988, which recorded 1,900,000 yen. MOF was heavily criticized for untimely and arbitrary selling out the NTT stocks. Even though it may not be a concerted move by the MOF and other opposing actors, MOF definately turned into a defensive corner. It was coincidental that NTT stock price had dropped down when the issue of NTT breakup was on the political agenda. When MOF announced it would sell the NTT stock in 1990, the price of it did not match government estimated price of 1,197,000. From that time on, MOF stopped selling the NTT stocks even though the Diet approved the transaction up to 500,000 stocks every year. As the NTT breakup was set as an agenda, investers in stock market might have two worries: how to do with NTT stocks in case the price drops with the NTT breakup; and what would be the terms of change between NTT stock of the moment and stocks of the divided NTT. With increasing apprehensions among the investers, NTT stock price began falling down with the policy debate on the course of NTT's future. This move by market forces could never be controlled by the government, for the number of NTT stock holders recorded more than 1.6 million.20 Government is neither omnipotnet not omniscient to the extent that stock price can be defined and managed as MOF wanted. NTT stock price drop made MOF quite skeptical about the idea of the sudden NTT breakup. NTT and Zendentsu took advantage of this mood to stop debating the NTT breakup.21

　It goes without saying that NTT and its labor union, Zentdentsu, opposed the idea. On the part of the NTT and Zendentsu the divide up of the NTT was the least desired scenario. In particular, Zendentsu would have been fractionized if the NTT is divided. Zendentsu took an active intiative to turn the course. Under the leadership of the then president of the Zendentsu, Yamagishi, Zendentsu twisted the arms of SDPJ politicians to oppose the breakup of the NTT while pushing through the idea of privatization. The fact that Zendentsu was the one of the strongest backbone of the SDPJ made this happen. As is well known, SDPJ stood on the support of the labor unions. Among others, Jichiro, Nikkyoso, and Zendentsu and Zente had been the main partners for the SDPJ.
　Under the 1955 system, political power of Zendentsu can never be underestimated by any party. It goes without saying that SDPJ had been heavily reliant on Zendentsu for voter mobilization, financial backup and information gathering. In this sense, it is almost natural that most SDPJ members were reluctant in accepting the option for NTT break up while the LDP wanted to break it up in order to weaken the power base of the main opposition party. But what the SDPJ could do to prevent the break up of the NTT was limited. As the work connotates, opposition parties can oppose but never be able to push through origical policy scheme. What the opposition party had at hands was confined to two: making compromse with the LDP party leaders through informal channel established in the form of kokudai.; and opposing the government submitted bills at several stages of deliberation like in the committee, plenary session of the House of Representatives, and the House of Councilars. SDPJ actually used all the tactics that could be thought of. Zendentsu was all behind the scene to change the course of the NTT divide up.
　Two situational elements contributed to the increasing influence of the opposition camp. First is the defeat of the LDP in the Upper House election in 1989. Heavily torn by the consumption tax, scandals, and rice market opening, LDP failed to get majority in the election. As all the bills should pass through the Upper House, this meant that bills opposed by the SDPJ would be rejected. It goes without saying that SDPJ opposed the NTT break-up. Second, labor unions become united under the single umbrella organization of Rengo in 1989. Also this group sent their own representatives in the Upper House. The fact that chairman of the Rengo was Yamagishi from Zendentsu could never be ignored. Hence it may be the case that opposition camp increased its negotiating power in around 1990. In March 1990, LDP decised to postpone the final decision for the NTT breakup until 1995. But neither the Zendentsu not the SDPJ could get rid of the clause of the bill that the NTT break up should be discussed after 5 years.
　Five years lapsed before debate over the management form of the NTT reemerged. Two major changes took place between 1990 and 1995. LDP predominance was broken leading to the emergence of coalition regime among the LDP, SDPJ, and Sakigake even though LDP remained out of power for nine months between July 1993 and April 1994. Also the single-seat constitutency and the proportional representation system was introduced in 1994 and general election was expected to be called in a near future.

　Controversies emerged again focusing on whether the NTT should be divided or not. On April 6, 1995, MPT asked Deliberative Council for Telecom Policy (Dentsushin) to recommend a poliy plan for the management form of the NTT. Three set of issues became main points for discussion: separationof services between long distanc and local call; issue of breakup to overcome monopoly; and measures for deregulation. Until the final report from the Dentsushin came out, pros and cons exchanged their ideas in an open manner. Keidanren and Committe for Fair Transaction released their research reports for advancing deregulation while acknoledging the need for discussing the NTT breakup. On the other hand, Committee for Administrative Reform clearly took positive stance on the NTT breakup. All these reports had influenced the final report by the Dentsushin.22 To turn the debate in their own favor, MPT as well as NTT took several preventive measures between 1995 and 1996. In September 5, 1995, MPT asked NTT to allow connection between cable phone and ordinary phone services, which was accepted. On the next day, NTT announced a business plan for separating software companies from the NTT. Also on September 28, Kojima, president of the NTT, declared the complete opening of networks for local connections. On the other hand, NTT asked for entering into international business and deregulation for that. Furthermore, on October 26, NTT strived to publicize its effort to rationalize the company by announcing that NTT would cut down the number of employees from 195,000 to 150,000 by the year 2,000. Also NTT announced its plan to drop the long distance call charge to 100 yen by the year 2,000.23
　In February 29, 1996, Deliberative Council for Telecommunications Policy, which was an advisory council for the MPT minister, sent a final report to the MPT minister. The report suggested that NTT should be divided into three: one long distance call company and two local call companies. The report recommended that as for the long distance call company, full privatization combined with freedom of business was suggested while cross-regional entry should be permitted for the local call company with expanded business areas. MPT, with recommendation from the council, was ready to push the idea of the NTT breakup in a scheme to promote competition in telecommunication sector.
　Some members of the LDP were positively considering the case while others remain skeptical about it. As for the SDPJ members, they opposed the idea of breaking up the NTT following the demand from the Zendentsu. Zenentsu had no reason to shift their position, for the break up of the NTT also means the break up of the Zendentsu as well. Managers at the NTT were also questioned the merit of the NTT breakup, arguing that the breakup of the NTT would proscranate the development of multimedia and decrease the competitiveness of Japanese firm in glocal telecommunications market.24 NTT and Zendentsu had no disagreement at all in oppositing the NTT break-up.

　Political influence of the Zendentsu has never been ignored by the political circle. It stemmed from organizational structure of Zendentsu. First, Zendentsu has been a solid national center for the NTT employees. NTT is one of a few companies in Japan that have nationwide business network. Unlike Jichiro or Nikkyoso that is a federation of independent unit unions at the local level, Zendentsu maintains unified national control over personal shift, financial affairs, and policy lines. Second, the size and organizational solidarity outrun al the other unions. Though national average rate of unionization is estimated to be 23.2% in 1996, Zendentsu organizes 99.6% of the NTT employees as of 1997. Zendentsu has members of 216,649. Third, in addition to the organizational solidarity, Zendentsu has kept the tradition of flexibly adapting to changing demands by the consumers. Unlike other public unions, Zendentsu had an aspect of private business corporation that sells their products to the consumers. Moreover, the fact that telecommunication sector is heavily influenced by technological innovation let the union members acquire spirit of adapating to the changing environment. It is by no means surprising that Zendentsu had pushed SDPJ to take more realistic policy stance even under the 1955 system. Though Zendentsu had been supportive of the SDPJ, it has serious revervations on the unrealistic ideological stance of the SDPJ. Zendentsu's support for the SDPJ was not for the sake of the SDPJ but for its own sake.
　It is striking to note that political dynamics of telecommunications policy is under slight change. Under the coalition government, SDPJ backed up by the Zendentsu has been a key coalition partner for the LDP. Though main explanations and policy schemes were discussed at the policy affairs council as it was done before, SDPJ had a say over the issue before the bill was submitted to the Diet. They could use the option of making compromise at bill-drafting stage rather than opposing in the Diet session. As the general election was expected to be hold in not so distant future, SDPJ did not want to turn their stern supporters into enemy. On the part of the LDP, political logic also intervened in the process of deliberation. First of all, LDP did not want to isolate the SDPJ when the LDP was said to be unable to gain majority in the coming election. SDPJ and Sakigake as well, which opposed the idea of NTT breakup, seemed to be good coalition partners even after the election. To hold them intact, certain compromise was inevitable in policy areas where coalition partners have key stakes. Second, knowing the weakening support of Zenentsu for the SDPJ because of the introduction of the new electoral system, LDP was willing to extend its reaches to Zendentsu. As most of the decisions were primarily made in the policy affairs council within the party, LDP used it as a good leverage to bringing in Zendentsu as a potential support groups. Zendentsu was also well aware of the LDP power. Under the consciousness that SDPJ support is not enough, Zendentsu actively approached the LDP, the ruling party. They knew that MPT could not say in the negative to the LDP decision.25 For the first time in the 45 year history of Zendentsu, LDP politicians were invited to the national convention of the Zendentsu on August 2, 1995. At the convention, Kajimoto declared, "Even though we have supported only the SDP, from now on, we are going to decide support for politicians according to the policies of the parties as well as individual policy orientation."26

Also as was proven later, Zendentsu for the first time supported the LDP candidates in the general election on October 20, 1996. It is interesting to note that Zendentsu recommended main figures of the telecommunication policymaking such as Nonaka Hiromu, Yamazaki Taku, and Kawasaki. As the general election was approaching both party poiticians and Zendentsu wanted to avoid to draw a hasty conclusion about the management form of the NTT. After conclusive recommendation from the deliberation council was put out, NTT and Zendentsu had little time left to suggest alternative policy proposals that reflected their own interests. They needed time to find compromise solution. NTT and Zendentsu had no cleavage of opinions as far as this issue was concerned. However, MPT wanted to realize the policy ideas as soon as possible. MPT officials persuaded the LDP politicians to push for the ideas, but party leaders were cautiously responded to the demand from the MPT. It is undeniable that opinions were divided even within the LDP. The fact that international trend is heading toward the integration of the telecom sector gave impetus to the opposing minority. Jammed between political need for cooperating with coalition partners and policy recommendation for NTT breakup, LDP and ruling party leaders striked a compromise solution. NTT and Zendentsu demanded for deregulation than NTT breakup. In accordance with this demand, working team on the management form of the NTT, whose members include Yamazaki Taku, Ito Shigeru, and Wadakai, decided on March 25, 1996, to enact bills concerning deregulating telecom sector including such measures as entry barrier, business division, and network connection. However, the same team responded favorably to the demands of the MPT officials on May 26, 1996, by clearly stating that the issue would be decided by the "next" Diet session with "full respect" for the principle stated by the Dentsushin. On March 29, 1996, cabinet confirmed this decision. It said, "Though the mangement form of the NTT is an imminent issue, it is difficult to draw a conclusion within 1996. Accordingly, with regard to this, cabinet will proceed hearing opinions from the concerned parties with full respect for the statement of the Dentsushin. Together with pushing deregulation and speeding up network connectioon, cabinet will continue to discuss the issue in order to get conclusion by next Diet session."
　Before the election, political circle were in turmoil because of the problematic loans to housing related companies and financial failure of Daiwa bank. Business circle come to have crisis consciousness to dea with it. One of the ideas that emerged out of the process is a voice for revising monopoly prohibition law to rationalize the malfunctioning sector, especially banks. People began seriously talking about the establishement of a stocking holding company as a viable alternative for compromise.

　In the general election on October 20, 1996, LDP increased its seats though it failed to get majority. SDPJ, opposition party that has been strongly backed up by Zendentsu, come to gain only 15 seats. It is not surprising that Zendentsu gave significant portion of support for the Democratic Party. Zendentsu has been a main supporter for a new party movement. Also Zendentsu did not forget to support the LDP members, especially those who have influence over the telecommunications policy. SDPJ declined to send their members to the cabinet though extra-cabinet cooperation would be maintained.
　After the election, MPT began preparing for the policy suggestions for the NTT targeting the Diet session in 1997. At this stage, the option for stock holding company emerged as a scenario for the future management form of the NTT. The idea of stock holding company as an alternative to the NTT breakup had been discussed on occasions. It has been publicized by a private businessman in 1995. Nishi Kazuhiko, president of the Ascii, published his personal recommendation, titled "Personal Recoomendation for dividing the NTT into 9 Companies under a Stock Holding Company." Though it was not seriously taken at that time because of the difficulty to revise the monopoly probihition law, the article opened a third way to resolve the issue.27
　On the part of the MPT, priority lied in completely breaking up the NTT into three or more companies in order to promote competition among them. It is also undeniable that MPT wanted to reduce the power of the NTT, which can hardly be controlled under the current setup. NTT seemed to be too big an entity to be controlled by the MPT. However, what MPT really wanted to acquire was a control over "telecommunications sector" in general rather than the NTT, a sinlge company within the sector.28 As a ministry that desires to be policy-oriented ministry, MPT wanted to be a leading ministry in the pioneering industrial sector represented by the telecommunications sector. In other words, MPT wanted to use this sectoral concern as a spring board to rank the ministry with other infulential ministries such as MOF, MITI. However, if MPT had sticked to the idea of breaking up the NTT, it would be evident that NTT would resist the idea until the final moment. In this connection MPT took a second best choice, not the first priority, by positively considering the stock holding company as a substitute for divide up. In the eyes of the MPT official, stock holding company was better than doing nothing, for mutual competition among the regionally divided companies would be inevitable.

　As for the NTT and Zendentsu, which have been opposed to the idea of the NTT breakup, stock holding company formula was not a desirable form of management but there is little reson not to accept the formula. Both NTT and Zendentsu were aware of the fact that they couldnot simply oppose the idea of the NTT breakup to the final moment. To act against the already set agenda was not easy for them. NTT as a company has announced several programs for rationalizing the company after privatization. However, all these schemes were not enough to change the NTT breakup prescribed in the Act and political consensus. More practical approach was to avoid the worst case scenario. What NTT wanted to get was to get into international business. More precisely speaking NTT wanted to expand its business opportunity to cross-national business, which was forbidden under the current legal regulation. Investing in foreign countries was done in the name of domestic business that does not cross over the national boundaries. NTT wanted to correct the malpractice to take initiative to participate in international business. If the NTT accept a policy option of dividing the NTT into three companies including a long distance company, NTT could legally acquire the right to participate in international business. A scenario for stock holding company was not that much destructive if a solidarity of the company can be maintained by a holding company. Zendentsu could also accept the scenario for the organizational ties can be maintained even after its divide. As there remains a holding company that enables them to have interal linkage, Zendentsu may retain organizational unity. Zendentsu can remain a central headquater with three sub-organizations, but the organizational solidarity would be secured.
　Stock holding company formula was also acceptable to the MOF. As was analyzed above, MOF took the opposing stance in 1990 with serious concern for rapid drop of NTT stock price. What concerns the MOF was not the management form of the NTT but the managment of NTT stock, which MOF was in charge.29 Under the situation that stock price is determined by market mechanism not by administrative decision, MOF officials have more concern over how the new management form of the NTT influences the stock market. With regard to stock management, MOF had two critical concerns. First, MOF did not want to paralyze the NTT stock price. If the NTT is divided into three independent companies, current stocks should be transferred to the stocks of new companaies, which provokes a lot of problems related to the rate of conversion, setting up a new price for the former NTT stock, and opening the stock to the public. Another concern for the MOF was that MOF should keep stable and predictable relationship with current NTT stock holders. NTT stocks are said to be held by 1.5 million people. If any distrubing issue arise during the process of stock conversion, MOF was certain to take the administrative responsibility for mismanagement of the NTT stock. Remembering incessant disturbing calls from the ordinary NTT stock holders in 1990, MOF did not want to face the similar situation again especially when public criticism on the MOF is on the rise concerning a number of financial crisis. The stock holding company formula was not detrimental to the interest of the MOF, for the stock price may remain stable as far as the stocks are managed by the holding company.

　Finally the fact that new formula was politically acceptable should be emphasized. The final decision was postponed from 1996 to 1997, but it was ‘timing,' not substance that had been put off. As of 1995 and early 1996, key coalition partners of the LDP, SDPJ and Sakigake opposed the idea of breaking up the NTT, but they could not change the policy prescription suggested by the Deliberative Council in a fundamental way. The election result was critical in redirecting political intiative. Though coalition was maintained, both SDPJ and Sakigake lost its powerful leverage against the LDP in the cabinet. Extra-cabinet cooperation also let them friendly outsider as far as policymaking is concerned. In other words, they could take neither positive stance not negative stance over the government bills. They were shacked by their own decision to remain a ruling party. Also LDP still desperately needed them. It is not astonishing that major policy initiative was made within the LDP. LDP has taken de facto single party initiative.
　In conclusion, as far as policy direction is concerned, LDP and MPT closely collaborated to make govrnment bills. In this sense, they are "insiders" of policy making. Opposition parties had little room to intervene except resisting passing the bills. The position of SDPJ became ambiguous for it shifted its status from the opposition party to the ruling party and again to the cooperative coalition partner. Bills were prepared by the MPT with close consultation of the ruling party, LDP. This does not mean that interests of concerned parties or outsiders were neglected. NTT and Zendentsu, which are concerned parties for this policy issue, did not hesitate to make strategic coalition with actors with similar interests. Counter-opinions were thrown out by both actors. Also NTT and Zendentsu took best advantage of their political capacity in times of election. As for the MOF, it had a fair share of influence with regard to the management of the NTT stock.
　Based upon the above observation, we come to the conclusion that interests of all concerned parties were balanced out by "working on the minimum consensus" they could drew out. Dividing the NTT into three companies under the umbrella of stock holding company was the content of the consensus. Another characteristic in the teecommunications policy making is that every actor has tried to avoid the worst case scenario by negotiating the terms. Consensus has been made by "reciprocal concession" rather than "assertive persuasioon." It is also distinct characteristic of the Japanese telecom policymaking that "political" consideration was heavily involved in every stage of the decision. Changing dynamics of power balance between the ruling and opposition party sensitively influenced the policymaking process. MPT could not make daring move beyond the political desires of the ruling party. But interests of the ministries as well as private sectors were never been ignored by the political circle.

IV. Challenges for the Japanese-variant of Policymaking　

　Japanese policymaking style outlined above brought about "unintended" consequences. In an effort to find mutually agreeable terms, final settlement turned out to be a stock holding company formula that no concerned parties have asserted at the outset. Also reciprocal concession was based on an informal consensus not to touch upon the vested interests of each actor. Competition was contained in the framework of minimum consensus. Also by taking realistic course of political feasibility, NTT come to remain as a special corporation under government screening. Though final decision was made in the political circle, plural actors influenced the decision making and they mutually coordinated their actions in a way that consensus can be made. At the background of all these moves, public opinion worked as a potential safeguard against improper behaviors, for public criticism may work as a fatal blow to their own interests. In all recent decision to adopt the stock holding company formula is based on the delicate balance among the concerned parties. Managing crisis by balancing out the interests of multiple actors has been the core of the Japanese decision making.
　That being said, Japanese decisionmaking style has to come up with changing reality, posing a few challenges for the traditional policy making style in the years to come. First, how to decide "policy priority" comes to have political relevance. In times of economic growth, coordination among conflicting interests worked smoothly, for taking a fair share in a growing economy has been the critical concern among the interested parties. However, in times of economic hardship, political leaders are urged to make decision on the priority of policies. Leaders have to decide whether they will take egalitarian distribution, redistributive leadership, or assertive coordination. Up to the present, passive coordination among conflicting interests may have been the norm. But with the advent of economic downturn, active choice should be made. Another challenge for Japan is how to promote "innovation" in the industrial sectors with growth potential. Decision should be made whether Japan will take either competion with lesser government engagement, or stimulative competition, or continuing managed competition. The thing is whether Japan takes risk-minimizing appraoch or introduce more risk-taking approach in managing its economy. Finally how to resolve "conflict" among actors with different interests will be a matter of concern. In Japan, political settlement of the problem has been the norm rather than the exception. But the demand for more open and objective conflict resolution mechanism is on the rise. In that elected officials make a final decision, Japanese pattern serves the basic ideals of democracy. Whether Japan will develop politically independent organs for conflcit resolution or not is a challenge that awaits answers.

１. Kato Hioshi is reported to say, "We really were not sure whether this was an isolated case, or the start of a trend. But if it were the latter, we certainly would not want to be ‘left behind.'" This remark shows us the competitive unfolding of the telecom reform. Cited from, Steven K. Vogel. 1996. Freer Markets, More Rules. Ithaca: Cornell University Press. p. 37.
２. It is interesting that proponents of the NTT breakup cites the American experience of AT&T breakup while opponents of it tend to adopt the British experience where no breakup was made.
３. Steven Vogel, Ibid, p. 3.
４. With regard to the asymmetric regulation, see, Kimura Jungo. 1996. "Comparative Analysis of Regulatory Reform in Japan and the US," IPTP Monthly Review, NO. 96. pp. 12. -32.
５. As for the contrast between de facto monopoly and statutory monopoly, refer to, InfoCom Research, Inc. (1996). Liberalization of the Telecom (Tsushin Jiyuka). Tokyo: InfoCom Research, Inc. pp. 30-31.
６. Jill Hills. 1986. Deregulating the Telecoms. London: Trances Pinter. p. 6.
７. John R. McNamara. 1991. The Economic of Innovation In the Telecommunications Industry. New York: Quorum Books. p. 59.
８. As for the discussion of winning by losing, refer to, Paul W. MacAvoy and Kenneth Robinson. 1983. "Winning by Losing: The AT&T Settlement and Its Impact on Telecommunications," Yale Journal on Regulation, Vol. 1 No. 1. pp. 1-42.
９. Robert Crandall. 1991. After the Breakup. Washington, D.C.: The Brookings Institution. p. 38.
10. Robert Crandall. Ibid, p. 41.
11. About the paradigmatic change in economic ideas, see, P. Hall. 1989. "The Politics of Keynesian Ideas," in P. Hall. ed. The political Power of Economic Ideas. Princeton: Princeton University Press.
12. McNamara, op. cit., p. 137.
13. Following studies may be categorized as perspective-oriented works. Roger G. Noll and Fransces M. Rosenbluth. 1995. "Telecommunications Policy," in Peter Cowhey and Mathew McCubbins. eds. Structure and Policy in Japan and the United States. Cambridge: Cambridge University Press. pp. 119/176.; Steven K. Vogel. 1996. Freer Markets More Rules. Ithaca: Cornell University Press.; Chalmers Johnson. 1989. "MITI, MPT, and the telecom Wars, " in C. John, L. Tyson, and J. Zysman. eds. Politics and Productivity. Ballinger Publishing Company., 177-239.
14. Iio Jun. 1993. Political Process of Privatization (mineika no seiji katei). Tokyo: University of Tokyo Press.
15. Otake Hideo. 1994. The Age of Neoliberal Reform (jiyushugiteki kaikau no kidai). Tokyo: Chuo Koronsha. pp. 117-142.
16. Yamagishi. 1989. Does the NTT Have Future? (NTT ni ashita wa aruka). Tokyo: Nippon Hyoronsha. p. 83.
17. Yamagishi, Ibid, p. 48.
18. Sector-oriented, not company-oriented, telecom policy has been long cherished wishes among the MPT officials. In a report by a study groups among young MPT officials in July 1971, question was raised about the monopoly of Denden within the sector. The report says, "It is difficult to recognize monopoly system by Denden. We should admit entry from ordinary firms and competition should be promoted." See, Fujii Hajime. 1996. Breakup: NTT vs MPT. Tokyo: Diamondsha. p. 7.
19. Kato Hiroshi. 1996. NTT vs MPT. Tokyo: PHP. p. 32.
20. Interview with a MOF official on May 12, 1997.
21. It is said that former MOF official, Ohashi, played a critical role in bridging the MOF and NTT. Fujii Hajime, Ibid, p. 20.
22. With regard to the content analysis of several reports, refer to, Kato Hiroshi. 1996. op. cit., pp. 43-100.
23. Nihon Keizai Shimbun, December 9, 1995.
24. "Interview with Kojima Hitoshi, president of the NTT," Weekly Diamond (Shukan Daiamondo). March 1995.
25. Interview with a leader of Zendentsu on May 20, 1997.
26. Fujii Hajime, op. cit., p. 93.
27. Nishi Kazuhiko, Weekly Diamond (Shukan Daiamondo). December 9, 1995.
28. Interview with a MPT official on May 8, 1997.
29. Interview with an MOF official on May 12, 1997.