Japan-US Business Report LogoJapan-U.S. Business Report

No. 345, June 1998

Issue Index

Japanese Companies in the US


Worried about excess capacity, two groups planning to lay undersea fiber-optic cables across the Pacific have joined forces as the Japan-U.S. Cable Network. In essence, the consortium spearheaded by AT&T CORP. and KOKUSAI DENSHIN DENWA CO., LTD., which was going to build the TPC-6 cable network, has merged with a system backed by WORLDCOM INC. and JAPAN TELECOM CO., LTD. (see Japan-U.S. Business Report No. 343, April 1998, p. 6). In addition to these big international communications carriers, the 15 participants in the $1.1 billion project include NTT WORLDWIDE NETWORK CORP., GTE CORP., MCI COMMUNICATIONS CORP., SPRINT CORP. and Britain CABLE & WIRELESS PLC. The 13,000-mile, self-healing ring Japan-U.S. Cable Network, which will follow two routes in the northern and the southern Pacific, initially will operate at 80 gigabits per second -- the equivalent of 967,680 simultaneous calls. It will have the potential to be upgraded to 640 gigabit- per-second transmissions, or 7,741,440 concurrent calls. Likely landing points for the system include locations in Ibaraki, Chiba and Mie prefectures and in Hawaii and California. Virtually all the capacity already has been subscribed. Construction is scheduled to begin by yearend, with operations starting by midyear 2000.

One reason for the concerns about overcapacity despite surging transpacific demand for broadband capacity is the pending construction of the first privately owned and operated undersea fiber-optic cable network (see Japan-U.S. Business Report No. 342, March 1998, pp. 7-8). The backers of Pacific Crossing-1 -- KDD SUBMARINE CABLE SYSTEMS INC., MARUBENI CORP. and GLOBAL CROSSING LTD. -- have completed financing for the $1.2 million project. They lined up $800 million in bank financing to supplement $400 million in equity contributions. They also signed a contract with TYCO SUBMARINE SYSTEMS LTD. to act as prime contractor and with KDD-SCS to be the subcontractor. In addition, PC-1 has its first Japanese customer: DDI CORP., the nation's second-largest telephone company.

Through its KDD AMERICA, INC. unit (see Japan-U.S. Business Report No. 343, April 1998, p. 6), KOKUSAI DENSHIN DENWA CO., LTD. is in the process of launching both domestic and international telephone service for corporate and individual customers alike. For now at least, the company is leasing capacity from local carriers. KDD claims that its international call rates, especially to Japan, will undercut those charged by American competitors.

The tie-up between SONY CORP. and TV set-top box leader GENERAL INSTRUMENT CORP. (see Japan-U.S. Business Report No. 341, February 1998, p. 8) already has yielded its first cooperative product: an interactive digital in-house networked system that allows digital devices from different manufacturers to be seamlessly interconnected via a TV set. The prototype system combines the Chicago manufacturer's DCT 5000+ interactive digital set-top device and Sony's i.LINK-based Home Networking Module and Aperios real-time operating system. The i.LINK interface enables connected devices to send and receive digital commands and digital audio/visual streams at up to 200 megabits per second. Obvious uses for the system include monitoring via digital video cameras and accessing the Internet.

An exchange rate of ¥135=$1.00 was used in this report.

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