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

No. 348, September 1998

Issue Index

Japanese Companies in the US


Stiff competition in the American market for cellular telephones and the transition from analog handsets to digital ones forced money-losing OKI ELECTRIC INDUSTRY CO., LTD. to end production of analog cell phones at its Suwanee, Georgia factory. In operation since 1984, the plant was turning out more than 100,000 phones a month when it closed. Roughly 110 people lost their jobs. Oki Electric continues to make automotive electronic parts in Suwanee. It also is doing research and development there on next-generation cellular phones. The company stopped making cell phones in Japan in 1995. Oki Electric's U.S. businesses reported a combined operating loss of $44.1 million in the year through March 1998.

JAPAN TELECOM CO., LTD.'s New York City subsidiary, which launched facilities-based domestic long-distance and transpacific calling services this summer (see Japan-U.S. Business Report No. 346, July 1998, p. 7), has acquired a 51 percent stake in AIRNEX COMMUNICATIONS INC. for an undisclosed amount. The San Ramon, California long-distance carrier has some 15,000 mostly Japanese customers, about 80 percent of which are individuals. Japan Telecom plans to wholesale capacity to Japan and other parts of Asia to Airnex while using its customer base to expand U.S. services.

Like JAPAN TELECOM AMERICA INC., KDD AMERICA, INC. now has its own network for providing communications services across the Pacific and within the United States. KOKUSAI DENSHIN DENWA CO., LTD.'s New York City subsidiary had been offering international and domestic telephone services to corporate and individual customers using capacity leased from local carriers. The Federal Communications Commission made the start of facilities-based transpacific services contingent on KDD cutting the fee it charges American carriers for completing calls in Japan to 15 cents per minute. Japan's biggest international carrier said that its rate had been below that level since July. Echoing JAPAN TELECOM CO., LTD., which was subject to the same condition, the company claimed that competition, not the FCC, forced the rate reduction.

Beginning this month, customers of NTT MOBILE COMMUNICATIONS NETWORK, INC.'s nine regional cellular service providers are able to make calls directly to the United States. Until now, they and other cell phone subscribers in Japan had to register first with an international communications company like KOKUSAI DENSHIN DENWA CO., LTD. that actually handled the call. The new service is the result of a tie-up with AT&T CORP. and its AT&T Wireless Services unit. NTT DoCoMo claims that its rates undercut those charged by KDD by roughly 25 percent.

The Japan-U.S. Cable Network, a 13,000-mile, high-capacity, undersea fiber-optic network, has moved closer to reality with the signing of a formal construction and maintenance agreement by three Japanese communications companies and 30 American and European carriers and other investors (see Japan-U.S. Business Report No. 345, June 1998, p. 7). The backers of the $1 billion-plus project include JAPAN TELECOM CO., LTD., KOKUSAI DENSHIN DENWA CO., LTD. and NTT WORLDWIDE NETWORK CORP. as well as AT&T CORP., GTE CORP., MCI WORLDCOM, INC., PSINET INC., SPRINT CORP., BRITISH TELECOMMUNICATIONS PLC and CABLE & WIRELESS PLC. The investors also signed a supply contract with ALCATEL ALSTHOM S.A.'s Alcatel Submarine Networks, FUJI-TSU, LTD., NEC CORP. and KDD SUBMARINE CABLE SYSTEMS INC. The system is scheduled for completion by the second quarter of 2000. It initially will be able to handle 967,680 simultaneous voice calls, but it will be designed to scale to a capacity equivalent to more than 7.7 million concurrent calls. How much each investor will put up has not been disclosed.

A multinational alliance that includes PIONEER ELECTRONIC CORP. is working on an end-to-end digital system for the U.S. cable television industry that will be compliant with its OpenCable standards. The system will support such advanced digital video and interactive TV applications as interactive program guides, Internet browsing, video-on-demand and home banking. C-CUBE MICROSYSTEMS INC., a developer of digital video semiconductor products, will use its expertise to come up with a digital set-top box. The Milpitas, California company then will provide a complete evaluation board to Pioneer. Meanwhile, France's CANAL + will adapt its MEDIAHIGHWAY software and MEDIAGUARD conditional access system to the American market to advance set-top applications development. C-Cube subsidiary DIVICOM INC. will supply the digital head-end equipment necessary for the deployment of OpenCable-compliant systems. PIONEER NEW MEDIA TECHNOLOGIES, INC. will market the end-to-end system.

The Hitachi Internetworking unit of HITACHI COMPUTER PRODUCTS (AMERICA), INC. released a switch that bridges ATM (asynchronous transfer mode) and Ethernet environments at about $1,000 a port. The HiSpeed 160 edge switch combines 12 10/100-megabit-per-second ports and a pair of ATM uplinks that can provide either two separate connections or a redundant backbone connection. Local area network emulation software inside the switch makes the link between the packet-based Ethernet ports and the 155-Mbps, cell-based ATM OC-3 ports. The HS 160 also can be configured as a routing switch.

An exchange rate of ¥145=$1.00 was used in this report.

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