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No. 362, November 1999

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American Companies in Japan


A New York City company that provides round-the-clock, global, facilities-based data and voice communications for the financial community is the latest American services provider to receive a Type I operating license from the Ministry of Posts and Telecommunica-tions. IXNET, INC.'s subsidiary initially will provide high-speed voice and data services using the transpacific TPC-5 undersea fiber-optic cable network. When the Japan-U.S. Cable Network goes onstream next spring, consortium member IXnet will gain the international bandwidth to expand its extranet not only in Japan but elsewhere in Asia as well.

Industry sources report that MCI WORLDCOM, INC. is in talks with JAPAN TELECOM CO., LTD. about working together to build a fiber-optic network in Osaka's business district. Such collaboration has obvious appeal for both carriers, which are looking for ways to lower the stiff interconnection charges they pay NIPPON TELEGRAPH AND TELEPHONE CORP.'s regional subsidiary to initiate or terminate calls. Most notably, MCI WorldCom and JT could share the costs of laying the network and eliminate some of the red tape that each would encounter on its own. .....Closer to realization is a plan by MCI WORLDCOM, INC. and MORI BUILDING CO., LTD. to tie office towers in Tokyo run by the commercial property manager into the fiber-optic network that the carrier has been building in the capital since the fall of 1998. The deal would give Mori Building a marketing tool to use to secure multinational tenants for its buildings since these companies not only would have access to high-speed voice and data services but also could save a considerable amount of money, according to MCI WorldCom. The partners expect to be offering communications services to 10 office buildings by the start of 2000 and to have some 40 locations managed by Mori Building tied into the MCI WorldCom network by the summer.

P-COM, INC., a Campbell, California supplier of network access systems for the wireless communications market, has won a contract worth more than $3.5 million from the Information Systems Division of KOKUSAI ELECTRIC CO., LTD. for point-to-point, spread-spectrum radio equipment. The Tokyo firm will use these products for projects it is undertaking for NIPPON TELEGRAPH AND TELEPHONE CORP. and KDD WINSTAR CORP. (see Japan-U.S. Business Report No. 358, August 1999, p. 34). P-Com also makes wireless products for point-to-multipoint systems, a capability that should help it expand business in Japan.

Atlanta's EQUANT, a major source of managed, end-to-end data network services for global businesses worldwide, is a primary beneficiary of the contract that NINTENDO CO., LTD. awarded HITACHI, LTD. to build it a global private network. To connect the worldwide offices of the top developer of video games, Hitachi will employ Equant's international frame-relay services. Its network extends to key business centers in more than 220 countries. Hitachi offers Equant's services as part of its Compassport total network design package.

Subscribers to DDI CORP.'s nationwide PDC services that own phones equipped with PHONE.COM, INC.'s UP.Browser microbrowser now have access to Internet-based services, including e-mail and more than 140 content sites. Last spring, Japan's second-largest carrier brought wireless Internet access to its cdmaOne customers based on the Redwood City, California company's UP.Link Server Suite. Both the PDC service and the cdmaOne service are marketed under the EZweb brand name.

Slowly but surely, LUCENT TECHNOLOGIES INC. is making inroads into Japan's huge communications infrastructure market, primarily through alliances with various NIPPON TELEGRAPH AND TELEPHONE CORP. affiliates. The latest deal is an agreement with NTT COMMUNICATIONWARE CORP. to jointly develop and market Lucent's high-performance Softswitch to Japanese carriers. Developed by Bell Laboratories, Lucent's R&D arm, Softswitch is designed for Internet Protocol and ATM (asynchronous transfer mode) networks. It is said to enable carriers of all sizes to offer customers new services quickly and economically on either packet-switched or circuit-switched networks. Softswitch development work will begin before yearend at a new NTT Comware test facility in Makuhari, Chiba prefecture. The Japanese company currently participates in Lucent's Full Circle Program, which is aimed at making it easier for independent software vendors like NTT Comware and Web developers to quickly create new services that take advantage of broadband networks.

Six-month-old UNISPHERE SOLUTIONS, INC., which designs networking solutions exclusively for carriers and ISPs, has moved into the Japanese market through a distribution arrangement with NETMARKS, INC. The first of the Burlington, Massachusetts firm's products that it will sell and service is the two-model ERX Edge Routing Switch. Targeted at ISPs, this carrier-class platform is described as the industry's first wire-speed routing product designed to tackle the unique feature requirements at the edge of services providers' networks. The ERX1400, priced at $50,000, is aimed at ISPs that operate high-capacity points of presence. Its modular, 14-slot chassis features a wide range of interface options. The more economical, seven-slot ERX700 is designed for applications that require a midrange capacity; otherwise, it has the same features and performance as the ERX1400. Unisphere Solutions is a wholly owned SIEMENS AG company.

NETWORK EQUIPMENT TECHNOLOGIES, INC., a supplier of multiservice wide area network equipment, also has its sights firmly set on building business in the Japanese market. The Fremont, California firm has tapped TOYO COMMUNICATION EQUIPMENT CO., LTD. to sell, install, support and maintain the Promina 800 multiservice platform for aggregating voice, data and video for access to ATM and other WAN services and the Promina 4000 ATM switch, which is optimized to improve performance for IP-differentiated services. As part of their alliance, N.E.T. and TOYOCOM will develop Japan-specific interfaces for these products.

A company formed by San Francisco's little-known LIVEDOOR GROUP, INC. is offering Tokyoites something that NIFTY-Serve, Biglobe and other major ISPs so far have been unwilling to provide: free Internet access. livedoor users only have to pay telephone charges. LIVEDOOR, INC. plans to make money from advertisements and e-commerce commissions. It has very ambitious goals for a start-up in Japan's notoriously fickle market. With access points planned for other parts of the country over the near term, livedoor believes that it can have 1 million users by the end of 2000. In contrast, NIFTY-Serve, Japan's biggest ISP, currently has 2.7 million-plus subscribers.

For whatever reason, American suppliers of optical fibers, no matter how technically advanced, historically have had trouble breaking the hold that FUJIKURA, LTD., FURUKAWA ELECTRIC CO., LTD., SUMITOMO ELECTRIC INDUSTRIES, LTD. and other Japanese makers of optical fibers have on the business of domestic manufacturers of fiber-optical cables. CORNING INC. has managed that feat. It has a contract to supply about one-fourth of OCEAN CABLE CORP.'s optical-fiber requirements for about 18,600 miles of cable. Shipments are scheduled to start at the beginning of 2000. OCC gave several reasons for going with Corning, including cost considerations. What makes the contract all the more surprising is that OCC's principal shareholders are Corning's competitors in optical fibers — Fujikura, Furukawa Electric and SEI.

An exchange rate of ¥106=$1.00 was used in this report. aaaaaa

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