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(keitai-l) Re: FYI: DoCoMo To Open Up I-Mode Network To Other ISPs In December

From: Michael Turner <leap_at_gol.com>
Date: 01/25/02
Message-ID: <000b01c1a5a1$ce3545c0$f842d8cb_at_phobos>
[Curt Sampson is wondering ...]
> > Is it just me, or does 7-8 billion yen (getting on towards $60
> > million) sound a tad expesive for such a thing? Sure, it's not a
> > hack I could pull off in a week-end or anything like that, and
> > dealing with billing systems is never cheap, but what on earth can
> > make it cost so much?

Certainly on-topic.  If 7-8bn yen actually proves to be excessive,
I would raise that old argument again: infrastructure depreciation
financing.  This is always relevant in any telecom deregulation.

I.e., if a (formerly) regulated monopoly made capital investments
expected to be good for 15 years, and deregulation cuts that
to 7 years, the playing field can actually tip *unfairly away*
from incumbents (or in the case of NTT, "the incumbent"),
depending on the numbers.  Even to bankruptcy.

And there has, after all, been some discussion of whether the
i-menu is a "structural impediment." so this is a regulatory
issue.  (Case: Virgin Air being stiffed from the i-menu, possibly
because of its Vodafone connection.)  So here comes that
gaiatsu [1] again.  (No, don't get me wrong, it's good, it's
good!)

And (oh no!) the Tsuchiyama Thesis raises its head again --
i-mode as crutch under the not-yet-paid-for PDC network.

This all ties together.

It's a line of reasoning that probably underlies that other seeming
non sequitur brought up in this connection: why does DoCoMo say
"Because this is PDC, we're posting the specs for new i-mode
ISPs in Japanese only"?

I think that this message might be read as "Please, no more
gaishi [2] charging onto our shores and screaming about structural
impediments.  We've got our hands full already with the claims on
our attention being made by the current collection of upstarts,
foreign and domestic.  And *they* are telecom companies.
You're now talking *ISPs* -- much lower barriers to entry,
in that business."

It might seem amazing that NTT is still slow-rolling claimants
to its franchise based on a gaiatsu [1] market-opening that
happened all the way back in 1994.  But this is Japan.  A full
regulatory regime-shift is more typically two decades.  (And
Yes, it does happen. It just *seems* like nothing's moving.  This
stuff with wireless telecom is unfolding at light-speed by
comparison.  Well, OK, would believe "at Mach 1"?  No?)

Possibly off-topic:

"Douglas MacDougall" <mac_at_gnajp.com> takes Curt's
musings as a springboard for a full-fangs-out-for-the-jugular
rant against Japan Incorporated:

> Irasshaimase! [3] Welcome to Japan. Read in the newspaper about
> the bubble and scratch your head... how the hell does a bubble
> cripple an economy for 10+  years? Simple. It's not a bubble. It's
> corruption. In the rest of the civilized world we call it a depression.

Whoa.  Let's not go overboard.  The depression doesn't start
until March, OK?  Walk, don't run, to your nearest autoteller,
and start milking it as fast as the withdrawal cash limit allows.

I'm going to address Douglas' rant only because there are a lot of
people on the list whose awareness of the Japanese economy
is on the level of Newsweek's.  Mine isn't a helluva a lot
more sophisticated, but ... well, read on and judge for yourself.

First point: the post-bubble period was/is a depression?

In fact, the Japanese economy saw net growth in the post-
bubble period.  Which is to say, averaged over a decade,
Japan wasn't even in recession, much less depression.

Japan is just dealing with a situation with no true post-war
precedent: low growth for years on end.  The system is
still adjusting to that as the new status quo.  Which it is.
Japan will never see 10% growth again.  That's bad for
some, but not the end of a nation.  If it was, why is
the U.S. still around?

> Sorry mate, but Japan will never be a stable economy in the
> way that the US is and the way that the EU is likely to become
> until they decide to stop the centuries old habit of mutually
> agreeing to ignore annoying realities.

Stability may be a matter of perception.  Take employment.

Japan's unemployment figures haven't exceeded 6% (yet).
These figures understate reality of course, possibly by as
much as 3%, but so do the corresponding statistics
for many, if not most, major industrial nations.

By some way of looking at things, the 1990s were *too*
stable.  Heisei [4] era indeed.

And it's not a matter of denial over *centuries*.  Japan had
a ruder shock than most countries ever get, at the end of 
WW II.  We should all have our heads so revolutionized.

Nor I don't see a "mutual agreement to ignore annoying
realities."  What I see is a sense of frustration at the inability
of an immature political system to come to grips with some
fairly dire realities.

Finally, yes, there are some things being ignored, but a lot
of them aren't the ones most people think of.  Japan is a
democracy, and some of Japan's problems are pretty
closely related to voters here getting the kind of government
they deserve.  (Flame me, if you want, for this.  But off-list
please.) More on this point, below.

> Living in Japan can be incredibly frustrating for foreigners
> particularly if you have any inclination to affect a change.

Oh boy.  Being a *human being* is incredibly frustrating
particularly if you have any inclination to effect a change.

Not frustrated enough?  Wanna get really frustrated?  Go
set up in a foreign country.  Any foreign country.

> I have all but given up on such noble thoughts and now
> force myself to be contented with building a small business
> and trying to influence those few around me who will
> actually listen. The Japanese banking fiasco makes the
> whole Enron scandle look like a bad night at the craps
> table. It is system wide and entrenched such that even
> a Prime Minister has a snowball's chance in hell of ever
> fixing it.

Prime ministers aren't very powerful here.  The ones who
have been powerful have been pretty corrupt.  But that's
the world.  (Want a powerful PM in Europe?  How about
Berlusconi?  What's that you say, now?  You've changed your
mind? ;-)

The U.S. model of the quasi-monarchical chief executive is
actually pretty rare in democracies.  Koizumi currently
enjoys absurdly high popularity, but I'm not sure the
system can cash that check.  Or even whether it should.

And anyway, the tendency is too look at the 
power structure within Japan, and neglect other factors
that might be far more important.  As big and ungainly
as the Japanese government is, it's still only so big.
There's a whole economy it has to feed on, and
serve, without (much) net parasitism.  And then there's
the U.S. economy, and its voters and politicians.

Paul Krugman made an excellent case, five years ago,
that it's not the bad loans, the government debt, the
deadbeat corporations, the infrastructure parasite
ministries, the construction companies.  Other 
good economists have since looked at this view and
chimed in.

Krugman said, It's the consumers, stupid!  It's a
demand-side problem more than a supply-side
problem.  Consumers aren't spending money.

He proposed (heresy! heresy!) inflation targeting.
Say, 4%, for a decade or more.

The pure economic arguments for inflation targeting
are excellent.  It would slowly but surely make
these staggering debts manageable.  Consumers, fearful
of losing the value of their savings, would go out and
spend on durables like more spacious housing, better
furniture for that housing, and so on.  This would
create domestic sector jobs without relying on the
usual Road Tribe stimulus, an acknowledge dead-
end at last.  By devaluing the yen, inflation targeting
would plump up export-sector employment as well.

The political feasibility of all this is poor.  Rotten.  Can
you say "non-starter"?  I knew you could.

Why?  Well, for one thing, older people have the
fat bank accounts, older people vote earlier and more
often, and they vote their pocketbooks.  (AND they
vote their morals.  And we all know that inflation is
second only to Osama bin Laden on the Evilness Scale.)
All the talk in the world about how their kids will be
making more money, how we can give you COLA's,
so hey not to worry ... it will probably fall on deaf ears. 
Especially those literally deaf ears who still remember
when 1 yen was a lotta money, a whole lotta money,
why, when I was yer age ....

For another thing, and perhaps more important: despite a
faintly warm reception to the idea in Washington when
inflation targeting was first floated by the Koizumi
administration last year, there's been a recession in
the U.S. since then, and Treasury Secretaty Paul
O'Neill is here in Tokyo saying -- guess what? --
" You better not let the yen fall much further, no
way guys."  I.e., there's not just the Japanese voter
to think of, but the U.S. voter and *his* job.  As
Henry Kissinger was saying on TV here last week,
nobody needs to tell the Japanese that the U.S. is 
alling the shots.  (He used the word "hegemony",
but you're all grownups, you know how to
translate that.)

The current iiwake [5] is this: "The Bank of Japan won't
stand for inflation targets, and the BoJ may be wrong,
but it's better from the point of view of global financial-
market confidence that the BoJ be seen as independent,
even if wrong."  This is silly. Not even Greenspan
is truly independent of the political system.  The Fed
was created by an act of congress, and what Congress
giveth, Congress can taketh away.  (And you were
curious why Alan the Wonder Boy is always so polite
in testimony,  even when congressmen are openly
sneering at his equivocations?  Now you know.)

But anyway, "BoJ Independence" makes a good fig-leaf
for impotence in the meantime.  It beats confronting
both the Japanese voter and the U.S. voter with the
implications of what it would take to get things really
moving again here.

[snip]
> (Not to sound too negative :)

What, did you say something negative?  Come again?  ;-)

> I love Japan but it's a painful relationship. I have a recurring
> dream that a bunch of Japanese stick their heads out the
> window and shout "I'm mad as hell, and I'm not gonna take
> it anymore!".
> :)

Yes, and I have this recurring nightmare that Governor Ishihara [6]
will run out ahead of them as they pour into the streets, and yell,
"This way! This way!"  And that they'll follow.  A Juan Peron for
East Asia's most prosperous major economy?  Gee thanks.
Argentina was one of the top 3 countries in per capita income
100 years ago.  Look at it now.  Populism is not the answer.

Why am I saying all this?  Because keitai-l is about keitai,
Japanese mobile telephony, and this is still, even with the
recent downturn in sales, a relatively vibrant and interesting
arena, not just in Japan, but in the world.  All this talk about
Japan disappearing into some economic suck-hole shouldn't
be taken as a reason to be any less interested in what's
going on here, with this technology and these markets.  In
fact, if it leads to more attention to (and more considered
thinking about) the Japanese predicament, I think that's
all to the good.

Enough said.

-michael turner
leap_at_gol.com

[1] gaiatsu - "foreign pressure".  What Japanese politicians wait
     for, rather than take unpopular initiatives on their own.

[2] gaishi - foreign company.  The only hope, according to some.

[3] irasshaimase  - "Welcome [to the store/restaurant/etc.]"  Best
     delivered in a nasal, perfunctory tone by a prepubescent
     girl speaking over a bad sound system.

[4] heisei - roughly, "flat, common, peaceful".  (Forget Aum.)

[5] iiwake - lame excuse (lit. "good reason".  And people
     say the Japanese are never sarcastic.  Hah.)

[6] Governor Ishihara - proto-fascist governor of Tokyo,
      and the 3rd most popular man in Japan.  (Koizumi
      is #1, Tokyo Giants baseball team coach is #2.  If we
      lose K-man, pray we get Coach.)
Received on Fri Jan 25 15:38:09 2002