1. 1 Standardization systems of telecommunications in Japan 2004 ITS Yoko Nishioka InfoCom Research, Inc. / Keio University This study is funded by Telecom industry promotion Fund in Japan.

2. 2 Roadmap of this presentation 1. Introduction – Outline of this study (purpose, views) – Trends of standardization activities in Japan 2. Theoretica l review – Two approaches to “ institution ” – Model of institutional change 3. Analysis – Historical analysis of int ’ l standardization institution – Comparison of three regional standardization organizations among Japan, US and EU 4. Conclusion and implication for Japanese system

3. 3 Purpose of this study To analyze the Japanese system of standardization of telecommunications in the context of “ institutional change ” in international standardization of telecommunication 1. Introduction

4. 4 Views of this study This study analyze the Japanese standardization system of telecommunications comparing cases of the US and EU along with change of environment around international standardization. The definition of institution in this study is based on “ neo institutional economics ” approach. 1. Introduction

5. 5 Structure of this study 1st part – To analyze meaning of creation of regional standardization organizations in the context of historical change of institution of international telecommunications 2nd part – To analyze major regional standardization organizations in Japan, US, and EU, and evaluate how they respond new environment of international standardization. 1. Introduction

6. 6 More attention standardization issues in Japan these days Cooperation with other Asian countries ASTAP(Asia Standard Program)1998 “ Report of R & D and standardization toward building -up competitiveness in the information- technology area ” 2004.3 Nippon Keidanren published an position paper “ strategic international standardization ” 2004.1 1. Introduction

7. 7 Japan can contribute more to international standardization The Japanese main contributions to international standards – FAX – MPEG 1. Introduction

8. 8 Roadmap of this presentation 1. Introduction – Outline of this study (purpose, views) – Trends of standardization activities in Japan 2. Theoretica l review – Two approaches to “ institution ” – Model of institutional change 3. Analysis – Historical analysis of int ’ l standardization institution – Comparison of three regional standardization organizations among Japan, US and EU 4. Conclusion and implication for Japanese system

9. 9 Why not so far? Communication skill? Cultural difference? Some structural reasons? This study analyze them from the view of institutional change of international standardization of telecommunications technology 1. Introduction

10. 10 Two different approaches to “institution” in neo institutional economics Institutional evolutionary approach “ Institution qua equilibrium of the game ” (Aoki 2001;26): Institutional evolutionary approach “ Institution qua equilibrium of the game ” (Aoki 2001;26): play er institutions play er institutions Institutional design approach “Institutions are the rules of the game” (North 1990;3-4,23) Institutional design approach “Institutions are the rules of the game” (North 1990;3-4,23) Both explain institutions by relations between players and institutions, but the emphasis is different. 2. Theoretical review

11. 11 Stability Institutional evolutionary approach explains well institutional changes Evolutionary approach explains institutional changes through change of balance of players. Rather,design approach is useful to analyze incentive structures given by institutions. Change Formation Process of institutional change 2. Theoretical review

12. 12 Model of institutional change Institution Path dependency （ history matters ） Gaps between shared beliefs and reality among players Needs of co-evolution of relatedinstitution Factors to stabilize institution Factors to foster institutional change Environmental change This is the model of institutional change based evolutionary approach 2. Theoretical review

13. 13 What is “s ｔａｎｄａｒｄｉｚａｔｉ ｏｎ ” ? In terms of activities... – Institution of decision-making activities to choose what most members can agree In terms of economics.. – Activities to promote economic efficiency on innovation In terms of players.. – Strategic activities for certain members (countries/ firms) to promote their own ideas in the given markets 2. Theoretical review

14. 14 Roadmap of this presentation 1. Introduction – Outline of this study (purpose, views) – Trends of standardization activities in Japan 2. Theoretica l review – Two approaches to “ institution ” – Model of institutional change 3. Analysis – Historical analysis of int ’ l standardization institution – Comparison of three regional standardization organizations among Japan, US and EU 4. Conclusion and implication for Japanese system

15. 15 Evolution of institution of international standardization of telecommunications ? Birth of ITU 1865: Foundation of the International Telegraph Union 1906:First time of International Radiotelegraph Convention Growth of ITU 1932: Union changes names to International Telecommunication Union along with combining the two organizations Stabilization of ITU 1947:ITU becomes a Specialized Agency of the United Nations Toward diversification of institution Regional standard organizations created 1984:T1in US committee was created with AT&T divestiture 1985:TTC in Japan was created with privatization of NTT 1988:ETSI in EU was created along with EU convergence 1992:Creation of 3 Sectors, ITU-T, ITU-R, ITU-D 1995:ARIB in Japan was created for radio related needs in convergence of telecommunication & broadcasting Toward cooperation between diversified institutions ITU/ICANN cooperation The institution of int’l standardization seems to have experienced the life cycle? 3. Analysis

16. 16 More players, more diversified after mid of 1980s International Telegraph Union (1865) International Radiotelegraph Convention (1906) International Radiotelegraph Convention (1906) International Telecommuni cation Union (1932) International Telecommuni cation Union (1932) Became a specialized Agency of the UN (1947) Became a specialized Agency of the UN (1947) TTC (1985) T1 (1984) ETSI (1988) forum ARIB (1995) 20 European member states (1965) Needs to pay attention to development issues More players in the markets De-regulations Attention by users/markets More competition in global markets Shortened innovation cycle Swifter decision reflecting many and wide range of players with the limited resource Big increase of member states of developing countries Gaps between shared beliefs and reality among players ( Factors to foster institutional change ) Environmental Change Birth of ITUGrowth of ITU Stabilization of ITUToward diversification Reform (1992) Reform (1992) As a part of UN, less flexibility to transform itself Needs of co-evolution of related institution (Factors to stabilize institution) Diversification was resulted by both factors to foster institutional change and to stabilize institution Toward cooperation IETF 3. Analysis New membership of sector member

17. 17 Players involved in standardization (before 1947) ITU Member state National Operator Manufacturers Member state National Operator Manufacturers Member state National Operator Manufacturers 3. Analysis Before 1947, ITU was like a “salon” of similar players, who were basically developed countries. Developed countries More interested in standardization and global competitions

18. 18 Players involved in standardization (1947 -1992) ITU became to have to pay attentions to two different interests which could be contradicted. ITU Member state National Operator Manufacturers Member state National Operator Manufacturers 3. Analysis Member state National Operator Manufacturers Member state National Operator Manufacturers Developed countries More interested in standardization and global competitions Developing countries More interested in development issues

19. 19 Players involved in standardization (after 1992) Regional organizations should work and be expected as an inter-mediators of players and ITU. ITU Member state Sector member (Operator) Member state Sector member (Operator) Sector member (Manufacturers) Member state Sector member (Operator) Sector member (Manufacturers) Sector member (Manufacturers) Sector member (Manufacturers) Sector member (Manufacturers) 3. Analysis Sector member (Operator) Sector member (Operator) Sector member (Operator) Developed countries Developing countries Multi-national corporations Regional organization Regional (national) organization

20. 20 Telecom companies, broadcasters, manufacturers, universities TTCARIBJCTA Recommen dations ITU-T ITU-R ITU Recommen dations Cable LaboHATS Technical regulations Non-governmental MPHPT ITU-T SG ITU-R SG Other committees ICT sub- council Source: MPHPT materials Japanese system Down-stream Up-stream ICT council mainly prepares contributions, mainly works on downstream. 3. Analysis

21. 21 Major standardization organizations in Japan MPHPT(Ministry of Public Management, Home Affairs, Posts and Telecommunications) TTC(The Telecommunication Technology Committee) – Created along with deregulation of telecom market in 1985 ARIB(Association of Radio Industries and Business) – Center for Promotion of Efficient Use of the Radio Spectrum,1995 JCTEA(Japan Cable Television Engineering Association) 1975 HATS(Harmonization of Advanced Telecommunications Systems) 1988 3. Analysis

22. 22 EU system ETSI can grasp many member states and each member country prepares contributions based on ETSI decision ITU-T ITU-R ITU ETSI EC National standardization organization National government Telecom companies, broadcasters, manufacturers, universities Down-stream Up-stream Source: MPHPT materials 3. Analysis

23. 23 US system US has many sector members and ITAC, a part of state department, takes a strong leadership of US strategy ITU-T ITU-R ITU ITAC (Int’l telecommunications advisory committee:state department) Government agencies FCC,NTIA T1 (network interface etc.) TIA (Telecommunications industry association) (terminal equipments, mobile,etc.) Many telecom companies, broadcasters, manufacturers, universities Down-stream Up-stream IEEE (LAN etc.) ANSI forum Contribution Source: MPHPT materials 3. Analysis

24. 24 Comparison of three regional organizations Compared to US and EU, government takes more leadership to contributions to ITU in Japan 3. Analysis

25. 25 Roadmap of this presentation 1. Introduction – Outline of this study (purpose, views) – Trends of standardization activities in Japan 2. Theoretica l review – Two approaches to “ institution ” – Model of institutional change 3. Analysis – Historical analysis of int ’ l standardization institution – Comparison of three regional standardization organizations among Japan, US and EU 4. Conclusion and implication for Japanese system

26. 26 Summary and Conclusion The institution of Int ’ l standardization has developed with ITU. ITU has been stabilized since it became an specialized agency of the UN. The number of members expanded at once by joining developing countries, therefore, they have to pay more attention to developing issues. Big environmental changes after deregulation of telecom industry in the mid of 1980s created the gap that ITU can not easily respond. In order to supply the the gap / support the existing system (ITU), regional / national standardization organizations formed. US:T1 committee, Japan:TTC,EU:ETSI 4. Conclusion

27. 27 Summary and conclusion 2 Comparing the three organizations, in terms of attracting state member ETSI is doing well. T1 and TTC are not successful to attract other state members In terms of upstream activities, TTC is just participating and not taking a central role.ETSI is facilitating state members upstream activities. T1 takes a leadership in that. Potential of system improvement in Japan can be follows: – Reform the system in order to invite more active participation of private sector – Merge the organization that currently divided to many specialized areas – More cooperation with Asian countries 4. Conclusion