Scarce mobile phones illustrate trade obstacles

February 17, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau of The Sun

TOKYO -- Akihabara is the self-proclaimed electric city of Japan and the world. The small Tokyo district has hundreds of electronics stores, selling innumerable types of Walkmans, televisions, stereos and, increasingly, computers. But one item that cannot be found is a mobile telephone.

The absence, a telltale element in the major trade war brewing between Japan and the United States, is particularly striking because Japan was the first country to introduce cellular service back in 1979. But according to Motorola Inc., the U.S. company that has become the focal point of the dispute, stiff regulations and complex decisions by the Japanese government and private Japanese companies have stifled development. Japan has the fewest subscribers of any developed country.

Mobile phones aren't the only product mysteriously scarce in Japan despite the fact that U.S. stores are deluged with Japanese-made models. Plain paper faxes are almost nonexistent, and fax modems are just beginning to find their way into Japanese stores. Personal computers are so expensive that an entire closet industry exists of "consultants" who arrange purchases at stores in other countries for installation in Japan.

There are all sorts of suspicions about why this is the case, most commonly a sense that the major producers orchestrate what is sold so as not to cannibalize sales from other machines they manufacture, or depress the large margins that subsidize the low-cost sales of exports.

Consumers accept limits

Typically, such issues don't make headlines here.

Consumers accept limited choice and high prices, and gleefully go shopping when abroad. But cellular communications are different because the dominant manufacturer, Motorola, is from the United States, has undisputed technological expertise and has been willing to raise its voice in a distinctly un-Japanese way.

Adding to the controversy is the fact that it has come to a boil in the immediate aftermath of failed trade talks between the United States and Japan.

At a news conference yesterday, Motorola argued that its efforts to crack the Japanese market have been significantly compromised by a complex web of government decisions limiting its access to the dense Tokyo-Nagoya corridor.

"After 10 years of diligent effort," said Arnold Brenner, head of Motorola's Japan operations, "access to this market has been blocked."

Geographic split

At the core of the dispute is a decision taken in 1985 by the Japanese government to split the country's cellular market geographically, rather than by frequency, thus giving people in different areas no choice about the type of system they can use.

In the Tokyo-Nagoya area, home to half of the Japanese population and most of the country's wealth, the only system permitted to operate uses a technology incompatible with overseas systems, provided by NTT, the former national monopoly still largely owned by the government.

In the rest of the country, a compatible system was adopted, and Motorola products have gained about 40 percent of the market.

At the urging of Motorola and U.S. trade representatives, a compatible system was assigned some of the bands remaining on the spectrum in 1989 to operate in Tokyo and Nagoya.

But construction of transmission facilities needed to make those bands usable, the responsibility of the same carrier that also provides the alternative system, has gone extremely slowly, particularly in comparison with similar work done elsewhere.

As a result, Motorola equipment can only be used in portions of the area and has been largely unsuccessful.

Difficult barriers

Foot-dragging and administrative hassles are difficult issues for international trade negotiations, but critics of Japan's policies say many of the really egregious and obvious barriers to imports have been replaced by just this type of impediment, making it a prototype for numerous other negotiations to come.

The story led the evening news. At the Yamamoto Store in Akihabara, manager Takashi Kuno watched it with interest. His small second-floor outlet is in the section of the district devoted to portable communicators that include large radios and small elegant walkie-talkies.

Picking up a particularly sophisticated model that fits in the palm of a hand, Mr. Kuno said, "It looks great, but is not that useful."

Strict regulations limit power and range. What about phones? Mr. Kuno has recently received four portable models, each from a major Japanese company: Matsushita, Fujitsu, NEC and Kenwood. They are chained to a wall. None are permitted to be sold until April -- a vestige of regulations that so far have limited mobile phone possession in the Tokyo area to NTT rentals.

Mr. Kuno has accepted reservations from a few potential buyers, but he remains skeptical that cellular phones will ever take hold. Speaking as if he doesn't live in the place that transformed the living room hi-fi into the personal stereo and the console television to a pocket-sized airport distraction, he says the move to portable phones may be too large a step for the Japanese. After all, he says, most people have phones at home, and there are plenty of public ones on the street.

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