AT&T offers discount calls from Japan State phone company calls service illegal


TOKYO -- AT&T shook up Japan's telecommunications market yesterday by offering to provide discount international calls to Japanese customers using a controversial technique that some countries prohibit and which AT&T itself once condemned as unfair.

The entrance of the American phone giant into the Japanese market is certain to help lower rates and bring about deregulation in a nation where high telecommunications costs are widely blamed for hurting competitiveness and slowing the advance into the information age.

The shares of KDD, Japan's main international telephone company, fell 5.6 percent yesterday on the Tokyo Stock Exchange.

AT&T's move is also likely to help legitimize the approach it is using, which is known as a call-back service. Until now, such services, which take advantage of low American long-distance rates, have been provided mainly by small companies in Japan, Europe and some other countries.

Call-back services take advantage of the fact that it is generally less expensive to call from the United States to Japan or other countries than to call from those countries to the United States.

In the simplest type of call-back service, a person wanting to call the United States from abroad dials a switch in the United States and hangs up before the call is answered, so no charge is incurred. The switch, which recognizes the caller by a code, immediately calls back. The caller then enters the number to be called.

The result is that, to the telephone system, it appears as if the call originated in the United States, so cheaper rates apply.

Many telephone companies oppose the practice, saying that the initial call to the switch in the United States uses their lines without their being compensated.

"We wouldn't say it's illegal, but it's unfair," said Shigeki Nakagawa, senior general manager of service planning at KDD, which wants some restrictions placed on such services. About 60 countries, including China, and Indonesia ban such services altogether, he said in an interview yesterday.

John J. Legere, the president of AT&T Asia/Pacific Inc., said the firm is conforming to all regulations. "The AT&T brand will never be used in participation of services that are deemed to be illegal," he said at a news conference here.

He also said that AT&T is "not stealing signals from anyone," because it is leasing lines to call the switch in the United States rather than using the public phone system. Nakagawa of KDD agreed with this.

The International Telecommunication Union, the U.N. agency that sets global telecommunications rules, decided last month that two particular types of call-back service should be outlawed. But it said some other types might be helpful in encouraging competition and lower rates.

AT&T, as a major carrier in America, once fought against such services. But since the United Nations and the Federal Communications Commission have ruled that some call-back services are legal, AT&T decided to offer them rather than lose out to others.

Japan's Ministry of Posts and Telecommunications has allowed such services, apparently viewing them as a way to force down Japan's high telephone rates.

AT&T will charge 240 yen for a three-minute call to the United States, compared to 450 yen that KDD will charge after a coming rate reduction. Users will be able to call other countries as well.

AT&T's service will be sold initially to corporations in Tokyo. Customers will be given an automatic dialer that will set up the call in a single step, so that users won't have to wait to be called back. It will take 12 to 15 seconds to put through a call, compared to about six seconds for a call dialed directly through KDD.

Japan, with a roughly $4 billion in international calls a year and high rates, is considered particularly ripe for call-back services. Steven Weiner, president MTC Japan Ltd., a call-back provider, said there are 40 or 50 mainly American companies offering call-back services in Japan, some consisting only of an individual operating from an apartment.

Pub Date: 11/28/96

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