GOVERNMENT & POLICY

MITI to propose 32-bit encoding standard
Japan's Ministry of International Trade and Industry (MITI), through a joint project with several other Asian countries, is seeking to develop a new Asian standard for character encoding. MITI intends to develop and propose to the International Organization for Standardization (ISO) an expanded 32-bit character set table that will allow kanji and a variety of other characters to be easily used on the Internet. The current 16-bit code table, devised in 1992, provides codes for about 65,000 characters, enough for most Western languages but insufficient to display all Chinese characters. The 32-bit table would allow for 4 billion characters.

Linking overseas and domestic schools
The Ministry of Education has disclosed a plan to connect overseas Japanese schools with domestic elementary and junior high schools via the Internet. Nearly 36,000 Japanese students attend over 90 schools around the world outside Japan. The initial plan calls for linking 75 schools in Japan with schools overseas via the Internet. Domestic schools participating in the program will pay about JPY 30,000 each in subscription and monthly fees.

Standardizing digital camera terminology
MITI intends to draft a digital camera terminology guideline proposal as early as this fall. With the market soaring (sales of digital cameras are expected to surpass 1 million units in FY1997), users and potential buyers are having difficulties comparing various models from different manufacturers, each of which uses different terms to explain its products' characteristics and performance capability. The Digital Camera Study Group, organized in fall 1995, will be in charge of standardizing terminology.

MPT to ease broadcast pricing regulations
The MPT intends to eliminate, from April 1998, cost-plus pricing regulations on fees charged for digital broadcasts transmitted via communications satellites. Essentially, companies will be allowed to charge whatever rates they desire. The move is designed to spur competition between providers, thus driving down communication satellite usage fees in Japan (now more than twice those in Europe and the US). The relaxed regulation is certain to affect broadcast contract fees as well, and should encourage new players to enter the communications satellite broadcast sector.

A system for online statistics
MITI plans to develop by 2000 a "new generation statistics system" that will enable data collection, compilation, processing, analysis, and disclosure to take place online. The move is intended to help various government organizations dramatically reduce the amount of time needed to compile and report statistical data. The ministry will call on government organizations both at home and overseas to make wide use of the system, and hopes its model will become an international standard for managing statistics in the new global economy. MITI, which reportedly has gained support for the project from the Statistics Council of the Management and Coordination Agency, says it is ready to start specific development work.

BUSINESS BRIEFS

ActiveX retailing standards
Microsoft Japan has formed the Active Store Research Group. This organization of 23 companies will work to create Windows and ActiveX-based standards for point-of-sales (POS), inventory, and customer management applications as well as application programming interfaces (API) for distribution and retail systems. Currently, different companies are developing distribution and retail store applications based on their own standards, which raises costs and limits interoperability. Members of the group include Fujitsu, NCR Japan, Nomura Research Institute, Hitachi Software Engineering, and several systems integrators and POS system manufacturers. The group will seek to complete a first version of the standard by December, and a Japanese-language version by early 1998.

Corel comes to Japan
Ottawa-based Corel, Canada's largest and the world's second-largest software company, will establish a Japan subsidiary within a year, marking its full-fledged entry into the Japanese market. Currently, Corel relies completely on dealerships such as Sumitomo Light Metal Industry, Marubeni, and Catena, but is looking for more control amid sales that skyrocketed 70% last year. The Canadian firm also plans to establish a sales base in Europe.

Toyo targets systems integration business
Toyo Information Systems (TIS) will beef up its mission-critical business systems integration services to corporate customers. The company plans to hire 30 experienced mainframe technicians by March 1998, and is stepping up hires of management and systems consultants with experience in core business systems. TIS sees growing needs among Japan's financial institutions for revamping of core systems, and wants to put together a team that can propose and execute major system revisions.

Teaming for middleware
NTT and Hewlett-Packard (HP) will jointly develop international standard-compliant middleware for the construction of telecommunications network management systems (TNMS). The middleware, dubbed TNMS for HP Open View, will conform to the telecommunications management network international standard and enable application software to be reused, thus facilitating interconnection and promoting open networks. The product will be developed by extracting part of NTT's TNMS Kernel middleware and combining it with the HP Open View DM network system management product. NTT-AT and HP are likely to sell the new product from fall 1997.

E-mail firms merge
Osaka-based Kuni Research, developer of the Japanese-language version of the popular Eudora e-mail program, merged with Osaka-based e-mail software developer Air in June. Air is the developer of Airmail, an e-mail program popular with university students. The merger was arranged by Japan Adventure Capital of Tokyo. The new company, Air Kuni Research, becomes the largest e-mail software developer in Japan with anticipated annual sales of JPY 2.5 billion. The new firm hopes to undertake an IPO (initial public [stock] offering) within two to three years.

Net ad revenues rise
Expenditures on Internet-based advertising in Japan will jump 2.5-fold to JPY 4.0 billion in 1997, up from about JPY 1.6 billion in 1996, according to a survey conducted by advertising firm Dentsu. This represents less than 0.04% of Japan's over JPY 5.7 trillion annual spending on advertising in all media, but underscores the Internet's rise as a viable advertising medium. According to Dentsu, more than half of the JPY 1.6 billion spent on Internet advertising in 1996 occurred between October and December, illustrating how rapidly the Internet advertising market has grown.

TELECOM TOPICS

MITI and industry talk
In March, MITI Minister Sato met for the first time with industry leaders concerning the infrastructure and rules necessary for electronic commerce. Sato stressed that MITI will cooperate with other ministries and government organizations in supporting industry efforts to create electronic commerce-related rules that follow international standards. While Sato has met with various industry organizations since he took over the Minister's post in November, this was his first direct meeting with members of the industry. MITI is currently involved in 45 different electronic commerce-related testing and verification experiments.

Costs are biggest hurdle
The Japan Users Association of Information Systems has completed a research report on the corporate use of international data communications networks. The report, based on a survey of 1,950 corporate users, found that while most companies rely on public networks for overseas data transmissions, use of leased lines and new types of communications services is growing among the heavier users. Most users of nonpublic networks are active in the US and Asia, with Singapore and Hong Kong starting to function as key communications hubs. Some 56% of all respondents and 70% of heavy users identified "high cost" as the biggest hurdle they face in their international communications activities.

Bringing French content to Japan
France Telecom Japan will develop a content business in Japan. The company plans by the end of the year to firm up commitments from France's Minitel videotex service and other providers to introduce their content in Japan. The company also hopes to introduce Japanese content in France, and to encourage a greater exchange of online and multimedia information between the two nations. Some of the French content providers under consideration are fashion retailers, mail order clothing sellers, and tourist information centers.

New EC services company
Lotus Japan, Mitsubishi Corp., Mitsubishi Electric, Kyodo VAN, and IBM Japan have cooperatively established a new company that will offer identity verification and fee collection support services to companies that want to do business via the Internet. The new company, NNS, is capitalized at JPY 45 million; Lotus holds a 67% share, while the other partners own 11%, 11%, 7%, and 4%, respectively. NNS started operations in April and is aiming for revenues of JPY 200 million in 1997, and JPY 500 million in 1998. The new firm will make use of the Lotus Notes Domino R4.5 server to provide services primarily to small and midsize companies.

Yamaha calls it quits
Yamaha and its group affiliates are withdrawing from the cellular radio phone business. Telenet Enshu, set up mainly by Yamaha and Yamaha Motor to provide a wireless service in Shizuoka Prefecture, will be liquidated by this fall, with the service's operating rights to be taken over by either NTT Tokai DoCoMo or IDO. The move is the result of intense rate competition with cellular phone carriers.

Lucent enters Net phone market
Lucent Technologies Japan will enter the Internet phone market. In July, the company will introduce its BusinessWorks Series of products: Internet Telephony Server (which receives and transmits phone/fax calls via the Internet or intranets), Internet Call Center (which enables callers and operators to talk while looking at the same webpage), and Intuity Universal Messaging Solution (a system accommodating six lines and 150 mail boxes that allows users to access voice mail, fax, and e-mail messages). Lucent hopes to sell a total of 800 systems (priced at about JPY 10 million each) in 1998.

INTERNATIONAL NEWS

New Fujitsu R&D center
Fujitsu's Texas-based communications equipment production subsidiary, Fujitsu Network Communications (FNC), has set up a 3,000-square-meter communications technologies R&D center in Pearl River, New York. FNC has invested $122 million in the construction of the center, which will develop next-generation transmission, switching, and basic trunk communications equipment as well as relevant software. Plans call for hiring 75 staff members by the end of 1997, and expanding to 250 by 2000. FNC, created in June 1996 through the integration of two Fujitsu subsidiaries, hopes to achieve sales of over $1 billion in FY1997.

Games from Hawaii
Leading game software manufacturer Square of Tokyo has started developing its popular Final Fantasy series of games in Honolulu, Hawaii. The company plans to invest JPY 78 billion in an overseas development effort by 2000, and hopes to create a development team of 120 (half from Japan and half from the US) in Honolulu. Wholly-owned subsidiary Square USA of California will oversee the development effort. Since the Honolulu facility is positioned midway between Japan and the US, it is seen as a good location for attracting technical talent.

NEC wins Chinese order
NEC has won an order to provide ATM (asynchronous transfer mode) switches and other equipment to Shandong University and four other schools in China for a high-speed inter-university network. In a bid to strengthen the nation's research and development capabilities, the Chinese government is currently implementing a project to link 1,100 universities via a high-speed communications grid. NEC's first order is worth some JPY 100 million, and the company hopes to win similar orders from other universities across China. IBM and other leading US and European manufacturers have the lead in network equipment sales to China, but NEC hopes to leverage the new order into related sales.

Looking abroad for help
Amid an anticipated shortage of qualified system engineers to help serve its customers in Japan, Unisys Japan is looking to firms in India and China for help with solutions to the Year 2000 software problem. The company plans to outsource middleware software revisions to Bangalore-based Tata Infotech, a company in which it holds a capital stake, and to a Unisys subsidiary in Beijing. NEC and other domestic computer manufacturers have already started preparations to outsource Year 2000 work to overseas companies, and this trend is likely to accelerate.

Venturing into the Valley
NEC and Sumitomo Bank have established Convergence Ventures One Fund, a venture capital fund that will invest in communications, computer, semiconductor, and multimedia-related venture firms in California's Silicon Valley. The new $60-million fund will invest in five to eight companies per year, with each investment for a minimum of ten years. NEC and Sumitomo hold about 74% and 25% of the shares in the fund, respectively, with local venture capital firm Convergence Partners having the other 1%. NEC hopes to harvest both the technological and intellectual property fruits of the companies in which the fund invests, and will make strategic use of the information it obtains by underwriting new investments.

Fujitsu enters North American groupware market
Fujitsu is moving into the groupware market in North America. Subsidiary Fujitsu Software of California delivered a large-scale system based on Fujitsu's TeamWare groupware to Sony Canada in April. The system accommodates up to 1,400 clients. Fujitsu Software will work with more systems integrators in North America to market its product, aggressively targeting government agencies and financial institutions.

IN 50 WORDS OR LESS

Digital camera shipments will likely soar 50% year-on-year, to 1.2 million units, in FY1997. Nearly 20 makers were expected to introduce 36 new models in the spring, at prices starting from about JPY 30,000.

NTT Data will establish facilities in the US (New York) and Europe (France or Germany) as early as spring 1998 to collect information on leading-edge multimedia developments that it hopes to exploit in its businesses in Japan.

Chubu Electric Power and Chubu Telecommunications have started joint-construction of a 15,000-km fiber-optic network installation project. Completion is expected to take about 10 years.

IBM Japan has set up a Conversion Center dedicated to "Year 2000 Problem" software rewriting and testing. The new center will primarily serve customers with MVS or other mainframe-based information systems who lack the technical specialists and the equipment needed to deal with the issue.

Melco has become the first Japanese company to manufacture and OEM-supply a motherboard based on the DEC Alpha RISC microprocessor.

In April, America Online (AOL) started offering services in Japan through Tokyo-based subsidiary AOL Japan, a joint venture between AOL, Mitsui & Co. , and Nihon Keizai Shimbunsha (NKS). Japanese-language content is being provided by NKS.

PC maker Sotec of Yokohama has won an order for 26,000 notebook computers from the US Department of Veterans Affairs. The company teamed with Virginia-based Scisolex Information Systems for the winning bid, worth an estimated JPY 89 billion.

NTT doubled - to over 100,000 - the number of digital lines it has leased between February 1996 and February 1997. The company had leased only 50,000 lines in the first 11 years of service. About 86% of the leased lines in place are either 64K- or 128K-bps ISDN lines.

NTT and the MPT have reached a basic agreement that key NTT group companies, such as NTT Data and NTT DoCoMo, will become holding company subsidiaries after the telephone company is reorganized in 1999.

Tokyo-based Shibuya FM has become the first community FM station to regularly broadcast both conventionally and via the Internet simultaneously. Shibuya FM broadcasts via the Internet eight hours daily.

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