Row not simply good West against evil East

PUBLISHED : Thursday, 17 February, 1994, 12:00am
UPDATED : Thursday, 17 February, 1994, 12:00am


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US Trade Representative Mickey Kantor says the Motorola cellular phone dispute is a simple case of market access.

And on Tuesday he used the dispute, festering since 1989, as an excuse to revive a powerful trade sanction.

Any sanctions will only affect US$300 million of Japanese exports to the US - about one day's total.

Although Motorola feels it has been denied fair access, its version of events makes it clear the story is far from a simple case of evil Japanese denying innocent Americans their rights.

The story starts with the liberalisation of Japanese telecommunications in 1985. NTT, the monopoly-holder, was suddenly faced with two competitors - IDO and DDI.

Japan chose to award franchises in a most unusual way - by geography.

DDI won the franchise for the north and west of Japan but IDO won the lucrative Tokyo franchise. DDI chose to use a system built around Motorola technology. IDO chose to stick with the incompatible technology already used by NTT.

Motorola won a contract to supply much of the switching equipment needed by DDI and also did well in selling mobile phones.

But it was effectively shut out of the Tokyo market by IDO's commercial decision to stick with the NTT system.

In 1989, Motorola discovered there was still enough radio spectrum available for another system to be set up in Japan.

But a request to the Japanese Ministry of Posts and Telecommunications that its Tacs system be chosen was refused.

This led to bilateral talks between the US and Japan. A deal was struck, but it involved IDO, which was to be a competitor to the new system, installing Tacs infrastructure.

The result, according to Motorola, has been that five years on there are only 12,000 Tacs subscribers in Tokyo, where 60 million people live, as coverage has never been extended beyond the centre of the city by IDO.

In the area outside Tokyo, where Tacs works, Motorola has a 40 per cent share of the 438,500 people who use mobile phones, a cut-and-dried case of discrimination, according to Motorola and Mr Kantor. But even Motorola itself admits it struck the wrong deal in 1989.

''No one liked it, but it was take it or leave it,'' Robert Orr, director of government affairs for Motorola's Japanese subsidiary, said of the arrangement.