As part of its attempt to deregulate the telecommunication and broadcasting industries, the Japanese Ministry of Posts & Telecommunications on Dec. 7 abolished a rule restricting cable operators to local municipalities. The next day, the ministry raised the limit foreign companies can own a cable operating company from 20% to one-third.
The ministry had established a rule in 1987 stating that CATV (community antenna television) stations should be mainly owned by local investors and should obtain permission to broadcast in each individual targeted area.
The move to abolish this rule was motivated by the realization that the use of fiber-optic cables would necessitate large-scale efforts on the part of CATV operators, according to officials.
Then on Dec. 9, Posts & Telecommunications Vice Minister Futoshi Shirai announced that the government would raise the limit of foreign investment in CATV companies up to one-third of total capital under the CATV Broadcasting Law.
The new limit is in keeping with the Telecommunications Business Law allowing no more than one-third of a telephone service company to be held by foreign firms.
Shirai said the two rules were being kept compatible since CATV companies might venture into telecommunications.
In fact, American giant TCI (Tele-Communications Inc.) invested about $ 2.5 million, or 18% of capital, in Cable Soft Network, a cable program supplier.
The recent interest in foreign investment and the relaxation of regulations comes, several cable officials concur, mostly because of the desire for foreign expertise to help jumpstart a slow cable industry troubled by the recession.
Just last month, the Social and Economic Congress of Japan, a powerful lobbying group, handed an “emergency” proposal to government officials that described Japan as “decisively behind” in the field of telecommunications.
The proposal emphasized the need to catch up to field leaders.