REGULATION ROADBLOCKS HINDER JAPAN ON INFO SUPERHIGHWAY

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TOKYO-Construction of Japan's information superhighway is under way, but it's so late that Japan could need years to catch up with the U.S.

"Japan is now between seven and 10 years behind the U.S. in developing its own information superhighway and networking," said Kimihide Takano, senior VP at Goldman Sachs Japan. "I think the lag will last about 10 years; it's a major failure for Japanese industry."

That said, Japanese companies regard multimedia and information technology as an industrial frontier that could lead them out of their seemingly unending recession. The Posts & Telecommunications Ministry expects the multimedia market in Japan to provide 2.4 million new jobs and be worth close to $1 trillion annually by 2010.

But not without some American know-how. "It is quite probable that Japan will not be able to catch up with the U.S. on its own," Mr. Takano said. "[That means] the model for the Japanese information superhighway will be the American one."

But figures comparing the penetration of some digital age essentials indicate Japan isn't even at the same starting gate. Take, for example, the number of PCs Toshiba estimates were in use in Japan in 1993-a key indicator of the population's computer literacy.

With Japan's population of 124 million, there were 6.45 million PCs in use-compared to the U.S.' 52.9 million PCs for its 258 million people. Only about 13% of Japan's PCs are connected to a local area network, compared to 56% in the U.S.; and only about 39,000 computers in Japan are connected to Internet. In the U.S. estimates fluctuate widely, but some say anywhere from 10 million to 30 million people have access to the global network of computers and databases.

The number of households subscribing to multichannel cable TV in the U.S. is nearly 30 times Japan's 1.1 million, while the U.S. population is just double.

The U.S. also exceeds Japan in the number of database services-900 in Japan versus 3,900 in the U.S., according to Toshiba.

"If we compare the basic ingredients of what is involved technologically, Japan and the U.S. are very close," Mr. Takano said. But the U.S. business environment makes entering the digital age much easier.

For example, regulations have hindered the development of the cable TV industry by restricting operators to a single district and requiring that the cable companies be capitalized by local companies. The net result: lack of money and know-how, too few subscribers and no profits.

Recognition of the lag came only last year and in December, the government began to ease regulations to enable the fragmented cable television industry to provide a national network.

Additionally, as of last December, foreign companies can own up to one-third of cable system operators.

But other regulations have so far prohibited expansion of a new tie-up among Tokyu Corp., parent of Japan's Tokyu Agency, two giant trading companies-Mitsui & Co. and Mitsubishi Corp.-and Tokyo Electric Power. They may operate only within a relatively limited geographic area surrounding Tokyo. Another contender is Nippon Telegraph & Telephone Corp., Japan's leading domestic telecommunications company, which plans to connect households throughout Japan with a fiber optic network by the year 2010. NTT has enlisted Microsoft as an ally, and the two are collaborating to deliver a variety of software to customers through NTT's telephone lines and on CD-ROMs.

A third group, consisting of Itochu Corp., Toshiba and two U.S. companies, Time Warner and US West, plans to spend $320 million creating a cable TV network to reach 2 million households.

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