U.S. Ambassador to Japan Thomas Foley on Thursday expressed disappointment at Japan's refusal to accept a U.S. compromise to resolve the two nations' differences over the size of planned cuts in interconnection fees charged by Nippon Telegraph and Telephone Corp., Japanese officials said.

"I'm very disappointed that Japan did not accept it, although the United States offered the best possible compromise," Foley was quoted as telling Posts and Telecommunications Minister Eita Yashiro in a meeting.

Foley was referring to bilateral deregulation talks held in Tokyo last week, during which the NTT issue was high on the agenda.

Foley told Yashiro that Japan's proposal to cut interconnection fees that NTT charges its competitors to access its local circuits by 22.5 percent over four years would favor NTT at the expense of newcomers, the officials said.

Foley also said four years is too long in an age of advanced information technology, according to officials. at the Posts and Telecommunications Ministry. The U.S. has called for a deeper cut -- of around 50 percent -- by the end of this year.

Yashiro replied that the U.S. proposal would force NTT into the red and asked the U.S. to accept the Japanese plan, saying it is the best possible proposal.