NEC Corp. has begun talks with Nippon Telegraph and Telephone Corp. and two other major telephone carriers to create an Internet service coalition, sources said.
NEC is negotiating with NTT Communications Corp., KDDI Corp. and Japan Telecom Co. to launch an alliance that would be known as Japan Online (JOL). The alliance would not be a merger or integration, but would give the Internet service providers a combined 10.8 million subscribers, they said Monday.
That would exceed the estimated 7 million that would result from a merger between Sony Corp. and Internet service provider Nifty Corp., a subsidiary of Fujitsu Ltd. Sony is pursuing talks with Fujitsu to acquire Nifty.
NEC and the three carriers hope the plan will help them boost their revenues, particularly from advertising. They also hope that by working together they could make it easier to provide Internet users with high-quality content in the coming broadband era, the sources said.
The move could result in a realigned market dominated by JOL and Sony.
However, the three carriers, which fiercely compete in fixed-line and cellular phone businesses, may give up the JOL plan if Sony fails to acquire Nifty.
NEC's Internet provider, Biglobe, has 3.99 million subscribers, while NTT Communications' OCN has 2.85 million, KDDI's Dion 2.07 million and Japan Telecom's ODN 1.86 million. NTT Communications is NTT's long-distance and international call unit.
Nifty has 5.1 million subscribers, while Sony Communication Network Corp. has 1.83 million subscribers to its So-net provider.