Two revision bills now before the Diet, designed to update the laws governing telecommunications business, do not go far enough to meet the demands of a competitive market. In December last year, the Telecommunications Council, a government advisory panel, called for a review of the NTT group's holding-company system, saying that "if no substantial progress is made in the next two years, drastic changes to the system, including complete separation of equity links, should be implemented." The revision package, however, says nothing about this.

The panel's proposal for an overhaul of the holding company reportedly met strong objections, not only from NTT, but also from Liberal Democratic Party legislators with close ties to the group. It appears probable that the amendment bills were drafted under political pressure. They aim to promote "fair competition," but absent any specific plans to change the way the telecommunications giant is managed, that will remain an empty slogan.

One reason given for maintaining NTT's dominant position in the domestic market is that Japan should have a world-beating communications company of its own. This theory of "communications sovereignty" sounds plausible. But no company can be truly competitive unless it provides the kind of services that consumers want -- services that are inexpensive, user-friendly and of good quality. The government may give the NTT a privileged status to make it strong, but unless its services meet these basic standards, the sovereignty theory will serve merely as excuse to keep the NTT group under government control.