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Japan International Value-Added Network Services Agreement (#1 of 2) (1990)

EMBASSY OF JAPAN

WASHINGTON, D. C.

July 31, 1990

Dear Madame Ambassador:

It is my pleasure to note the satisfactory resolution of important telecommunications services and equipment issues subject to the bilateral talks beginning after March 30, 1990 concerning international value-added network services (IVANS) and Network Channel Terminating Equipment (NCTE). As a result of our recent discussions on these matters, the Ministry of Posts and Telecommunications (MPT) has decided to take the measures specified in the letters and the Attachments, dated July 31, 1990 from Deputy Minister Igarashi to Ambassador Williams and Under Secretary Farren.

Let me confirm that the Government of Japan and the Government of the United States will meet, at the request of either party, to discuss issues relating to the implementation of the measures specified in the Attachments to the letters.

The resolution of these issues has proved that our cooperation and joint efforts are most appropriate in addressing our bilateral trade problems. I hope that we will work even harder in the future to maintain and further develop our important economic relations.

Sincerely yours,

[signature]

Ryohei Murata

Ambassador of Japan

The Honorable

Carla A. Hills

The United States Trade Representative

Washington, D.C. 20506

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THE UNITED STATES TRADE REPRESENTATIVE

Executive Office of the President

Washington, D.C. 20506

July 31, 1990

His Excellency

Ryohei Murata

The Ambassador of Japan

2520 Massachusetts Avenue N.W.

Washington, DC 20008

Dear Mr. Ambassador:

I was pleased to learn that, as a result of the recent discussions beginning after March 30, 1990, concerning international value-added network services (IVANS) and Network Channel Terminating Equipment (NCTE), the Ministry of Posts and Telecommunications (MPT) has decided to take the measures described in the letters and the Attachments of July 31, 1990, from Deputy Minister Igarashi to Ambassador Williams and Under Secretary Farren.

I also wish to confirm that the Government of the United States and the Government of Japan will meet, at the request of aither party, to discuss issues relating to the implementation of the measures specified in the letters and Attachments.

I look forward to further development of telecommunications relations in a spirit of mutual cooperation and joint efforts.

Sincerely,

[signature]

Carla A. Hills

Ambassador Sidney Linn Williams

Deputy United States Trade Representative

Executive Office of the President

Washington, D.C. 20506

The Honorable J. Michael Farren

Under Secretary for International Trade

U.S. Department of Commerce

Washington, D.C. 20030

Dear Ambassador Williams and Mr. Farren:

With regard to the recent bilateral discussions between our two Governments concerning international value-added network services (IVANS), the Ministry of Posts and Telecommunications (MPT) has decided to take the measures specified in the Attachment to this letter (Policies and Procedures Regarding International Value-Added Network Services) to ensure the openness of the IVANS market in Japan. MPT will implement all of the provisions in the Attachment to this letter by no later than September 1, 1990, unless another date is specified in the Attachment.

I wish to confirm that in implementing the procedures applicable to international Special Type II businesses, MPT will utilize the procedures specified in the Japan-U.S. IVANS Arrangements including the Attachment to this letter ("Arrangements"), and MPT will ensure that the procedures applicable to international Special Type II businesses will not be used to restrict, or have the effect of restricting, the provision of IVAN services between the United States and Japan. I also wish to confirm that MPT will also make an effort to expand IVAN services to points outside of Japan in line with the Attachment. Further, I wish to confirm that MPT will ensure that Type I carriers compete fairly and without advantage with Type II businesses in the provision of enhanced or value-aidded services and to confirm that, for purposes of the Arrangements, NTT is considered to be a Type I carrier. Finally, MPT will take no measures the intent or effect of which is to obstruct, hinder, deny or contravene the terms or objectives of the measures specified in the Arrangements.

I also wish to confirm that our two parties will meet, at the request of either party, to discuss issues relating to the implementation of the measures specified in the Attachment to this letter. Furthermore,, I would like to state that the Japanese side is prepared to meet, at the request of the U.S. side, to discuss any revisions of the Telecommunications Business Law (TBL) or any new legislation regarding the restructuring of NTT, if the U.S. side believes such revisions or legislation affect the implementation of the Arrangements.

Yours sincerely,

[signature]

Mitsuo Igarashi

Attachment

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The Honorable Mitsuo Igarashi

Deputy Minister for Policy Coordination

Ministry of Posts & Telecommunications

3-2 Kasumigaseki 1-Chome

Chiyoda-ku Tokyo 100

Dear Deputy Minister Igarashi:

Thank you for your letter of July 31, 1990, and its Attachment concerning the measures that the Japanese Ministry of Posts and Telecommunications (MPT) has decided to take with respect to international value-added network services (IVANS). We were pleased to learn that MPT will implement all of the measures specified in the Attachment to your letter by no later than September 1, 1990, unless another date is specified in the Attachment to your letter.

We were also pleased to learn that in implementing procedures applicable to international Special Type II businesses, MPT will utilize the procedures specified in the Japan-U.S. IVANS Arrangements including the Policies and Procedures Regarding International Value-Added Network Services ("Arrangements"), and that MPT will ensure that the procedures applicable to international Special Type II businesses will not be used to restrict, or have the effect of restricting, the provision of IVAN services between the United States and Japan. Further, we were pleased with your confirmations that MPT will make an effort to expand IVAN services with other points outside of Japan in line with the Attachment, and that for purposes of the Arrangements, NTT is considered to be a Type I carrier. Finally, we were pleased to learn that MPT will take no measures, the intent or effect of which is to obstruct, hinder, deny or contravene the terms and objectives of the measures specified in the Arrangements. Resolution of these issues represents an important step toward ensuring that U.S and other foreign firms have access to the Japanese IVANS market comparable to the access that Japanese and other foreign firms enjoy in the U.S. enhanced services market.

We will be very interested in the implementation of the measures specified in the Arrangements. In particular, we note our vital interest in ensuring: (1) that the review of operating agreements with foreign companies required by the Telecommunications Business Law (TBL) will not result in efforts to change the commercial terms of private agreements to the detriment of U.S.-owned companies; (2) that Type I carriers will compete fairly and without advantage with Type II businesses in the provision of enhanced or value-added services; and (3) that market access for U.S. companies to Japan's market for facsimile services will be provided in an effective manner.

In addition, the two parties will meet in the context of the MOSS framework or otherwise, at the request of either party, to discuss the implementation of the provisions of the Arrangements. Furthermore, we are pleased to learn that the Japanese side is prepared to meet, at the request of the U.S. side, to discuss any revisions of the TBL or any new legislation regarding the restructuring of NTT, if the U.S. side believes such revisions or legislation affect the implementation of the Arrangements.

We are pleased to confirm that the United States Government remains committed to affording open and non-discriminatory competitive access for the provision of enhanced or value-added services. The United States Government is prepared to meet, at the request of the Government of Japan, to discuss any questions or concerns regarding factors affecting the Arrangements.

Please accept our appreciation and our wish to continue to work together in a spirit of mutual cooperation and joint efforts.

Very truly yours,

S. Linn Williams

J. Michael Farren

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ATTACHMENT

POLICIES AND PROCEDURES REGARDING INTERNATIONAL

VALUE-ADDED NETWORK SERVICES (IVANS)

Consistent with the principles of the Japan-U.S. IVANS Arrangements including these Policies and Procedures Regarding International Value-Added Network Services ("Arrangements") and to support the objective of ensuring that U.S. and other foreign firms are afforded comparable access to the Japanese International Value-Added Network Services (IVANS) market that Japanese and other foreign firms enjoy in the U.S. enhanced services market, the Ministry of Posts and Telecommunications (MPT) will take the actions described below.

I. REGISTRATION

MPT has implemented and will continue to implement its commitment concerning transparent and simplified administrative procedures. From this point of view, MPT reconfirms as follows:

1. MPT will accept as filed for registration, without requiring pre-submission review or approval, any application for international Special Type II registration, provided such an application conforms to Article 24 of the Telecommunications Business Law (TBL).

MPT will process an application within 15 calendar days after filing and will notify the applicant within the 15-day period if it determines that there is a deficiency or any other problem with the application. If an applicant does not receive notification from MPT within the 15-day period, it may begin its business 20 calendar days after the filing of the application. In any event, MPT will provide the applicant with written confirmation of its approval or denial of the application for registration within 30 calendar days after filing.

2. Conditions for registration, as stated in Article 24 of the TBL, are clarified in the March 28, 1985 Koyama-Olmer letter as follows:

(i) Any financial information required for purposes of registration can be supplied from a corporate annual report. The financial basis of a Special Type II business can be substantiated by a -statement of creditworthiness, provided by a financial institution.

(ii) A simple one-page network map and listing of nodes and processing centers will suffice.

(iii) Only one application will be necessary for all services.

3. If MPT denies a request for registration, it will provide the applicant with a written statement outlining the grounds for denial within 30 calendar days after the filing of the application. An application may be denied only pursuant to the conditions set forth for such denial in Article 26 of the TBL.

4. Tariffs for international Special Type II businesses shall be notified to MPT pursuant to Article 31 of the TBL. Notification means that neither prior nor subsequent approval of the tariff is required.

5. MPT will attach no conditions to a grant of registration as an international Special Type II business.

6. MPT confirms that no provision of the TBL or revisions of the TBL applicable to Special Type II businesses will be construed to impose on international Special Type II businesses a "common carrier" obligation to serve the public generally.

7. MPT confirms that the concept of "many and unspecific" in Article 21(3) of the TBL is not and will not be applied to IVANS, as provided in the March 10, 1987 Sawada-Smart letter and attachment concerning IVANS.

8. Intracorporate Communications and Joint Use

(i) MPT will require Type I carriers to submit to MPT applications for authorization to revise their tariffs so that intracorporate and joint users of private leased circuits provided by Type I carriers may interconnect such circuits to the public switched telephone network (PSTN) both in Japan and in the United States, provided that such intracorporate and joint users do not use such circuits to offer telecommunications services to others or to operate as a telecommunications business, as defined in Article 2 of the TBL. Such intracorporate and joint users shall have technical capabilities to prevent their use of circuits interconnected to the PSTN at both ends for the purpose of engaging in "simple resale," bypassing the PSTN. MPT will ensure that such tariff revision will become effective on November 1, 1990, on or after which date intracorporate and joint users may request and will be granted service under the revised tariff.

(ii) MPT confirms that it will not treat intracorporate communications as a telecommunications business or a telecommunications service under the TBL, and will not require entities engaged in such communications to register as a telecommunications business.

(iii) Private leased circuit services used for intracorporate communications, which are provided by Type I carriers, may be used to carry voice, data or image communications, but cannot be used to intermediate communications among unrelated, non-affiliated third persons.

(a) For the purposes of this Attachment, the term "intracorporate communications" means communications solely within the same juridical person or communications between affiliated companies.

(b) For the purposes of this Attachment, the term "affiliated companies" means one company that is a juridical person holding 10 percent or more of the total issued stock or capital (hereafter "capital") of another company; a company more than 10 percent of the capital of which is owned by another corporation, or two companies "affiliated" with a third company.

(iv) In a group of affiliated companies, as defined above, one of the affiliated companies can become the provider of communications for and among the other affiliated companies, without being considered to be providing a telecommunications business or being required to register as a telecommunications business.

(v) Upon certification by the customer that its communications fall within the definition of intracorporate communications in this Attachment, and that it has the technical capability to prevent simple resale, Type I carriers shall make services available for communications within a reasonable period of time. The Type I carrier and its customer will negotiate a mutually agreeable due date for furnishing service. If the Type I carrier fails to provide service within this period, the Type I carrier will be required to provide to the customer, within 15 calendar days after the expiration day of the-above period, both a written explanation of the delay and a written commitment specifying a reasonable period within which it will make the service available. MPT will accept an appeal or complaint by the customer that the Type I carrier has failed to provide service, and within 15 calendar days will issue a written decision on such appeal or complaint.

(vi) Intracorporate users of Type I carrier services may also use such services to provide data processing services or other telecommunications services that do not intermediate communications of others by using telecommunications facilities.

(vii) MPT confirms that it will permit joint use of Type I carrier facilities and services and that MPT will not treat such joint use as a telecommunications service or telecommunications business under Article 2 of the TBL. MPT will not require joint users to register as a telecommunications business.

(viii) Joint use of private leased circuit services provided by Type I carriers will include voice, data or image communications, but will not include the intermediation of telecommunications services between or among non-affiliated companies or non-joint users.

(ix) For the purposes of this Attachment, the term "joint use" means the use of private leased circuit services by more than one company, where one company owns 10 percent or more of the capital of the other company and the two companies have a continuing business relationship; where two companies have a relationship of continuing business transactions (defined as meaning that either company accounts for 20 percent of the gross value of the other's transactions--e.g., purchases or sales); or where the joint user has a continuous contractual relationship with one of the companies, such as a business tie-up (that is, a close relationship of mutual assistance, such as the commissioning of business operations).

(x) Upon certification by the customer that its communications fall within the definition of joint use communications in this Attachment, and that it has the technical capability to prevent simple resale, Type I carriers are required to make services available for communications within a reasonable period of time. The Type I carrier and its customer will negotiate a mutually agreeable due date for furnishing service. If the Type I carrier fails to provide service within this period, the Type I carrier will be required to provide to the customer, within 15 calendar days after the expiration day of the above period, both a written explanation of the delay and a written commitment specifying a reasonable period within which it will make the service available. MPT will accept an appeal or complaint by the customer that the Type I carrier has failed to provide service and within 15 calendar days will issue a written decision on such appeal or complaint.

(xi) Joint users of Type I carrier services may also use such services to provide data processing services or other telecommunications services that do not intermediate communications of others by using telecommunications facilities.

9. The provisions in Paragraph 8 of this Section regarding intracorporate and joint use of Type I carrier services will not limit the ability of a Type I carrier to adopt any provisions broadening the scope of permissible intracorporate and joint uses of Type I services that may now or hereafter be included in their effective tariffs.

10. MPT will take the necessary measures to make available to those firms wishing to enter the IVANS market in Japan materials setting forth and explaining the procedures they must follow in filing an application for registration, obtaining review of ah operating agreement and obtaining review of a non-tariff based contract with an international Type I carrier.

11. Re-registration

(i) Once MPT has granted registration to an international Special Type II business, MPT will not require such business to re-register or to amend its existing registration as a result of any "minor change" stipulated in Article 36 of the Ministerial Ordinance or for the addition or deletion of any service enhancement, technical capability or feature to a service in a service category (data, voice, image, or mixed) for which registration has already been granted.

(ii) In the case of a change for which Article 27 of the TBL requires a registration of change, MPT will process an application therefor within 15 calendar days after filing and will notify the applicant within the 15-day period if it determines that there is a deficiency or any other problem with the application. If an applicant does not receive notification from MPT within the 15-day period, it may effect the change 20 calendar days after the filing of the application. In any event, MPT will provide the applicant with written confirmation of its approval or denial of the application for amendment of its registration within 30 calendar days after filing.

II. OPERATING AGREEMENT

1. An applicant for registration as an international Special Type II business may file, concurrently with the filing of its application for registration and without being required to complete a pre-submission review, an application for authorization of its operating agreement, pursuant to Paragraph 2 of this Section. Within 30 calendar days after an application for authorization is filed, MPT will authorize or deny the application, provide the applicant with written confirmation of its authorization or denial, and, where authorization is denied, provide the applicant with a written statement outlining the grounds for denial.

2. In order to decide whether or not to authorize an application, MPT will review only the following items in a proposed operating agreement:

(i) Names of the parties to an agreement:

-company name

-registered address

-name of its representative

(ii) Scope of an agreement:

-whether an agreement covers only the relationship between the parties to an agreement or covers another interconnected company(ies)

-whether the relationship between the parties to an agreement is exclusive or not

(iii) Services:

-description of services to be offered by the parties to an agreement

(iv) Technical standards:

-protocol to be used for network interconnection (As provided in the November 11, 1988 Okuyama-Moore letter, "International Special Type II service providers who use proprietary protocols for network interconnection shall submit an operating agreement to Ministry of Posts and Telecommunications which states their intention to have available technical capabilities to secure interconnection wit other IVAN providers." The alternatives for satisfying these technical capabilities are set out in the attachment to that letter.)

(v) Operating methods:

-description of service enhancements and how those enhancements are provided (e.g., value-added facsimile service by using store-and-forward function, service provision by using MHS protocol)

MPT will review these items only to determine whether three requirements are met. Those three requirements are the sole such requirements and no others will be used in the review. The three requirements are that each of the five items set forth above: (1) is present, (2) conforms to Japan-U.S. bilateral arrangements, and (3) sincerely fulfills the obligations imposed by treaties or other binding international obligations, pursuant to Article 37 of the TBL.

MPT respects CCITT recommendations to the fullest extent, but will not use such recommendations in its review of operating agreements between Japanese and foreign IVANS businesses since, legally speaking, such CCITT recommendations are not mandatory obligations.

3. MPT will not use its authority to deny an operating agreement for the purpose of delaying beyond 30 calendar days a decision on whether a service is enhanced or basic as defined under this Attachment.

4. Once MPT has authorized an application, it will not subject an operating agreement to further review except where an agreement is amended or terminated, pursuant to Article 40 of the TBL.

5. Upon request of either party to an operating agreement, MPT will reconsider its decision to deny an application for authorization and provide a written statement upholding or overturning its decision, as well as the grounds for this reconsidered decision, within 30 calendar days after the request.

6. Where the grounds provided by MPT for its reconsidered decision to deny an application for authorization relate to the service or scope of service proposed in the operating agreement, MPT will consult immediately with the United States Government.

7. Subsequent to authorization, either party to an operating agreement may request MPT review of the authorization because of an allegation that fairness and equality among the parties have been seriously impaired.

8. If a complaint is filed pursuant to Paragraph 7 of this Section, MPT will review the complaint. As a consequence of this complaint or MPT review of a complaint, there will be no delay in the introduction of, nor any interruption of, the Spegial Type II business.

9. In the event that MPT is considering action adverse to an international Special Type II business as a result of a complaint under Paragraph 7 of this Section, MPT will consult with the United States Government prior to any decision to undertake such adverse action.

10. For the purpose of the implementation of this Attachment, the authorization procedures described in Paragraphs 1 and 2 of this Section will constitute a fulfillment of the authorization requirements for international Special Type II businesses under the TBL, including Article 40.

11. In the event that a Special Type II business amends its operating agreement, it will be required to file an application with MPT for authorization to make the amendment. MPT will authorize such applications in accordance with the following:

(i) If the proposed amendment constitutes a "minor change" within the meaning of Article 36 of the Ministerial ordinance, MPT will authorize the application within 15 calendar days after it is filed. As of the effective date of this Attachment, the items stipulated as "minor changes" to operating agreements are as follows:

(a) where the change in geographical area of service does not exceed an increase or decrease of five (5) prefectures; or

(b) where an increase or decrease in circuit capacity does not exceed the equivalent of 250 circuits calculated on the basis that a circuit equals a transmission rate of 1200 bits per second.

For purposes of this Paragraph, a change in the number of nodes or other equipment within a prefecture named in an operating agreement previously authorized by MPT will also constitute a "minor change."

(ii) If the proposed amendment relates to the addition or deletion of a service enhancement, technical capability or feature to a service category (data, voice, image, or mixed) already covered by an operating agreement previously authorized by MPT, and such addition or deletion does not make the service a basic service, MPT will authorize the application within fifteen (15) calendar days after it is filed.

(iii) If the amendment to the operating agreement does not fall within the scope of sub-paragraphs (i) or (ii) of this Paragraph, MPT will review the application for authorization in accordance with the procedures set forth in Paragraph 11 (2) above, and authorize or deny approval within thirty (30) calendar days after the application is filed with MPT.

(iv) The procedures for appeal and consultations set forth in Paragraphs 3 through 10 of this Section will also apply to applications for authorization to make an amendment.

(v) MPT confirms that it does not have authority over the U.S. contracting party to an operating agreement with a Japanese international Special Type 11 business, nor over changes made by the U.S. contracting party to its value-added or enhanced service offering that cause no changes on the Japanese side.

III. NON-TARIFF-BASED CONTRACT SERVICES

1. Non-tariff-based contract service is a special measure to realize IVANS business, while ensuring consistency with the CCITT Recommendations, and essentially it is not designed for intracorporate communications. It is a principle that a circuit provided for self-use will be based on the international Type I carriers' leased circuit service tariff. However, MPT confirms that it will allow an international special Type II business to use a single non-tariff-based contract circuit for the provision of IVAN services, for intracorporate communications, as defined in Paragraph 8 (iii) of Section I, and for joint use as defined in Paragraph 8 (ix) of Section I, except where such circuits would be used to provide any one of the services which have been defined as basic and have been excluded from the scope of services covered by this Attachment: basic voice, basic telex, basic facsimile or simple resale. For purposes of this Attachment, a basic service may be understood as a service normally considered a tariffed service by the U.S. Federal Communications Commission. MPT will ensure that such Type I non-tariff-based contract services may be interconnected to the public switched telephone network both in Japan and in the United States.

2. MPT will require Type I carriers not to treat international Special Type II businesses in a discriminatory manner.

3. MPT will ensure that Type I carriers remove any surcharge that such carriers impose on the charges for non-tariff based contract facilities used by international Special Type II businesses for the provision of IVAN service.

(i) Upon receiving a request to remove such a surcharge, the Type I carrier will be required to apply to MPT to authorize an amendment of the contract between it and the international special Type II business to remove such surcharge. Within 30 days of such request by the international Special Type II business to the Type I carrier, MPT will authorize the amendment of the contract to remove the surcharge.

(ii) No new surcharges will be imposed.

4. Negotiation and Approval of Non-Tariff-Based Contracts

(i)Applicants for registration as Special Type II businesses may negotiate with Type I carriers for special non-tariff-based contract services at such rates, terms and conditions as are mutually agreeable. MPT will review such non-tariff based contracts and authorize then within 15 calendar days of their submission to MPT.

(ii) MPT will require Type I carriers to offer standard non-tariff-based contract services that are identical in rates, terms and conditions to the services that the Type I carriers offer under tariff. MPT will authorize such contracts within 15 calendar days of submission of the contract to MPT.

(iii) On the same day that an applicant for registration as an international Special Type II business files its application with MPT, the applicant may submit a request to a Type I carrier to lease a standard non-tariff-based contract service from the Type I carrier. The Type I carrier will be required to accept the request within 15 calendar days after the request is made. If MPT has not notified the Special Type II applicant within the 15-day period provided in Paragraph 1 of Section 1, the Type I carrier will, on the 16th calendar day after the filing of the application for registration, submit the standard non-tariff-based contract to MPT for authorization.

(iv) In the event that an international Special Type II business and a Type I carrier are unable to agree on the rates, terms and conditions for a non- tariff-based contract service within 30 calendar days of a request for service, the international Special Type II business may request arbitration by MPT pursuant to Article 39 (2) of the TBL. MPT will complete such arbitration within 30 calendar days of a request therefor.

IV. SCOPE OF SERVICES

1. The scope of services covered by the terms of this Attachment includes all enhanced or value-added services, including but not limited to enhanced or value-added facsimile services, as described in Paragraph 2 of this Section. The following services which have been defined as basic are excluded from the scope of services covered: basic voice, basic telex, basic facsimile and simple resale. For the purposes of this Attachment, a basic service may be understood as a service normally considered a tariffed service by the U.S. Federal Communications Commission. MPT confirms that-under existing policies Special Type II businesses may provide all enhanced or value-added services.

2. For the purposes of this Attachment, "value-added or enhanced services" means services offered over Type I carrier transmission facilities, which employ such domputer processing applications as described below:

(i) that convert the content, code, protocol or similar aspects of the subscriber's transmitted information (conversions performed solely for the benefit of the network shall not be included within the scope of this definition);

(ii) that provide the subscriber with additional, different or restructured information; and

(iii) that involve subscriber interaction with stored information (note that a service involving the storage and automatic delivery of information to the recipient will be allowed whenever the service includes one of the processing applications described in sub-paragraphs (i) or (ii) of this Paragraph, or whenever the storage and delivery function provides a service of value to the sender or recipient).

3. A service that combines basic and enhanced service functions.is considered to be enhanced or value-added when the service provider offers the enhancement as part of a service offering, even though such enhancement may not be required on a particular call.

(i) Notwithstanding the above, the enhancement of services will be required to be provided on a call-by-call basis with regard to enhanced or value-added voice services.

(ii) With respect to enhanced or value-added facsimile services, IVANS businesses which provide service enhancements described in Paragraph 2 of this Section may also, at the request of the customer on a particular call, transmit without such enhancements as part of their service to users, so long as they have available the technical capability to provide service enhancements on a call-by-call basis.

(iii) Notwithstanding Paragraph 3 (ii) of this Section, the enhancement of services will be required to be provided on a call-by-call basis provisionally, with regard to enhanced or value-added facsimile services. With regard to this requirement, MPT will evaluate the degree of financial influence financial influence which enhanced or value added facsimile service may have on international Type I carriers, business activities, with a view to finding a possible way to remove the call-by-call requirement as stipulated in sub-paragraph (i) above. MPT will complete the study in three years from the effective date of this Attachment.

4. Some examples of services that are enhanced or value- added services are:

(i) data communications services that involve:

(a) code and/or format conversions as for example listed in Table I of CCITT Recommendation X.408 or its equivalent;

(b) protocol conversions, in addition to that between X.25 and X.75 in packet switching (with regard to packet switching, service providers who provide protocol conversions may also transmit messages without such conversions as part of their service to users); and

(c) store and forward.

(ii) facsimile communications that involve store and forward or one of the functions listed in sub- paragraph 4 (i)(a) or (b) above.

5. Other examples of services that are enhanced or value- added services are: enhanced voice, enhanced telex, enhanced facsimile (including store and forward), and any other service that employs the computer processing applications described in Paragraph 2 of this Section.

V. OTHER

1. Safeguards

(i) MPT will ensure that whenever a Type I carrier competes with a Type II business in the provision of a value-added service, either directly or through an affiliate, such carrier will not engage in anti-competitive conduct such as cross-subsidization, predation, disclosure of customer-proprietary network usage information, or discriminatory access to network services or -functions.

(ii) MPT will ensure that effective safeguard measures are implemented to prevent such anti-competitive conduct, and will ensure that Type I carriers provide to Type II businesses access to network services and functions equivalent to the access that Type I carriers provide to themselves and to their affiliates. MPT will take immediate action to eliminate any such anti-competitive conduct.

(iii) By April 1, 1991, MPT will publish a Special White Paper specifying legal and administrative measures that MPT will implement to ensure effective safeguards to prevent such anti-competitive conduct. MPT will ensure public input from all interested persons, including domestic and foreign-owned Special Type II businesses, in the development of the Special White Paper on Safeguards. During the five (5) years in which the safeguard measures are implemented, MPT will continue to inform all interested persons, including Special Type II businesses, of the status of the implementation of the safeguard measures.

(iv) Effective safeguards may be structural or non- structural, but MPT will ensure that such safeguards provide that Type I carriers furnish Type II businesses with access to network services and functions equivalent to the access that Type I carriers furnish to themselves and to their affiliates.

(v) MPT will set forth in the Special White Paper the measures to be implemented during the Japan Fiscal Year 1991, and the measures to be tmplemented over the course of the next five (5) years, and also indicate problem areas requiring further study.

(vi) In addition, MPT will immediately begin a review of the Accounting ordinance to be completed by April 1, 1991. By October 15, 1990, MPT will meet with the U.S. side with the objective of considering how the review of the Accounting ordinance would be conducted so as to identify appropriate revisions that would promote conditions of fair competition between Type I carriers and Type II businesses.

2. MPT will make its processes for authorizing Type I carrier,tariffs and non-tariff based contracts relating to services offered to international Special Type II businesses more transparent by publishing and making available to all interested persons all relevant laws, ministerial ordinances and ministerial decisions affecting the provision of IVAN services. MPT will ensure public input into its decision-rmaking process concerning the establishment and/or modification of measures within MPT's authority including, but not limited to, ministerial ordinances affecting the authorization of Type I carrier tariffs and non-tariff based contracts that relate to the provision of IVAN services.

3. MPT confirms that cross-subsidization measures do not apply to international special Type 11 businesses providing IVANS. Basic cross-subsidization measures applicable to Type I carriers are stipulated in the Ministerial ordinance concerning accounting regulations, pursuant to Article 33 of the TBL. These "Preventive Measures Against Cross-Subsidization" are summarized in the March 28, 1985 Koyama-Olmer letter and attachment, part of the MOSS Arrangement on Telecommunications.

4. International Special Type 11 businesses may provide IVAN services between Japan and any point outside of Japan, and a bilateral arrangement permitting such services will not be required in order to provide such services, under the following conditions:

(i) IVAN services to be provided fall within the scop of services covered by this Attachment;

(ii) The laws, regulations and other legal measures governing telecommunications services at the poin outside of Japan do not prohibit the offering of such services; and

(iii) The laws, regulations and other legal measures governing telecommunications at the point outside of Japan do not require a pre-existing bilateral arrangement with Japan before such services may b offered.

MPT will confirm, in writing to the international Special Type II business, within 30 days of a request from the international Special Type II business, that the above three conditions have been fulfilled. If MP is not able to confirm that the above three conditions are met within 30 days of a request for such confirmation from the international Special Type II business, then MPT will consult with the U.S. side immediately in order to promptly conclude the confirmation process.

[letterhead]

DEPUTY UNITED STATES TRADE REPRESENTATIVE

EXECUTIVE OFFICE OF THE PRESIDENT

WASHINGTON, D.C. 20506

April 27, 1991

The Honorable Mitsuo Igarashi

Deputy Minister for Policy Coordination

Ministry of Posts and Telecommunications

3-2 Kasumigaseki l-Chome Chiyoda-Ku Tokyo 100

Dear Deputy Minister Igarashi:

Thank you for your letter of April 27, 1991 and its Attachment and Appendix concerning the policies the Ministry of Posts and Telecommunications (MPT) confirms and measures the MPT will take, consistent with the 1990 Policies and Procedures regarding International Value-Added Network Services, which is attached to your letter of July 31, 1990 to Ambassador Williams and Under Secretary J. Michael Farren. Please accept our continued appreciation and wish to work together in a spirit of mutual cooperation and joint efforts.

Very truly yours,

[signature]

S. Linn Williams

[signature]

Timothy J. McBride

[letterhead]

Deputy Minister for Policy Coordination

Ministry of Posts and Telecommunications

3-2 Kasumigaseki 1-chome

Chiyoda--ku Tokyo 100-90, JAPAN

April 27 , 1991

Ambassador S. Linn Williams

Deputy United States Trade Representative Executive

Office of the President

Washington, D.C. 20506

Mr. Timothy J. McBride

Assistant Secretary for International Trade

U.S. Department of Commerce

Washington, D.C. 20230

Dear Ambassador Williams and Assistant Secretary McBride:

Consistent with the 1990 Policies and Procedures Regarding International Value--Added Network Services, which is attached to my letter of July 31, 1990 to Ambassador Williams and Under Secretary J. Michael Farren, I am pleased to inform you that the Ministry of Posts and Telecommunications confirms the policies and will take the measures described in the Attachment and Appendix to this letter.

Yours sincerely,

[signature]

Mitsuo Igarashi

Deputy Minister for Policy Coordination

ATTACHMENT

With regard to the implementation of the 1990 Policies and Procedures Regarding International Value-Added Network Services (IVANS Policies and Procedures), which is attached to Deputy Minister Mitsuo Igarashi's letter of July 31, 1990 to Ambassador S. Linn Williams and Under Secretary J. Michael Farren, the Ministry of Posts and Telecommunications (MPT) confirms the following.

I. Private Leased Circuit form for Joint Use and Intracorporate Communications

If a customer is requesting private leased circuit service for Joint use and/or intracorporate communications under the terms of the IVANS Policies and Procedures, it is necessary for the customer to fill in the eight "essential items" on the Form for the provision by the Type I carrier of services requested by the customer and submit the Form to the Type I carrier. (Sample Form attached as Appendix.) The eight "essential items" are identified as Nos. 1 through 8 on the Sample Form attached. It is also necessary for the customer to certify (Note 2 in Appendix) that its communications conform to the following definition of joint use and/or intracorporate communications: The term "joint use" means the use of private leased circuit services by more than one company, where one company owns 10 percent or more of the capital of the other company and the two companies have a continuing business relationship; where two companies have a relationship of continuing business transactions (defined as meaning that either company accounts for 20 percent of the gross value of the other's transactions--e.g., purchases or sales); or where the joint user has a continuous contractual relationship with one of the companies, such as a business tie-up (that is, a close relationship of mutual assistance, such as the commissioning of business operations). The term "intracorporate communications" means communications solely within the same juridical person or communications between "affiliated companies". The term "affiliated companies" means one company that is a juridical person holding 10 percent or more of the total issued stock or capital (hereafter "capital") of another company; a company more than 10 percent of the capital of which is owned by another corporation, or two companies "affiliated" with a third company. It is also necessary for such a joint or intracorporate use customer, when it seeks to interconnect its private leased circuit with the Public Switched Telephone Network (PSTN) both in Japan and in the United States, to certify (Note 3 in Appendix) that it has the technical capability to prevent simple resale.

These statements concerning joint user and intracorporate communications user status and technical capabilities shall be sufficient to satisfy the above--mentioned certification requirements in all cases of joint use communications, where private leased circuits are interconnected with the PSTN in the United States and Japan, intracorporate communications, where private leased circuits are interconnected with the PSTN in the United States and Japan, and the intracorporate or joint use of an excess part of capacity on a non-tariff-based contract circuit used by an international Special Type II business.

The Type I Carrier is required to supply a Form for joint use and intracorporate communications wherein the items requested from the customer will be classified into the eight items that are "essential" for the provision of requested services (items 1 through 8 on the Sample Form attached) and the items that are not necessary unless the customer wishes to obtain optional services, including but not limited to installation of in-house wiring of terminal equipment by the Type I carrier, provisions for route diversity arrangements, or circuit multiplexing for the domestic portion of the circuit. Such optional items are listed on the Sample Form as No. 9 and No. 10 and could also be added in No. ll. Only the eight "essential items" necessary for the Type I carrier to provide requested services must be filled in. The customer is not required to attach documents that support the statements on the Form. The format of the optional information requested in Notes l, 4 and 5 may be decided upon by the customer (see "Notes" in Appendix to Attachment).

The Type I carrier is required to accept the above information as provided by the customer. Upon the customer's submission of the above information to the Type I carrier, the Type I carrier is required to furnish a private leased circuit for the initiation of leased circuit service within a reasonable period of time, in a manner consistent with the IVANS Policies and Procedures.

II. Tariff Revision

The MPT will approve by June 30 re-revised tariffs for Type I carriers consistently with the 1990 Policies and Procedures Regarding International Value-Added Network Services including points in section I of this Attachment and the attached Sample Form.

II. Investigation

When international leased circuits used for joint use and/or intracorporate communications are interconnected to the public switched telephone network both in Japan and in the United States, the Japanese side customers and their joint users in Japan are not permitted to engage in simple resale between Japan and the United States. If a Type I carrier presents evidence that such customers or their joint users in Japan are engaging in such simple resale between Japan and the United States, it may suspend the use of the service or terminate the contract only if the MPT so authorizes, following an MPT investigation to determine that such customers or their joint users in Japan are engaging in such simple resale between Japan and the United States.

To conduct this investigation, the MPT can require Type I carriers to request that the customer provide to the MPT information necessary for the MPT to determine that the Japanese side customers or their joint users in Japan are engaging in such simple resale between Japan and the United States.

The MPT and the U.S. Government will consult over the next 60 days to agree on a mutually acceptable investigation process.

Appendix

Note l OPTIONAL: Please attach a diagram to this Form, which illustrates the configuration of the customer's system limited to the telecommunications circuit facilities installed by the Type I carrier (including those installed jointly by the Type I carrier and an overseas telecommunications carrier).

Note 2: In the case of an application for a private leased circuit for joint use and/or intracorporate communications, please attach a statement to this Form, in which the customer certifies that its communications conform to the definition of joint use or intracorporate communications: The term "joint use" means the use of private leased circuit services by more than one company, where one company owns 10 percent or more of the capital of the other company and the two companies have a continuing business relationship; where two companies have a relationship of continuing business transactions (defined as meaning that either company accounts for 20 percent of the gross value of the other's transactions--e.g., purchases or sales); or where the joint user has a continuous contractual relationship with one of the companies, such as a business tie-up (that is, a close relationship of mutual assistance, such as the commissioning of business operations). The term "intracorporate communications" means communications solely within the same juridical person or communications between affiliated companies. The term "affiliated companies" means one company that is a juridical person holding 10 percent or more of the total issued stock or capital (hereafter "capital") of another company; a company more than 10 percent of the capital of which is owned by another corporation, or two companies "affiliated" with a third company.

Statement:

I hereby certify that my communications conform to the definition of "joint use" which means the use of private leased circuit services by more than one company, where one company owns 10 percent or more of the capital of the other company and the two companies have a continuing business relationship; where two companies have a relationship of continuing business transactions (defined as meaning that either company accounts for 20 percent of the gross value of the other's transactions--e.g., purchases or sales); or where the joint user has a continuous contractual relationship with one of the companies, such as a business tie-up (that is, a close relationship of mutual assistance, such as the commissioning of business operations), and/or "intracorporate communications", which means communications solely within the same juridical person or communications between "affiliated companies", which means one company that is a juridical person holding 10 percent or more of the total issued stock or capital (hereafter "capital") of another company; a company more than 10 percent of the capital of which is owned by another corporation, or two companies "affiliated" with a third company.

(Signature)

Notes 3 : In the case of an application for a private leased circuit for joint use and/or intracorporate communications, where private leased circuits are connected to the public switched telephone network both in Japan and in the United States, please attach a statement to this form, in which the customer certifies that it has the technical capability to prevent simple resale.

Statement:

I hereby certify, with respect to a private leased circuit interconnected with the PSTN at both ends, that I have the technical capability to prevent simple resale.

(Signature)

Note 4 OPTIONAL: In cases where the Type I carrier is requested to install NCTE and/or other terminal equipment on the customer's premises, please attach a diagram to this Form, which illustrates a connection plan and layout (floor plan) of the terminal equipment and in-house wiring (vertically).

Note 5 OPTIONAL: In the case of a request for any optional service, please attach a document to this Form which provides the information necessary for the Type I carrier to provide such optional services.

[Also included in this Appendix is the Sample Form, in Japanese and English, titled International Private Leased Circuit Form for Joint Use and Intercorporate Communications, in Japanese and English. It is not reproduced here. ]


TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.