interview by Dave McCombs
photographs by Philip Gordon

The job has taught Miyake a few things about the direction of the digital revolution that is sweeping everything from potato-future prices to Walt Disney movies into a single medium. He's also come to know why the Power Ranger cartoon figures are so popular in the United States, ("They're politically correct"), why Japan isn't lagging behind in the digital revolution, ("The Japanese language has survived the computer revolution"), and why, by the time this magazine is printed, the Japanese telecommunications market may have become among the most open in the world.

Is the average person in Japan aware of how important the shape of the future telecommunications infrastructure is to their everyday lives?

They are consumers, and consumers are basically passive. It is not surprising--if your question is whether people are aware--that they probably are not.

However, people will probably appreciate the result of those developments: decreased costs for communications. If telephone bills are cheaper, everybody's happy. If rental videos are cheaper and available without going to a shop to get them, they are happy. Consumers are passive, but they are the key factor in the market. Although they are probably not aware of all the technical issues, they are fully aware of the benefits that are realized. So I'm not pessimistic about it. If telecommunications companies, be they foreign- or domestically owned, provide good services, consumers will make the right decision.

In 1995, the semiconductor market in Japan was worth about $40 billion. The telecom market was about double that size, and that is just telecom services alone, not including equipment.

What are the key telecommunications issues being negotiated?

As far as the developed countries are concerned, the main issue is foreign equity participation (in the telecoms sector). Even in the United States, the ceiling was 20 percent, and now, under the `96 Telecommunications Act, they say foreign equity participation can be up to 100 percent of a company through indirect investment. For the European Union, although they say it will be completely free and foreign equity participation will be permitted up to 100 percent as of January 1998. The reality is that most of the telecommunications industries in Europe are state monopolies, except for a few countries. In addition, there are at least four member states that have failed to reform their market up to 100 percent; for one of them the ceiling is only 20 percent, although our current ceiling in Japan is 33 percent, it will be dramatically improved to 100 percent.

Since telecommunications is, at least in some ways, a nation's cultural nervous system, do you think countries should shield that sector from domination by foreign companies?

No, I don't think so. That was the issue raised by the Europeans during the Uruguay Round of negotiations. They claim that cultural values are something that should be excluded from the scope of the World Trade Organization, while other countries, including Japan and the United States, sharply objected, saying that cultural elements shouldn't be excluded from the scope because the WTO agreements and the GATS [General Agreement on Trade Services] are general agreements on trade and services in particular and should be generally applied without exceptions. Personally, I believe you cannot protect your culture with trade restrictions. A culture will be strengthened when it is exposed to other cultures, and that kind of competition refines the culture. If you're trying to protect your culture through protective measures, it is a proof of the weakness of your culture.

The cultural element was not precluded from the GATS, and it was an issue that we won. It seems pretty natural that citing cultural issues as a reason for trade restrictions is an excuse that cannot be tolerated.

We don't think that we need to restrict our market for cultural reasons.

So are you fully supportive of opening the Japanese telecommunications market completely?

By the time this magazine is published, we may end up with some pretty significant improvements in the foreign equity participation issue. After that, we will be one of the two most liberalized telecommunications markets in the world.

It is only the United States and Japan, and to a lesser extent the United Kingdom, which have introduced competition into the telecommunications market. The U.S. has three major long-distance carriers. We have a similar number in domestic and long-distance services. Competition has already been with us since 1985.

It has not been easy to introduce competition in the telecommunications sector, even in the United States. It is only recently that the local carriers have been allowed to enter the long-distance market. Before that, there was a firewall between the markets. Legally, we don't have that firewall here in Japan since 1985. However, as I said, bringing in competition isn't easy. There is no `invisible hand' that will take you to competition. You need to take measures to build competition, especially to prevent the potential abuses of market power by the dominant suppliers. Without those measures, meaningful competition cannot be introduced.

I think there must be a myth, especially among foreigners, who believe the Japanese telecoms market is closed. I might have agreed with this 10 years ago, but I would not now. Meanwhile, the European dream is to introduce competition as of the first month of 1998. So that is the reality, maybe contrary to the conventional wisdom. That's why we are negotiating in Geneva. This is a golden opportunity for us to enhance liberalization in the market.

What are the key points you bring to the international trade negotiations on the telecommunications sector?

The important thing is that communications technology is converging. While we now have telephones, computers and TV sets, in the future, they will be one piece of equipment.

Another key aspect is whether the medium is unilateral or interactive. TV or news media and entertainment are unilateral, but it will be all interactive in the future. With the new equipment and new technology coming out, you can communicate with anybody in the world, retrieve any kind of information and enjoy any kind of entertainment with one machine. This is what we are headed for. We are just at the beginning of this new era. It was triggered by the 1996 Telecommunications Act that was recently passed in the United States.

Without this perspective, I would be unsuccessful in negotiations. Even though we don't discuss those kinds of issues in the negotiations, you have to have that kind of historical perspective.

It also seems to be the conventional wisdom that Japan is lagging behind in use of the Internet and personal computers in general. Would you agree with this?

Lagging behind as compared to whom? For example, Americans, yes; But Europeans? Never. If you go to Europe, Internet providers are fewer and more expensive. I don't think we are lagging behind.

I would have agreed with you a few years ago. Remember, the Internet revolution started last year in this country, and it probably started in America only two years ago. When I left Washington two years ago, the Internet was not popular. It was an exclusive hobby for Internet maniacs.

It may be that on a per-capita basis, Japan lags in terms of the number of computers. But look at my office and see how many computers we have. More than one per-capita. (laughs) Even in the most conservative sector of the Japanese economy, which is the bureaucracy, we have a one person per computer policy. In my office, in MITI and in the Ministry of Posts and Telecommunications.

But it is also important to note that the Japanese language has survived the computer revolution. There is a Windows 95 Japanese version, which you are using right now to input this interview. I got the beta [test version] for it at the same time the final English version of Windows 95 was released in August of 1995. Although typing Japanese is difficult, but at least there is a universal way of inputting Japanese. In China, we still have several different ways to input Chinese characters; these have yet to be unified into a single system. If you can't input your language, can it survive?

Now there is even simple software that translates English into Japanese when you surf over the Internet.

Another aspect is the new recruits coming out of college. They believe that if they don't know anything about the Internet, they won't get a job. So now everybody tries to understand the Internet, but we are only at the threshold. It's all happening now. Within a few years, the number of Internet subscribers will be increasing by millions in this country.

The pundits are saying that the emergence of inexpensive, easy-to-use computer networks is going to dramatically change the work environment in many industries and will set off a boom of entrepreneurism.

Do you think these changes will be profound in Japan?

I'm sure it will create many businesses and new opportunities, and eventually, it will change the traditional aspects of our society. But that is happening everywhere in the world. Of course, there are certain kinds of jobs that are sure to undergo a revolution. Analysts, for example. They don't have to come to the office; they just get all the information from the Internet or databases, then do the analysis and send the outcome by e-mail to the headquarters.

But there are certain kinds of jobs that cannot be processed in the computer--politics, human relations, skinship-type businesses. These are not handled by machines. Look at Washington, D.C., nobody carries computers to calculate political gains and losses. They analyze that in their brain.

Do you foresee Japan becoming a player in the world software market or in entertainment-oriented intellectual property?

At least in terms of personal computer operating systems, my personal hunch is that American dominance will continue in the sectors of services and intellectual properties. However, it doesn't mean that we will be a net importer of software or intellectual properties. I'll give you an example: when I was in the States three years ago, the Teenage Mutant Ninja Turtles were so popular. How could we imagine that? Ninja Turtles are beyond the Japanese imagination--you cannot combine ninja and turtles into one. I was deeply impressed by the creative imagination of the Americans.

However, when I went back to Washington just a year ago, I found that the Japanese-originated Power Rangers were so popular on U.S. television. By the way, they are very `politically correct' in the American Way. They are five masked men and women. They could be a combination of white, Asian, Hispanic, African and other Americans, men or women.

Yes, I agree that in terms of entertainment products, we have probably been a net importer. But Japanese animation and even TV dramas are becoming more and more popular in the world market. I don't want to underestimate our entertainment industry's potential, because Japanese animation is so popular in Europe and the United States. Once, an Indian diplomat based elsewhere in Asia asked me to buy some Sailor Moon products because his daughter loves it. So it's becoming more universal.

I'm not pessimistic about the entertainment industry, and I can say that it relates to the broader issue of whether we should shift our entire economic structure from a manufacturing mode to a service mode. It's going to happen sooner or later.

It has already happened in the United States and in Europe, where 60 percent to 70 percent of economic activity is in services. In Japan, it is slightly more than 50 percent. It is going to increase, especially when as the highly valued yen leads to the hollowing out of the manufacturing sector. The question is, which sector is going to absorb the unemployed? In the case of the United States it was the service sector, financial services, aviation, telecommunications and others. The same thing should happen in Japan in the `90s, which is why the services sector is more important than before.

So we have to promote services exports, and in order to promote them, we have to remove restrictions. By removing those restrictions, we can be competitive. If you protect your industries, as is the case with our financial industries, it will weaken your industries in the long run. That is the lesson we have learned.