TOKYO -- Back in 1994, Nobuyuki Idei had little interest in the Japanese government's grand plan to build a nationwide optical fiber network dubbed the "information superhighway."
"We are a global company -- 75% of our business is outside Japan -- so we essentially don't care about the information superhighway," said Mr. Idei, then a Sony Corp. managing director.
So it might have seemed strange last month when Mr. Idei, now chairman of Sony, sat next to Prime Minister Yoshiro Mori and called for government action to boost growth of Japan's Internet. The IT Strategy Council, a panel of Japanese business leaders and academics appointed by the prime minister and headed by Mr. Idei, summed up their findings in a goal: surpass the U.S. in the area of high-speed Internet within five years.
The plan is one of many government initiatives aimed at boosting e-commerce and Internet usage in Japan. Ministries are promoting work in fields ranging from online payment systems to security on the Net. These sundry projects and Mr. Idei's change of heart reflect broad concerns that Japan is falling behind in high-speed, or broadband, Internet services. The emerging broadband world, much like today's slower-paced dial-up one, is happening first in the U.S., where cable modems and high-speed access technologies are already spreading to homes.
Counters Trend
The panel's goal-setting harks back to an earlier era when Japan's government plotted direction for the country's technology stars. Japan's successful use of industrial policy to build entire industries in autos and chips still holds weight with many government and industry people. A day after the panel's announcement, Japan's Ministry of Posts and Telecommunications unveiled its own plan for Japan's Internet society, promising nothing less than free access to "ultrahigh-speed" Internet services for all Japanese citizens by 2005.
The issue will likely come to the fore soon as Japan's Ministry of Finance considers boosting spending on information technology-related public works projects in next year's budget.
Strong government participation runs counter to the way today's global technology leaders -- from Microsoft Corp. to Cisco Systems Inc. -- have sprung up. Until recently, many of those companies were too small to have representation on a government panel. And in recent years, the U.S. government has deliberately avoided any action that would appear as meddling with the freewheeling nature of the Net, even extricating itself from its historic role overseeing domain name and Internet address allocation.
"Japan is going through a transition ... and it's still not comfortable with what role the government is supposed to play in these industry transformations," says Lee Daniels, president of Jupiter Telecommunications, Japan's largest cable operator.
Japan's post-World War II rise as a technology power has been credited in large part in Japan to government planning. The Ministry of International Trade and Industry used its financial might to turn the country into a power in a range of areas including semiconductors and supercomputers, while other quasi-governmental projects built Japanese industries in fiber optics and communications switches.
But such centralized planning has failed to produce much in the past 10 years. Reacting to U.S. Vice President Al Gore's information highway initiative in 1992, Japan's mandarins pieced together their own plan: the 1994 information superhighway, calling for combined government and private sector spending of one trillion yen ($9.33 billion) annually. But soon the Internet took off, superceding superhighway talk in both Japan and the U.S.
Japan was late to the Internet boom, but in the past couple of years the Net has crept into a growing number of homes. Currently about 20 million Japanese, or 16% of the population, have Net access. That doesn't count the roughly 13 million using cellular phones to tap the Net, an important bright spot for Japan, which has taken the lead world-wide in mobile Internet services. The head start could be extended next year when Japan is the first country to roll out third-generation, or 3G, mobile services that will give cell phones even higher-speed Net connections.
But it may not be enough. Both the 3G service and an ambitious project to wire Japan with optical fiber are for the most part the work of Nippon Telegraph & Telephone Corp., a former state-owned carrier that still dominates telecommunications in the country. Viable broadband options are nonexistent; Japan's cable industry remains fragmented, leaving the total market for cable-based Net access small, while services that squeeze more data into phone lines are also nascent.
This stands in stark contrast to the U.S., where big players from Microsoft Corp. to AT&T Corp. are sinking billions into cable companies with the expectation that cable access will be the choice of millions for high-speed Net access.
The need for high-speed Internet is especially relevant to some of Japan's most international companies. The country is home to leading video-game makers that all have plans for building online games. Sony itself, with movie and music studios, is at work on services that deliver all sorts of video and audio entertainment over the Net. Such services require networks that can handle volumes of data far larger than seen today.
Japan 'Far Behind'
In its report last month the IT Strategy Council emphasized the U.S.-Japan gap, blasting Japan's high-speed Internet as "virtually nonexistent," saying that only "low-speed networks through telephone lines allow connections to the Internet, which keeps the access speed slow and access costs extremely high. This prevents Japan's IT industry from growing, making Japan fall far behind the U.S. in activating its information economy."
To reinvigorate the industry, the panel asked for four actions by the government: investing in broadband network technologies, revising laws that hinder e-commerce, delivering government services via electronic networks, and investing in IT training. Some of the recommendations are expected to be included in a bill next month to Japan's Diet that will outline a broader government policy on information technology.
It's unclear what impact the panel will have. One member argues that even in the Net era it is important for the Japanese government to set goals for industry. "Unless you have a vision, unless you have a target, everything moves so slow," says Masayoshi Son, chairman of Internet investor Softbank Corp. and one of the most aggressive promoters of the Internet in Japan.
Mr. Son argues that by learning from top businessmen, politicians can open doors that will spur the Internet. Specifically he cites a list of niggling regulations that the panel argues stifle e-commerce in Japan. The laws, in industries ranging from tobacco to golf-course memberships, require things like paperwork, face-to-face meetings and physical addresses, which are impossible in cyberspace.
Mr. Son says that in panel meetings he has personally campaigned against an age-old rule over utility poles. Back when interference from electrical lines was a bigger factor, Japan set rules over minimal distances between lines, limiting to four the number that can be strung on a given pole. But now optical fiber, which won't affect other lines, should be allowed to be strung on poles, he argues. Without a change, NTT and electric power companies essentially have monopolies on a key piece of Internet infrastructure, Mr. Son argues.
As for whether small measures like that can bridge the Japan-U.S. Internet gap, Mr. Son says it's at least a start.
"Whether Japan can do it or not is the next subject, but at least raising awareness ... is an important first step," he says.
Write to Robert Guth at rob.guth@wsj.com