Dispute Over Undersea Phone Cable : Would-Be Rivals to Japan Monopoly Hit Stalemate

TOKYO â€”  A meeting between two groups planning to form a consortium to rival Japan’s international telecommunications monopoly has fallen apart after sharp disagreement over a transpacific undersea cable, an official said.

“We’re in a stalemate situation,� Jonathan Solomon, director of special projects for the giant British firm Cable & Wireless, said Friday.

The stalemate was a setback for efforts by companies in Europe and the United States to get a piece of the telecommunications business in Japan, from which they have been largely excluded.

International Digital Communications, a group of 35 businesses that includes Cable & Wireless and San Francisco-based Pacific Telesis Group, is trying to form a consortium with the all-Japanese International Telecommunications Japan, headed by major trading companies including Mitsubishi, Mitsui and Sumitomo.

They hope to team up against Japan’s current international telecommunications monopoly, Kokusai Denshin Denwa.

As a precondition to setting up the joint venture, the group including U.S. and European partners called for a $500-million transpacific undersea cable to compete with the Japanese monopoly on an equal footing.

However, the all-Japanese group, International Telecommunications Japan, restated Friday that the cable should not be a prerequisite for establishing a new firm but an issue for the company to address in the near future.

Earlier this month, Britain’s House of Commons called for retaliation against Japan’s perceived failure to allow significant foreign participation in its telecommunications industry.

Japanese Prime Minister Yasuhiro Nakasone received letters from several government leaders including President Reagan and British Prime Minister Margaret Thatcher, urging him to help open Japan’s market.

Solomon said Japan was procrastinating on the matter because it is “difficult for the country to have foreign companies run its international telecommunications.�

But he added: “It’s not for a foreigner to decide how to change the situation. . . . I think frankly that it is a Japanese matter, which I think they are working on.�

At an earlier press conference Friday, Zenshiro Nagasaka, general manager for Mitsubishi’s Communication Network Project Department, said: “Both sides tried to resolve the issue but failed to reach agreement.�

Nagasaka held out the possibility of a compromise, saying his consortium would study the matter. “We must continue further talks in order to reach agreement for a merger,� he told reporters.

In Friday’s meeting, the two sides also failed to resolve the question of how to divide up membership in the new firm, Solomon said.

Representatives of both sides said at a news conference that the companies would again be in contact, but only on a working-level basis. No date for the next meeting was set.

International Telecommunications Japan called for equal shares in the firm, while International Digital Communications demanded a “core group� in the company to hold the majority of the shares, Solomon said.