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Japan's KDDI, SoftBank say NTT's broadband plan risks monopoly revival

By Teppei Kasai

TOKYO (Reuters) - Japan's KDDI Corp and SoftBank Corp said bigger rival NTT DoCoMo Inc (DoCoMo) could gain too much control of the wireless telecommunications business should DoCoMo's parent offer its fibre-optic broadband for resale.

Former state monopoly Nippon Telegraph and Telephone Corp (NTT) in May said it planned to sell its fibre-optic broadband to mobile phone network providers, which can then re-brand the service and sell it together with mobile phone contracts.

At present, NTT sells its fibre-optic broadband independently or in partnership with SoftBank, whereas KDDI offers its own service. Of Japan's three mobile network providers, only DoCoMo lacks a fibre-optic component.

But NTT selling DoCoMo the service risks reviving the former monopoly of NTT, which is still 36 percent government owned, KDDI and SoftBank said separately. NTT has dismissed the notion.

"The current law doesn't say anything specifically on wholesale schemes. But one wonders, just because it doesn't say anything, whether it should be allowed to go ahead," KDDI Chief Executive Takashi Tanaka said after a news conference on Wednesday.

KDDI earlier this month sent a letter of complaint to the Ministry of Economy, Trade and Industry (METI) saying NTT and DoCoMo could end up controlling broadband prices, "leading to a loss of incentives for competitors to invest in infrastructure."

DoCoMo, 63 percent-owned by NTT, last week said it planned to bundle mobile and NTT broadband services but did not disclose pricing.

Any sales of the package is likely to hurt KDDI as that company's revenue growth over the past few quarters has been largely driven by its "Smart Value" broadband and mobile bundles, said analyst Peter Milliken of Deutsche Bank in a recent report.

SoftBank said NTT could violate anti-monopoly regulations by offering its fibre-optic broadband for resale without making the terms of any resulting arrangements public.

"The terms of usage should be made clear, so that METI and competitors can check it's (NTT) not breaking the law," SoftBank said in a document released earlier this month by METI.

NTT has dismissed any notion of monopolistic practices.

"Of course, we'll be fair," Hiroshi Tsujigami, NTT senior vice president of corporate strategy planning, said in a recent interview with Reuters.

"From our position, we want more people to use the fibre network, so we'll rent it based on the traditional competitive rules."

(Editing by Ritsuko Ando and Christopher Cushing)

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