Japan May Let Hughes, Two Partners Set Up a Private Satellite System
Amid mounting U.S. pressure to open its trade doors to American companies, Japan agreed Tuesday to receive the license application of Hughes Aircraft and two Japanese partners to jointly operate a private satellite system for domestic Japanese markets.
Approval of that business license by Japan’s Ministry of Post and Telecommunications would clear the way for development of a two-satellite network expected to cost between $300 million and $400 million. Past trade restrictions have prevented sales of American-made communications satellites to Japan.
“Only a year ago there was no thought of selling U.S.-made satellites for domestic telecommunications use in Japan,” acknowledged Donald H. White, president of Hughes Aircraft in El Segundo. He said efforts to enter the Japanese market began more than a year ago at the urging of U.S. government officials.
“This became, in a way, a test case,” said Albert Wheelon, president of Hughes’ Space & Communications Group. “U.S. satellite technology is vastly superior to that which the Japanese have already developed. If Japan wouldn’t buy something where clearly they get the benefit of the trade, then what would they buy?”
Huge Market in Japan
At a news conference Tuesday in El Segundo, Wheelon called Hughes’ anticipated entry into Japan’s lucrative communications market “one of the first tangible examples of the serious intentions of the Japanese government . . . to make this a two-way street--to share U.S. technology with Japan and the Japanese market with Americans.”
Japan’s telecommunications market is worth an estimated $10 billion to $14 billion and has been closed for the most part to U.S. manufacturers. According to U.S. trade officials, 1984 exports to Japan by American telecommunications companies were $35.8 million, compared to $1.1 billion in Japanese telecommunications exports to the United States.
On April 1, however, the Japanese government-owned telephone monopoly, giant Nippon Telegraph & Telephone, was reorganized as a privately held company, raising expectations of increased trade with foreign firms.
“There’s an enormous pent-up demand for communications satellites in Japan,” Wheelon said. He noted that the United States, with a population of 230 million, uses 500 satellite transponders, while Japan, with 130 million people, is served by only 10.
Hughes, through its joint-venture company--Japan Communications Satellite--plans to use the U.S. space shuttle to launch two satellites by early 1988. Each satellite will have 32 transponders capable of transmitting voice, television and data.
Although final approval of the application is pending, Hughes officials said recent actions by the Japanese government “give us substantial hope” for success.
“Their habit is to encourage things that they intend to approve,” Wheelon said.
And, in a related move, the ministry--Japan’s equivalent to the Federal Communications Commission--recently cleared the way for competitive private satellite systems in Japan by making restricted transmission frequencies available to Hughes’ joint-venture company.
The joint-venture company was formed last September, with C. Itoh & Co. owning 40%, Mitsui & Co. holding 30% and Hughes owning 30%, the maximum foreign ownership permitted under recently liberalized trade rules in Japan.
Hughes officials said the American company would provide the space and ground systems as well as technical advice, while its Japanese partners would finance and market the system.
