1. [Constructing IP Networks as Part of a Global Information Infrastructur e for a New Age]	A variety of visions of a future information society have b een presented since the 1980s. Spurred on by commercialization, the Interne t, originally a computer network used principally for academic purposes, has expanded rapidly and assumed the mantle of a global information infrastructu re. Japan lags far behind the US and Europe in the construction and use of IP networks built upon the Internet communications protocol, and expansion o f this gap must be halted immediately. It is also urgent, too, that Japan earnestly encourage the construction of IP networks.
2. [Constructing CANs as a Strategic Move in the Transition to an Informat ion Society]	Providing public funds for the information and communications s ector is essential to infuse some vigor into the Japanese economy and indust rial base, both of which have been hit hard in the continuing recession. Ho wever, Japan's conventional "information public works investment" policy off ers no new direction for the Japanese economy and society. We would like to recommend that an infrastructure of local IP networks which all members of t he local community can join be established and that it feature applications that can be easily used by all members of the local community; we also recom mend that, upon this infrastructure, the nationwide construction and operati on of Community Area Networks (CANs) which can be employed by all members of a community for a variety of activities -- community management, promotion o f local business, various NPO activities, etc. -- be considered the most imp ortant and pressing strategic issue in Japan's transition to an information society.
3. [Reforming Business Processes as a Fundamental Means of Advancing the I nformation Revolution]	Japan has achieved considerable success in improving factory productivity and the productivity of standardized service operations through incorporating information technology. However, the key to internat ional competitiveness for Japanese industry now and in the future will be br oadly improving the productivity of white-collar workers by integrating info rmation technology into their non-standardized tasks. This will necessitate a review of traditional business processes and the implementation of a compr ehensive analysis of company-wide tasks and highly transparent operational p rocesses based on a substantial understanding of information technology. On ly if structural reform of industry and government administration incorporat es information technology will it have any meaning. Corporate restructuring , administrative structural reform, and the reorganization of ministries andagencies will not serve to improve international competitiveness unless thes e are simultaneously based on analyses of information flow within operationa l structures and on information technology.
4. [Constructing Open Systems Needed to Integrate Information Technology]	Information systems in Japan are constructed in and by individual companies and ministries/agencies, with each of these systems being separately and dis tinctly developed in accordance with the specific tasks required; this has c reated problems of compatibility in data formats used by different organizat ions and in network links. While it is only natural that core systems for i ndividual organizations were constructed independently, an excessive stress on the independence of other systems has not only impeded the improvement of productivity through networking but also has served to increase data process ing costs. Organizations should actively promote the use of packaged softwa re and construct open systems suited to networking.
5. [Building Networks with Security in Mind]	As information systems have grown in importance, so too has the need to maintain high levels of system s ecurity. Expanded networking has brought with it a greater threat of securi ty problems. Maintaining system security requires organizations to employ p ersonnel familiar with information systems and the tasks of these organizati ons, and it goes without saying that organizations must first seek to raise awareness among all of their employees of the importance of system security.
6. [Resolving the Year 2000 Problem and Other Sources of Instability in In formation Systems and Administering Systems in a Socially Responsible Manner ]	Information systems managed by individual corporations have come to form a neural system spanning the full scope of social activity, and the stabilit y of these systems is thus essential for social stability. At the same time , these systems face a variety of external and internal threats that will, i f successful in destabilizing the systems, result in chaos over a wide range of social activity. The Year 2000 problem is perhaps the most renown of the se, and instability in even a portion of these systems caused by this proble m could have an enormous impact on other systems. Despite this, there see ms little interest in the Year 2000 problem in Japan, especially in companie s and government offices, and appropriate approaches must be developed it ne eds to recognize that the adverse effects of the Year 2000 problem will not stop with individual organizations but quickly escalate into a major society -wide crisis.
7. [Encouraging the Training of Information System Specialists]	Japanese o rganizations have often taken to reducing the number of support personnel an d tend to cut support personnel levels without sufficiently assessing their operational value. Within organizations overall little regard has been give n to information technology -- hence the clearly inadequate numbers of spec ialists in information systems management employed by Japanese corporations, ministries/agencies, and universities -- and the assignment of non-specialis t managers to oversee OA systems has become another impediment to higher pro ductivity. If Japan is to integrate information technology more effectively in future, it will need to increase the number of information system special ists in all organizations and to encourage the training of such specialists to that end.
8. [Paving the Way for Optical Fiber Links to All Schools and Internet Con nections in All Classrooms]	8. [Paving the Way for Optical Fiber Links to All Schools and Internet Con nections in All Classrooms] Despite the wide public attention garnered by t he noteworthy "Nationwide School Optical Fiber Connection Program" proposed by the Ministry of Posts and Telecommunications as an integral part of the g overnment's overall economic policy, understanding of the Internet is still low among Japanese government officials and bureaucrats and this program has been shelved, perhaps attributable to political indecision as the Upper Hous e elections approach. This is indeed regrettable because, under the directi on of the Clinton-Gore administration, various parties in the US have joined together to link up all schools to the Internet by the year 2000, and Japan is thus throwing away a golden opportunity to close in a single stroke the e normous disparity between the US and Japan that this project has produced. As with the economy, the US-Japan disparity in new educational infrastructur e is only growing wider. The Japanese government should once again acknowle dge the importance of the program to link all schools by optical fiber cable s and to pave the way for Internet connections in all classrooms.
9. [Promptly Devising a New Concept of Education that Employs the Internet and Establishing the Necessary Social Infrastructure]	"Internet education" in Japan is an extremely vague term with little impact, and the problem is l ikely that no clear means of effectively integrating the Internet as an educ ational tool has been set out. The value of doing so, however, can be seen in the example of the US and the major changes it has brought to educational quality there. The "implant" style of education in which information, be it understood by the teacher or not, is simply conveyed to students in accordan ce with a curriculum is being increasingly rejected in favor of a system by which students can learn by themselves not by being taught by teachers but b y receiving help towards achieving their own learning objectives. This dire ction provides the foundations that children growing up during the Informati on Revolution should acquire. Realization of such a system will without que stion require both personnel and financial support; if public funding alone proves insufficient, then schools should consider approaching corporations d irectly for contributions.
10. [Reorganizing the Japanese Legal System to Correspond to the Informati on Age]	The information revolution of recent years has to it a new industri al revolution dimension and an information society revolution dimension. The appearance and activity in recent years of many NGOs and NPOs, which differ in personality from states and corporations, and the remarkable emergence of a new type of individual -- a third identity axis known as the "netizen" as opposed to the conventional identities of "national" and "citizen" -- are so cial phenomena that mark the start of an information society as a new phase of moderization. An appropriate legal system must be established if today's information revolution is to contribute to the further development of human society. As we move even deeper into the third phase of modernization, a ne w legal system that might be termed "joint law" (known in English as "cyberl aw") that governs the rights and obligations between NGOs/NPOs and netizens on the basis of the idea of "joint rights", i.e., the concept of "informatio n rights", must be created as common law and as positive law. At the same t ime, it will become necessary to attempt to define the relationship between information rights and property rights and that between information rights a nd autonomy.
11. [Promoting Electronic Commerce on the de facto GII of the Internet]	W e should recognize that private-sector initiative has advanced the construct ion of the de facto Global Information Infrastructure (GII) in the context o f the Internet, and full advantage should be taken of this trend. The debat es surrounding GII at present focus on electronic commerce (EC). The intern ational community is currently engaged in discussions on rules for the smoot h conduct of electronic commerce on the GII in connection with the issues of taxation, verification and security, and the protetion of personal data, but with economic activities in cyberspace just beginning to grow at present, ce ntral and local governments should refrain from imposing additional taxes on online electronic commerce. Encryption technology is essential for full-sca le use of the Internet, but it must be borne in mind that dishonest use of e ncryption technology might hinder investigations by law enforcement agencies . Nevertheless, from the standpoint of effectiveness, it would be advisable to make use of a "key recovery system" obligatory throughout Japan. As the use of information networks becomes a more commonplace part of daily life, t he principle of an environment allowing economic activities to be conducted as freely and fairly as possible should be maintained in addressing these is sues.
12. [Developing an Official Japanese Approach to the Internet Governance Is sue]	As large-scale commercial use of the Internet grows, mechanisms for do main name assignment, trademark issues, and more reliable packet routing hav e all merited reconsideration. An increasing reliance on computer networks for social activities has generated concerns about security threats, such as terrorist attacks via networks on vital social infrastructure such as commun ications facilities, traffic systems, and financial networks. It does not s eem likely that such attacks could immediately knock out the entire Internet but, given the number of people involved, the sheer scale of the problem, an d conflicts of interests, it may be difficult in the short run to come up wi th a solution to these security issues. Viewing the Internet as a type of s ocial system, the issue of global governance in maintaining and developing a system which has no central government has arisen. The protection of this e specially important social infrastructure calls for each country to design i ts own approach and, sublating past circumstances and laws/regulations, the Japanese government should promptly begin examining this issue and lead an o pen debate within Japan.
13. [Eliminating Barriers to Competition and Providing Users with World-Cla ss Service at Low Cost]	The deregulation that has been carried out in the t elecommunications field from 1996 should be praised as forward-looking in th at it has removed many of the barriers that existed within the telecommunica tions industry. This removal of barriers to competition is a significant st ep in making Japan a market in which communications companies from around th e world compete to offer quality service and in allowing Japanese companies and consumers to take advantage of the best telecommunications services in t he world at rates that are low by international standards. While the remova l of barriers may prove quite troublesome for existing companies, companies tempered in a fiercely competitive Japanese market will then be very competi tive worldwide. The removal of past barriers to competition should indeed b e positively assessed as forward-looking, but many outstanding issues still remain, for example, the barriers to competition between broadcasting and te lecommunications companies and the distinctions made between Type 1 and Type II carriers in the telecommunications industry. Reform will not be painless , but in light of the global competition that continues to spur on the devel opment of today's information and communications industry, Japan cannot affo rd to permit the existence of barriers that hinder adaptation to new trends. Japan should move boldly ahead with reform.
14. [Using the Principle of Competition to Secure Access to Quality Informa tion Infrastructure for All Residents of Japan]	For Japan to continue makin g cultural and economic contributions to the world economy, it is necessary that all Japanese residents and companies be well-versed in the use of infor mation technology. "Transparency" has become a keyword in the reconstructio n of Japan's political, economic, and social systems, and these reforms will require information disclosure systems that fully utilize information techno logy. Access to information infrastructure should not be restricted to a sm all number of well-to-do people but rather guaranteed to all people, and it is thus imperative that all residents of Japan enjoy an environment in which they can inexpensively benefit from world-class quality information and comm unications services. The long-standing mechanism of providing universal ser vice in total disregard to market principles no longer functions properly, a nd appeals should be made to users as well as suppliers in both promoting co mpetition in the information and communications industry and achieving unive rsal service.
15. [Reforming Telecommunications Charges for the Construction of a Value-C reating Cyberspace]	It is important that companies with offices in Japan an d people who live in Japan actively participate in the process of knowledge creation through the medium of computer networks, and a fixed rate system th at promotes use should be introduced for this purpose. From the experience of the US, we have discovered the immeasurable merits of an environment in w hich communications can be carried out with others worldwide 24 hours a day without concern about additional costs. Japan, too, should promptly seek to expand introduction of fixed rate service systems that promote usage in line with new concepts and should endeavor to establish more economical rates.
16. [Developing Global Standards for Interconnection Rules to International ize Telecommunications]	The globalization of the information and communicat ions industry seemingly knows no bounds. On the one hand, corporate managem ent has moved towards greater alliances and mergers/acquisitions, while on t he other hand, the universalization of digital technology has let technology completely transcend national borders. In the midst of these changes, thoug h, individual countries continue domestically to apply their own peculiar in terconnection rules. Communications comprise one of the most important elem ents of infrastructure in these countries and social demands, in addition to technological and economic conditions, have helped in great part to determin e the overall framework of interconnection rules in individual countries. N ow that it has become clear that the welfare of consumers worldwide is enhan ced through competition, rules should be drafted that facilitate market entr y in all countries. Global interconnection rules must be formulated that em phasize efficiency and long-term development.

The Policy Recommendations

1. [Constructing IP Networks as Part of a Global Information Infrastructur e for a New Age]	A variety of visions of a future information society have been presented since the 1980s. Spurred on by commercialization, the Intern et, originally a computer network used principally for academic purposes, ha s expanded rapidly and assumed the mantle of a global information infrastruc ture. Japan lags far behind the US and Europe in the construction and use o f IP networks built upon the Internet communications protocol, and expansion of this gap must be halted immediately. It is also urgent, too, that Japan earnestly encourage the construction of IP networks. A variety of visions of a future information society have been presented s ince the 1980s, among them the concepts of "softnomics" and the "multimedia society". There have also been many attempts at commercializing multimedia service utilizing cable television and telephone lines to establish an infra structural base for this information society. Meanwhile the Internet, originally a computer network used principally for academic purposes, has expanded rapidly and has now assumed the mantle of a global information base. The wide area network that has been suggested as t he form which the information and communications systems of a new age should take has been embodied in the Internet communications network built on the I nternet Protocol (IP). IP is the overall term for the communications proced ure on the Internet, and the "IP paradigm" is the concept of comprehensively linking a variety of network infrastructures via IP to create an open and wi de area information base. Recently the US Federal Communications Commission (FCC) as well as the US government essentially committed themselves to this vision. IP networks will naturally evolve even further with future technolo gical advances, but the major direction they will take seems to have been se t out already. Japan lags far behind the US and Europe in the construction and use of IP networks, and the expansion of this gap must be halted immediately. To that end, Japan should (1) proceed further with deregulation so that new IP trunk lines can be constructed through cooperation and competition among both fore ign and domestic companies, and (2) link together local access networks, ess ential for realizing the IP paradigm. In concrete terms, this means establi shing a policy to make widely available the rights to use communications inf rastructure owned by individual companies -- rights of way, the rights to us e conduit lines and electric poles, the rights to utilize lines (dark fiber, dry pair, etc.) owned by Type 1 Telecommunications Carriers or constructed a nd owned by other companies for sales/leasing purposes, access rights to com munications services (especially local telecommunications services) provided by carriers -- to other telecommunications carriers at competitive prices. At the same time, existing communications and broadcasting companies must se riously respond to this new shift, i.e., these companies themselves must und ertake the construction and operation of IP networks.
2. [Constructing CANs as a Strategic Move in the Transition to an Informat ion Society]	Providing public funds for the information and communications sector is essential to infuse some vigor into the Japanese economy and indust rial base, both of which have been hit hard in the continuing recession. Ho wever, Japan's conventional "information public works investment" policy off ers no new direction for the Japanese economy and society. We would like to recommend that an infrastructure of local IP networks which all members of t he local community can join be established and that it feature applications that can be easily used by all members of the local community; we also recom mend that, upon this infrastructure, the nationwide construction and operati on of Community Area Networks (CANs) which can be employed by all members of a community for a variety of activities -- community management, promotion o f local business, various NPO activities, etc. -- be considered the most imp ortant and pressing strategic issue in Japan's transition to an information society. Providing public funds for the information and communications sector is es sential to infuse some vigor into the Japanese economy and industrial base, both of which continue to suffer from the current recession. However, Japan 's conventional "information public works investment" policy that has postpo ned the laying down of optical fiber cables offers no new direction for the Japanese economy and society. The infrastructural improvements in the area of information and communications needed by Japan must address the following issues. (1) To help plant the seeds for, and meet the needs of, a proliferation of new industries, the government should directly support the startup of new in dustries and create high value-added employment by providing greater opportu nities to utilize information technology. (2) The government should make possible wider access to the information mar ket, provide new means of revitalizing conventional industries and expand do mestic demand while maintaining employment. (3) The government should provide opportunities at schools, public faciliti es, and in the home for the Japanese public to learn to utilize information technology and to acquire a wide range of knowledge via computer networks. In constructing and improving IP networks, local networks are of even grea ter strategic importance than trunk line networks. An IP network comprising mutually linked LANs is an absolutely indispensable part of the information and communications infrastructure for local communities in an information so ciety. The extensive construction of local IP networks is an important prec ondition for guaranteeing demand for trunk line IP networks. Hence, the central government as well as local governments should provide financial support for the construction and use of Community Area Networks (C AN) throughout the country. The CANs referred to here are local IP networks (LANs, inter-LAN networks, access networks to local trunk lines, local trunk lines, etc.) which all members of the local community can join that combine applications that can be easily used for a variety of objectives and opportu nities for participation in diverse activities with support and research ser vices provided for a fee or at no cost that cover a whole range of areas fro m protection and management of IP networks to application use and participat ion in activities. It is the construction and use of such CANs nationwide t hat is the most important and pressing strategic issue in Japan's transition to an information society.
3. [Reforming Business Processes as a Fundamental Means of Advancing the I nformation Revolution]	Japan has achieved considerable success in improving factory productivity and the productivity of standardized service operations through incorporating information technology. However, the key to internat ional competitiveness for Japanese industry now and in the future will be br oadly improving the productivity of white-collar workers by integrating info rmation technology into their non-standardized tasks. This will necessitate a review of traditional business processes and the implementation of a compr ehensive analysis of company-wide tasks and highly transparent operational p rocesses based on a substantial understanding of information technology. On ly if structural reform of industry and government administration incorporat es information technology will it have any meaning. Corporate restructuring , administrative structural reform, and the reorganization of ministries and agencies will not serve to improve international competitiveness unless thes e are simultaneously based on analyses of information flow within operationa l structures and on information technology. Japan has from early on achieved considerable success in incorporating inf ormation technology into industrial productivity improvements and into stand ard service operations. It has also endeavored via information technology t o bring about services that would not be possible without such technology. However, much of this progress has involved a very limited exploitation of t he potential of such technology, where only a restricted number of parties a re directly involved in developing and using the information technology and where conventional work methods have been changed as little as possible. Certainly a specialist would find it much easier to construct an informati on system with a limited range of involvement in the project, and indeed it is possible to create an information system without understanding all of the work performed by a particular organization. Many firms in Japan do not if possible establish information specialist positions within their own company framework, preferring instead to rely on outside specialists to integrate in formation technology into their operations. There is a strong tendency in s uch cases to limit the number of parties involved, but if such a policy is p ursued without regard for conformity amongst the various groups within an or ganization, then the overall flow of information will in fact deteriorate. Improving the productivity and sales/planning capabilities through the inc orporation of information technology into the nonstandard tasks of white col lar workers has become the key to future international competitiveness. In such tasks, people who until now have had no connection with particular info rmation will be asked to access a broad range of information from within and without the organization, analyze it, and make appropriate judgments. To ma ke such improvements in operational productivity, changes must be made to al low internal corporate information to transcend the walls built around the o rganization, to circulate widely, and to be processed with a high degree of compatibility. This will require a turn away from the attitude that informa tion processing should be left to specialists, which leads the majority of e mployees in a company to shy away from any involvement therein. The integra tion of information technology should be wholly consigned to outside special ists, and personnel at all levels in the company should view this as an issu e crucial to their own work; hence, the company should do its own planning a nd devise its own solutions. This issue is equal in standing to many other productivity improvement issues. At the same time, top management should recognize the need to review their traditional company structure and to make utmost use of information technolo gy in increasing competitiveness as a central issue to enhancing the overall competitiveness of their company. Greater competitiveness through higher in dustrial productivity was the secret behind Japan's international competitiv eness after World War II. Top managers themselves acquired an understanding of the necessary technology, made the appropriate investments, and directed increases in productivity, leading to greater production capacity. Plant pr oduction methods, company organization, personnel composition, and the skill s required in each of these areas were radically altered and improved produc tivity was achieved. This success was due to the comprehension and proper a ssessment of the importance of technology on the part of Japanese corporate leaders from the 1960s. In the 1990s the focus of technological improvement to operations shifted from the factory to the white collar sector, and the new means became inform ation technology. Successful corporate management requires an understanding of how to link this technology to improved competitiveness and the will to p ursue this course. All levels of corporate management from the top down mus t carry out a wide-ranging analysis of the firm's operations, review their t raditional business processes, make suitable choices of personnel to be plac ed in charge of integrating this technology, and conduct retraining in neces sary skills. The ability to implement such a policy and make the appropriat e investments is crucial to restoring Japan's international competitiveness. A very similar approach might be recommended to improve the administrative operations of the government. Under the ??Government Staff Levels Act??, an across-the-board cut in personnel has been carried out in government ministr ies and agencies, and this has been almost the entirety of the government's efforts to "slim down" its administrative tasks. As this personnel reductio n was uniform and did not include any provisions to take advantage of inform ation technology to improve efficiency, much of the old work has been outsou rced and a vast number of quasi-governmental organizations have sprung up, c reating a chaotic situation in which it is difficult to determine the actual number of personnel engaged in these administrative tasks. If no regard is given to "conservation of effort" through operational analysis and informati on technology use as well as to reorganization based on a thorough assessmen t of information flow, the end result of any efforts to streamline will simp ly be greater chaos. Organizational improvement is fundamentally a top-down decision, and persons at the highest levels familiar with information techno logy must demonstrate leadership in coordinating such improvement with a bot tom-up operational analysis.
4. [Constructing Open Systems Needed to Integrate Information Technology]	Information systems in Japan are constructed in and by individual companies and ministries/agencies, with each of these systems being separately and dis tinctly developed in accordance with the specific tasks required; this has c reated problems of compatibility in data formats used by different organizat ions and in network links. While it is only natural that core systems for i ndividual organizations were constructed independently, an excessive stress on the independence of other systems has not only impeded the improvement of productivity through networking but also has served to increase data process ing costs. Organizations should actively promote the use of packaged softwa re and construct open systems suited to networking. The incorporation of information technology in its basic form involves com puterizing operations at government offices, corporations, and other organiz ations, forming networks and sharing information. Computerization began in the 1960s, but initially existing operations were simply computerized with a s few alterations as possible. Even within individual companies computeriza tion was carried out on a task-by-task basis with no concern for compatibili ty with other tasks, and tasks continued to be carried out independently by individual sections within the company even after computerization. There ha d been little variation earlier in the sharing of information as most inform ation exchange was done on paper but, with computerization self-contained wi thin individual sections, the differences grew larger. Additionally, computerization brought with it the need to develop software , which in the absence of any models, was produced independently by each com pany following its own particular way of doing things. Although computeriza tion later become more widespread and a large number of programs became avai lable, companies did not diverge from their own independent courses, a manif estation of the dislike of companies for changes in the flow of work due to computerization and their conservativeness in opposing change. Companies ar gued that protecting their own business know-how was important to ensuring t heir competitiveness, and it was a time where independence was stressed at t he expense of all else. In many respects, custom-designed software is easier initially to use than packaged software. Improvements to this software require independent effort , however, and such improvements tend therefore to be delayed. With package d software, the larger the number of users, the greater the assets that can be devoted to making improvements, and it does not take long for packaged so ftware far superior to this custom software to make its appearance. For this reason, as computerization progressed during the 1980s, Japanese systems for a time surpassed packaged US systems in terms of detailed functi ons, but this dominance disappeared in the 1990s. As the focus of computerization shifted from information exchange within c ompanies to similar exchange between companies, extensive revisions were nec essary in systems in Japan, where companies stubbornly clung to "independenc e" and continued to implement computerization on their own. Standardization -- be it through EDI (Electronic Data Interexchange), CALS, or other means - - thus became extremely difficult. For the performance of general tasks not connected with core competence, c ompanies should actively adopt standardized packaged software and construct open platforms all the way to the application level, abandoning their stance of pointlessly stressing their independence and rejecting changes to their t raditional work methods. When one realizes that this has been made difficul t not by technological shortcomings but by the rejection by even the top com pany managers, who seek to maintain the current system, of changes to work m ethods, then it becomes apparent that this is not only an issue for data pro cessing managers but for all company members. It goes without saying that the adoption of commercially available package d software will require from data processing managers completely new tasks a nd abilities regarding understanding and assessment of this software and its compatibility with existing systems. Executive leadership is essential to b ring about a change in thinking in both the providers and the users of such a system. The use of standardized packaged software for business processes by the go vernment as well as by the private sector will help promote the networking o f documentation between the private sector and the government used in variou s procedures.
5. [Building Networks with Security in Mind]	As information systems have g rown in importance, so too has the need to maintain high levels of system se curity. Expanded networking has brought with it a greater threat of securit y problems. Maintaining system security requires organizations to employ pe rsonnel familiar with information systems and the tasks of these organizatio ns, and it goes without saying that organizations must first seek to raise a wareness among all of their employees of importance of system security. Japanese companies and government offices are far behind their US counterp arts in their use of information technology. The typical Japanese company h as only one-third to one-fifth the number of personnel proficient in informa tion technology in the typical US company. This constitutes a major obstacl e to the effective integration of information technology into company operat ions, which is being pursued by minimizing the number of support personnel a nd in some cases relying on outsourcing. When problems do arise, regular em ployees must fall back on their own resources to resolve them, and devoting time to solving such problems increasingly interferes with the employees' no rmal work. There is, however, heightened interest in security issues stemming from th e introduction of information technology into the workplace. Systems have e xpanded via networks from stand-alone systems to intra-company networks and networks linked to affiliated companies and even the general public, and as their role has grown larger, so too have security problems. Security proble ms can broadly be classified into four categories: (1) Hardware/software faults (2) System breakdowns due to external causes: fire, earthquakes, power outa ges, etc. (3) Problems due to carelessness: input of incorrect data, leakage of secrets (4) Damage and/or leak of information due to deliberate attacks As information becomes more and more important, these problems have an inc reasingly serious impact. The methods for dealing with these problems depen d on the circumstances in which the problems appear. Software bugs can be f ound in many application packages as well as in operating systems, and it is essential to find a suitable means of resolving these. To respond to improp er operation by users, a help desk is needed. A service that separates out problems occurring in centralized control systems is necessary to respond pr omptly to malfunctions. Such information system management entails costs wh ose necessity is at times difficult to see, and for that reason such managem ent is overlooked in Japan and the requisite funds not earmarked; this in tu rn makes the information systems more troublesome to use and more often than not impedes the expanded use of information technology. The deliberate atta cks of hackers can also be a major headache. There has been progress made i n authorization and control measures as well as in fire wall technology to c ombat these attacks, but means of overcoming these defenses are constantly b eing developed. Much of the software that these hackers use can be download ed from websites on the network, and it is now even possible to garner ideas from articles in magazines for computer buffs to do such hacking. The situa tion is such now that even a person not particularly knowledgeable about pro gramming can slip past access control barriers set up by experts. In addit ion to infiltration through networks, security risks are also present in med ia such as floppy disks which are used carelessly; software packages which h ave been illegally copied are regarded as especially dangerous in this regar d. To ward off such dangers, potential target organizations need managers w ith sufficient knowledge of, and authority within, these organizations. Aut horization control for single files accessed by multiple users and utilized jointly is a complex matter requiring supervisory personnel. Even then, it may be difficult at times to discover when security has actually been violat ed. Destruction of data and other such damage by hackers is readily apparent but it is not uncommon for data theft or eavesdropping to go unnoticed fo r a long time. Caution by persons actually using the computer is needed to prevent such acts, but central surveillance of the software being used throu ghout the system at any given time can also be effective. In this regard, too, a sufficient knowledge of the personnel and tasks req uired to meet an organization's needs is essential. Greater diffusion of in formation technology is inevitable, but it is important to recognize that in troducing information technology and systems haphazardly and parsimoniously will only increase the public's vulnerability.
6. [Resolving the Year 2000 Problem and Other Sources of Instability in Inf ormation Systems and Administering Systems in a Socially Responsible Manner]	Information systems managed by individual corporations have come to form a neural system spanning the full scope of social activity, and the stability of these systems is thus essential for social stability. At the same time, these systems face a variety of external and internal threats that will, if successful in destabilizing the systems, result in chaos over a wide range o f social activity. The Year 2000 problem is perhaps the most renown of thes e, and instability in even a portion of these systems caused by this problem could have an enormous impact on other systems. Despite this, there seems little interest in the Year 2000 problem in Japan, especially in companies a nd government offices, and it needs to recognized here that the adverse effe cts of the Year 2000 problem will not stop with individual organizations but quickly evolve into a society-wide crisis; consequently, appropriate approac hes should be developed. Information systems run by individual companies -- be they for customers, for internal company use, or for use among affiliated companies -- have in r ecent years become indispensable to smooth company operations. Especially f or real-time systems, even a very short-term problem can have a major impact on society, and prolonged difficulties on systems that are not real-time can still make themselves felt over a broad scope. The greater the social impor tance of a particular system, the the more likely that a technical problem w ill become a social one. It was sufficient in the past to guard against har dware failures, software bugs, and physical disasters, but in recent years v arious network-based threats, especially the Year 2000 problem, have come to the forefront. The Year 2000 problem stems from the use of the last two digits to designa te years in the 1900s; this device will need to be altered from the year 200 0. A wide range of application programs and databases could potentially be affected by this problem, and all of these must be examined and the necessar y corrections and alterations made. The programs used by typical companies have been developed over several de cades, and often the persons who developed them have already quit the compan y, there are not longer any specialists present familiar with the programmin g language in which the source code is written, or the source code itself ma y have been lost. In these cases, confirming that no problem will occur fro m the year 2000 will be quite an expensive matter. All companies in the US have invested large sums of capital to deal with the Year 2000 problem, and not a few of these have made publicly known their approaches to this issue. In Japan, many software houses have seen a surge in their sales due to reque sts for Year 2000 solutions, but it is still unclear how many individual use r companies are handling this problem; indeed, the budget for software revis ions to address the Year 2000 problem in government organizations have not b een sufficiently revealed. Acknowledging the existence of social responsibility in computer use, all computer users should inspect their systems for Year 2000 problems and make clear both the results and their testing methods. The Japanese government s hould therefore implement an inspection of all computers used by government organizations and earmark funds for making software revisions as they become necessary.
7. [Encouraging the Training of Information System Specialists]	Japanese or ganizations have often taken to reducing the number of support personnel and tend to cut support personnel levels without sufficiently assessing their op erational value. Within organizations overall little regard has been given to information technology -- hence the clearly inadequate numbers of specia lists in information systems management employed by Japanese corporations, m inistries/agencies, and universities -- and the assignment of non-specialist managers to oversee OA systems has become another impediment to higher produ ctivity. If Japan is to integrate information technology more effectively i n future, it will need to increase the number of information system speciali sts in all organizations and to encourage the training of such specialists t o that end. Corporate competitiveness will be improved by the increased use of compute rs and other information technology in the white collar sector and greater i ndividual productivity, and by using these elements to improve productivity in all departments, in overall company operations, and indeed in corporate g roups as a whole. To that end, the use of information technology for standardized tasks is a matter of course, and extensive introduction of OA technology is also essent ial, as is having all company employees in one form or another involved in, and taking advantage of, the information systems. In improving productivity thus, organizations need to acquire hardware bas ed on the newest technology and software that produced the maximum productiv ity, to deal promptly with any problems, and to learn to handle potential se curity threats effectively. This information system will not boost producti vity, however, if a non-specialist manager is placed in charge of its mainte nance and management. Responsibility for managing the system should go to a specialist, and support personnel can deal with problems more efficiently th an the typical employee. It is the job of support personnel to play a role in improving operational efficiency in their organizations. In Japan, especially in recent years, re ducing the number of support personnel has come to be seen as a prime means of cutting personnel costs, and efforts have been directed to this end. Sim ple tasks which have been curtailed can be outsourced, as can information sy stemization tasks with which the company has sufficient experience and which have become a firmly established part of company operations. However, the i ntroduction of information systems is still an ongoing process, and tasks be ing consigned to outside companies must be adequately understood beforehand. The typical US company in recent years has normally allotted about 3% to 5 % of its employee positions to information technology specialists. Of thes e employees, about one-half are engaged in support tasks that ensure reliabl e operation of OA equipment throughout the company. In many cases, the rema ining half are assigned as central information technology personnel to help plan the company's overall system, enhance the openness of data, and manage system operation and security. In contrast, information technology personne l account for no more than 1% of the employees in a typical Japanese company . Additionally, the majority of these are conventional independent system d evelopment personnel, and in not a few instances no specialists at all are a ssigned to OA management. As a result, OA equipment is often neglected and not used, or regular employees must take time out from their own work to res olve OA problems, reducing their productivity. Overcoming this problem would require the posting of skilled specialists, and Japanese companies at the moment would find it impossible to hire the ne eded number of personnel were they to establish specialist positions within their companies on par with US companies. In the 1970s, 10% of employed persons were in some sense involved in infor mation technology and, even with specialists making up less than 1% and syst em development personnel constituting less than 0.5% of employees, these lev els were deemed adequate at the time. However, by the first decade of the t wenty-first century, it has been suggested that the information revolution w ill require 70% of employed persons to be involved with information technolo gy and about 10% to serve as support personnel. For Japan to maintain its production capability in the 21st century, it mu st ensure that the ability to use computers becomes an integral part of the education of all children, and in fact at least 10% of the population must b e trained as leaders in the Information Revolution.
8. [Paving the Way for Optical Fiber Links to All Schools and Internet Con nections in All Classrooms]	Despite the wide public attention garnered by t he noteworthy "Nationwide School Optical Fiber Connection Program" proposed by the Ministry of Posts and Telecommunications as an integral part of the g overnment's overall economic policy, understanding of the Internet is still low among Japanese government officials and bureaucrats and this program has been shelved, perhaps attributable to political indecision as the Upper Hous e elections approach. This is indeed regrettable because, under the directi on of the Clinton-Gore administration, various parties in the US have joined together to link up all schools to the Internet by the year 2000, and Japan is thus throwing away a golden opportunity to close in a single stroke the e normous disparity between the US and Japan that this project has produced. As with the economy, the US-Japan disparity in new educational infrastructur e is only growing wider. The Japanese government should once again acknowle dge the importance of the program to link all schools by optical fiber cable s and to pave the way for Internet connections in all classrooms. The 840 billion yen "Nationwide 40,000 School Optical Fiber Connection Pro gram" proposed by the Ministry of Posts and Telecommunications as an integra l part of the government's overall economic policy attracted much attention as a new form of public investment designed to break free of the framework o f traditional public works and come to grips with the Information Age. In this program high-speed T1 lines, as they are known in the US, with a c apacity of 1.5 megabits/second (about 25 times that of normal ISDN lines) wo uld be constructed so that individual schools could be linked by these lines to the Internet, with the first five years' connection costs to be paid by the central government. This was a revolutionary idea, as it would allow st udents, teachers, and young children at most schools to make full use of the Internet, something they cannot do now as the weak dial-up connection using normal telephone lines currently used requires schools to pay both connectio n and telephone charges. The well-known Clinton-Gore initiative in the US is a national project to link up all US schools to the Internet by the year 2000, and a maximum of $2 .2 billion in subsidies have been earmarked for this purpose for FY1998. Already 78% of schools in the US were hooked up to the Internet as of the end of last year, while by that same time an estimated 10% of schools in Jap an were connected. This disparity is large enough judging just by these bro ad figures, and grows to disheartening proportions when one looks not at the number of schools but at the number of classrooms with Internet access. According to a survey by the US National Educational Statistical Center, i n 1994 a mere 3% of classrooms were connected to the Internet. This grew to 8% in 1995 and to 14% in 1996, and nearly doubled again by the end of last y ear to 27%. If this pace is maintained, then, with the support of the gover nment's enormous subsidy program, it seems likely that the majority of class rooms in the US will be directly connected to the Internet by the end of thi s year. It must be recognized that Internet-connected US schools are not at all li ke those in Japan, which usually have a special PC room with a few computers connected to the Internet where students come into contact with these comput ers only about once a week. It goes without saying at leading schools in the US that every classroom f rom kindergarten onwards will have two or three computers connected to the I nternet, and in the library's "media center", there are usually 10 or more c omputers available to search for books or to retrieve information from the I nternet. Internet computers are for teachers the equivalent of textbooks, b lackboards and chalk, while for students they are encyclopedia, reference bo ok, notebook, and pencil all in one. Nevertheless, as the US is such a vast country and has so many small to me dium-sized local telephone companies, laying optical fiber lines up to each and every school is far more difficult than in Japan and indeed is not even under consideration (T1 connections for schools employ copper cables). Tho ugh T1 connections are being increasingly used, dial-up connections are stil l the mainstream. Hence, if all schools in Japan were connected to the Internet by optical f iber lines, then Japan would at a stroke surpass the US, at least in terms o f communications infrastructure. However, in view of the fact that the plan to install personal computers in schools at least has proceeded smoothly, it seems that bringing the Internet connection status of schools in Japan to a level not inferior to that in the US was not simply a dream. The rejection of this program, though, means that plans to hook up all Jap anese schools to the Internet will now consist of no more than a connection subsidy of 2 billion yen this fiscal year through local subsidy tax grants b ased on the Ministry of Education's suggested "2 hours' daily of Internet co nnection time". This will without doubt widen the US-Japan gap to a despair ingly large degree. The government should once again recognize the importan ce of plans to link all schools by optical fiber cables and pave the way to Internet connection for all classrooms.
9. [Promptly Devising a New Concept of Education that Employs the Internet and Establishing the Necessary Social Infrastructure]	"Internet education" in Japan is an extremely vague term with little impact, and the problem is l ikely that no clear means of effectively integrating the Internet as an educ ational tool has been set out. The value of doing so, however, can be seen in the example of the US and the major changes it has brought to educational quality there. The "implant" style of education in which information, be it understood by the teacher or not, is simply conveyed to students in accordan ce with a curriculum is being increasingly rejected in favor of a system by which students can learn by themselves not by being taught by teachers but b y receiving help towards achieving their own learning objectives. This dire ction provides the foundations that children growing up during the Informati on Revolution should acquire. Realization of such a system will without que stion require both personnel and financial support; if public funding alone proves insufficient, then schools should consider approaching corporations d irectly for contributions. The term "Internet education" in Japan generally brings to mind a special classroom furnished with several computers where students gather once or twi ce a week under the guidance of an instructor to peer at several computers l inked to the Internet, which are used for such purposes as exchange with sch ools overseas or transmission of data worldwide by schools participating in a global acid rain project. In essence, the Internet serves simply as a "co nvenient means of communication" for most Japanese schools. Given the poor connection circumstances of these schools, they may have little other choice than to use the Internet in this fashion. If optical fiber lines were run to all schools and worries about telecommu nications costs alleviated, then Internet use would very likely help dramati cally invigorate Japan's currently bottled-up educational system. It has not been reported by the Japanese press at all, but on 29 April of this year the California state legislature voted by an overwhelming majority to expand the "charter school" system. A charter school is a "public" schoo l authorized to pursue educational aims free of traditional curricular restr ictions; 31 states throughout the US now have charter schools but, perhaps d ue to their experimental nature, the California School Code sets a ceiling o f 100 schools. As parents dissatisfied with traditional education have come to place more and more hopes in charter schools, though, there has been a gr owing drive to expand the number of charter schools beyond 100; the state le gislature has already decided to move the upper limit to 250 schools in the next fiscal year, with 100 more schools permitted each year afterwards, and the governor has expressed his agreement with this plan. Why do parents have such high expectations of charter schools? Classes in public schools are generally a one-sided affair, with teachers presenting th e curriculum to the students; those who can keep up are regarded as excellen t students while those who cannot are cast aside, very much like Japan's edu cational system. Charter schools, however, do not seek to "implant" the con tents of courses in students but instead to offer project-oriented education making active use of personal computers and the Internet. When necessary, t hese schools often negotiate directly with high-tech companies for support a nd assistance. Students are assigned topics by their teachers, divide up the various rese arch requirements within groups, and then give individual presentations on t heir results. Here the instructor is not a person whose role is to teach, i .e., a teacher, but an educator who offers guidance and advice, while "pupil s" and "students" become instead "learners" as they do much of their learnin g on their own. Students are not evaluated by their class attendance but ra ther by the way they tackle the topics assigned them using their individual abilities and preferences; the evaluation is a positive and not a negative o ne. This educational method is not limited to charter schools, though, and schools around the country are beginning to adopt this method. The Internet has been a major element in this educational revolution. Using the Internet, reports that children used to put together with an enc yclopedia and a few reference books can now be written by freely accessing the newest and most complete online data, and students can discover the happi ness of writing and presenting a report that steps into a world beyond textb ooks. Of course, guiding young children and students this far cannot simply rely on the individual efforts of single teachers. Educators must be backed up b y a structured system of information exchange regarding useful websites, tec hnical support for the personal computers and the Internet, and assistant te achers and parent volunteers to help children lagging behind. Schools must avoid becoming closed kingdoms and should implement systems whereby third pa rties can properly evaluate the results of any new experiments. The active introduction of Internet education in the US is producing a ste ady supply of people familiar from childhood with information processing who will be essential in the coming Information Age, and the federal government, state governments, and local communities and companies are united in this ef fort. It would seem essential in Japan, too, to improve the information processi ng abilities of children. This will require the government to promptly devi se a new concept of education to realize this, and a wide range of measures to overcome any public funding limitations should be studied.
10. [Reorganizing the Japanese Legal System to Correspond to the Informatio n Age]	The information revolution of recent years has to it a new industria l revolution dimension and an information society revolution dimension. The appearance and activity in recent years of many NGOs and NPOs, which differ in personality from states and corporations, and the remarkable emergence of a new type of individual -- a third identity axis known as the "netizen" as opposed to the conventional identities of "national" and "citizen" -- are so cial phenomena that mark the start of an information society as a new phase of moderization. An appropriate legal system must be established if today's information revolution is to contribute to the further development of human society. As we move even deeper into the third phase of modernization, a ne w legal system that might be termed "joint law" (known in English as "cyberl aw") that governs the rights and obligations between NGOs/NPOs and netizens on the basis of the idea of "joint rights", i.e., the concept of "informatio n rights", must be created as common law and as positive law. At the same t ime, it will become necessary to attempt to define the relationship between information rights and property rights and that between information rights a nd autonomy. The information revolution of recent years has a new industrial revolution dimension (an information-intensive industrial revolution to succeed earlier revolutions in light industry and the heavy/chemical industries) and an info rmation-oriented dimension that in a sense surpasses industrialization itsel f (the beginning of a third phase of modernization following the second phas e known for the militarization that gave birth to the modern state and the first phase characterized by the industrialization that produced the modern corporation); in other words, it combines the aspects of an information soci ety revolution. The appearance and activity in recent years of many NGOs an d NPOs which differ so in personality from states and corporations as well a s the emergence of a new type of individual -- unlike the national (an indiv idual who has the identity of a member of a modern state) and the citizen (a n individual who has the identity of both a member of a modern state as well as an employee of a company), a third identity axis known as the "netizen" - - are social phenomena that mark the start of an information society as a ne w phase in modernization. The netizen, in contrast with the national and the citizen (especially the citizen as a member of the 20th century consumer public), is not content to exist as a passive recipient of information and actively searches out and ev aluates information, at times even creating and transmitting it. In this se nse, netizens as active communicators and as members of NGOs/NPOs are also active collaborators that act with the aim of realizing the common social values of both. An appropriate legal system must be established if today's information rev olution is to contribute even more to the development of human society. In the first phase of modernization, the idea of the autonomy of the state (or nation) lead to the establishment both domestically and internationally of s ystems of public laws governing the rights and obligations of states and the ir nationals, while in the second phase private statute systems were founded on the basis of private property rights to cover the rights and obligations of companies and citizens. There were also attempts made to define the rela tionship between public and private rights. Reflecting on this point, it wi ll become necessary as we proceed further into the third phase of modernizat ion to create, as common law and as positive law, a new legal system that mi ght be termed "joint law" (known in English as "cyberlaw") that governs the rights and obligations between NGOs/NPOs and netizens on the basis of a thir d idea which might be called "joint rights", i.e., the concept of "informati on rights". These "information rights" refer to the collection of rights co nnected with the self-autonomy of information processing and security, the r eversion and priority of created information, the management of information concerning a given individual and privacy, etc. It has also become necessary to attempt to define the relationship between information rights and propert y rights (e.g., the freedom to reproduce information and limitations thereon ) and that between information rights and autonomy (e.g., the freedom to enc rypt and limitations thereon). Coordinating this new legal system with the existing legal system cannot be accomplished overnight, but the very fact th at it cannot be makes it all the more important that this issue be addressed in earnest at the earliest possible moment.
11. [Promoting Electronic Commerce on the de facto GII of the Internet]	We should recognize that private-sector initiative has advanced the constructio n of the de facto Global Information Infrastructure (GII) in the context of the Internet, and full advantage should be taken of this trend. The debates surrounding GII at present focus on electronic commerce (EC). The internati onal community is currently engaged in discussions on rules for the smooth c onduct of electronic commerce on the GII in connection with the issues of ta xation, verification and security, and the protetion of personal data, but w ith economic activities in cyberspace just beginning to grow at present, cen tral and local governments should refrain from imposing additional taxes on online electronic commerce. Encryption technology is essential for full-sca le use of the Internet, but it must be borne in mind that dishonest use of e ncryption technology might hinder investigations by law enforcement agencies . Nevertheless, from the standpoint of effectiveness, it would be advisable to make use of a "key recovery system" obligatory throughout Japan. As the use of information networks becomes a more commonplace part of daily life, t he principle of an environment allowing economic activities to be conducted as freely and fairly as possible should be maintained in addressing these is sues. In March 1994 at the Information and Communications Development Conference (Buenos Aires Conference) of the International Telecom-munications Union (IT U), Vice President Gore presented the idea of a Global Information Infrastr ucture (GII), a concept which then drew worldwide attention. Since then, ho wever, it has been private-sector investment and dynamic competition that ha ve advanced the cause of GII construction, and the original GII conception h as yet to become a major agenda item for the international community. The central focus of the GII debate at the moment is electronic commerce ( EC). In July 1997 the US announced its "Framework for Global Electronic Co mmerce", the essence of which was the idea of promoting worldwide electronic commerce using the Internet. The official US position in this proposal was that electronic commerce on the Internet should not be subject to new taxes and that technical standards should be determined through private-sector com petition; it did, however, stress the need to regulate the use of encryption from the standpoint of individual and national security. We recognize that de facto GII construction in the context of the Internet is proceeding at the initiative of the private sector, and we believe that f ull advantage should be taken of this trend. On the subject of rules for t he smooth conduct of electronic commerce on the GII, the discussion in the i nternational community at present is concentrated on taxes on electronic com merce, verification and security issues, and the protection of individual da ta. With the use of information networks just beginning to enter the sphere of everyday life, central and local governments should not impose additional taxes on online electronic commerce. Encryption technology is essential for full-scale use of the Internet. Th e encryption of data is vital for the transmission of credit card numbers an d other personal information when conducting electronic commerce online. Th ere are concerns, however, that investigations by law enforcement agencies c ould be hindered should powerful encryption technology for personal computer s become widely available and utilized by organized crime. In devising meas ures to counter the dishonest use of encryption technology, (1) regulation o f encryption technology should be restricted to the elimination of the threa ts of terrorism and crime, (2) commercial use and technological development should as far as possible remain free of interference to ensure cost effecti veness, and (3) an international cooperation structure should be formed to e nsure security and to coordinate policies among countries. In the area of e ncryption technology, there are those in the US who seek the introduction an d widespread implementation of a "key recovery system". A key recovery syst em involves a third party organization that offers storage of encryption key s and provides means of unlocking encryption in response to requests from la w enforcement agencies. However, PC encryption technology that does not rel y on a key recovery system is already in use in many countries, and imposing a key recovery system on all PC encryption domestically, even if it were fea sible, would substantially impede social and economic activities. From the standpoint of effectiveness, then, it would not be advisable to make the use of a key recovery system obligatory throughout Japan. With regard to the handling of individual data, standards differ by countr y on the resale or other use of this information by companies possessing dat abases, and this has become a major issue in global electronic commerce. C ompanies who collect data and use data should as a rule make clear the purpo ses for which they will use this information and they should give consumers a choice of whether or not to provide personal data. As the use of information networks becomes a more commonplace part of dail y life, the principle of an environment allowing economic activities to be c onducted as freely as possible should be maintained in addressing all of the se issues.
12. [Developing an Official Japanese Approach to the Internet Governance Is sue]	As large-scale commercial use of the Internet grows, mechanisms for do main name assignment, trademark issues, and more reliable packet routing hav e all merited reconsideration. An increasing reliance on computer networks for social activities has generated concerns about security threats, such as terrorist attacks via networks on vital social infrastructure such as commun ications facilities, traffic systems, and financial networks. It does not s eem likely that such attacks could immediately knock out the entire Internet but, given the number of people involved, the sheer scale of the problem, an d conflicts of interests, it may be difficult in the short run to come up wi th a solution to these security issues. Viewing the Internet as a type of s ocial system, the issue of global governance in maintaining and developing a system which has no central government has arisen. The protection of this e specially important social infrastructure calls for each country to design i ts own approach and, sublating past circumstances and laws/regulations, and the Japanese government should promptly begin examining this issue and lead an open debate within Japan. One characteristic of the Internet is its vast degree of "freedom" in that it has a "council" system of management and no centralized control mechanism or organization. This form of international council system is symbolic of t he "freedom" in this "network of networks". As use of the Internet has shi fted away from the original community of researchers and towards large-scale commercial use and as higher quality service is being demanded, there have b een second thoughts regarding this council system of Internet management as issues arise such as intellectual property rights, acquisition of access lin es, large-scale relay transmission accidents, privacy, encryption, domain na me decision mechanisms, global electronic commerce, and taxes. There is als o growing worry over security issues such as terrorist attacks via networks on vital social infrastructure such as communications facilities, traffic sy stems, and financial networks. Judging from available data and surveys, it does not seem likely that such an attack could immediately knock out the ent ire Internet. Given the number of people involved, the sheer scale of the p roblem, and conflicts of interests, it may be difficult in the short run to come up with a solution to this problem. With the international community now taking up the task of creating rules for the common task of managing the GII, one might think of the Internet, like global environmental issues, as a subject for some type of global governance. To give a recent example, a reform movement centered on the Internet Socie ty has gained momentum with regard to the issuing of Internet domain names, and a memorandum on domain names has been drafted by the International Ad Ho c Committee (IAHC). This memorandum included a comprehensive review of the system of addresses such as ".com" and ".gov.jp" in common use now as well a s of the organizations authorized to issue these addresses, and its recommen dations would have a major impact on commercial use. The US government has submitted a proposal for a domain name system differing from that of the IAH C and, having solicited opinions from numerous other countries, is as of May 1998 preparing a final draft proposal. This reform will transfer Internet m anagement to a more commercial base and likely make it more stable. The Internet is thus standing at the crossroads in dealing with the new is sue of a "practical GII" and the questions of whether or not the global gove rnance issue is addressed and what kind of system or framework will arise of fer many important hints for predicting the future of the Internet. Viewing the Internet as a type of social system, it is crucial that indivi dual countries tackle the issue of maintaining and developing this system, w hich has no central government, especially in regards to protecting this imp ortant element of social infrastructure. We therefore propose that the Japa nese government promptly being examining this issue and lead an open debate within Japan.
13. [Eliminating Barriers to Competition and Providing Users with World-Cla ss Service at Low Cost]	The deregulation that has been carried out in the t elecommunications field from 1996 should be praised as forward-looking in th at it has removed many of the barriers that existed within the telecommunica tions industry. This removal of barriers to competition is a significant st ep in making Japan a market in which communications companies from around th e world compete to offer quality service and in allowing Japanese companies and consumers to take advantage of the best telecommunications services in t he world at rates that are low by international standards. While the remova l of barriers may prove quite troublesome for existing companies, companies tempered in a fiercely competitive Japanese market will then be very competi tive worldwide. The removal of past barriers to competition should indeed b e positively assessed as forward-looking, but many outstanding issues to rem ain, for example, the barriers to competition between broadcasting and telec ommunications companies and the distinctions made between Type 1 and Type II carriers in the telecommunications industry. Reform will not be painless, b ut in light of the global competition that continues to spur on the developm ent of today's information and communications industry, Japan cannot afford to permit the existence of barriers that hinder adaptation to new trends. J apan should move boldly ahead with reform. The deregulation that has been carried out in the telecommunications field from 1996 and the competition that has been sparked thereby should be praise d as forward-looking. For example, in January 1996 the Ministry of Posts an d Telecommunications released a policy statement entitled "On promoting dere gulation towards a 'Second Information and Com-munications Reform'". The si gnificance of the series of deregulatory measures that put this pronouncemen t into practice lies in the fact that it eliminated a variety of barriers th at existed within the telecommunications industry. As a result, rapid progr ess has since 1997 been seen in (1) mergers and partnerships between domesti c long-distance companies and international companies, (2) cooperation betwe en local telephone companies and their participation in the long distance ma rket, (3) aggressive domestic participation by foreign companies, and (4) ac celerated overseas expansion by domestic telecommunications companies. The most welcome of these is the vigorous competition arising in local (intra-ci ty) markets. This trend is still underway, and even foreign Type 1 Telecommu nication Carriers are planning to participate in local markets. This removal of barriers to competition is significant in that it will mak e Japan a market in which communications companies from around the world com pete to offer quality service and will allow Japanese companies and consumer s to take advantage of the best telecommunications service in the world at r ates that are low by international standards. In other words, eliminating b arriers to competition will not only spur competition between domestic compa nies but will also allow foreign companies freely and swiftly to participatein the Japanese market and develop services for this market. Japanese consu mers and industries will be able to choose from a diverse menu of functions and rates offered by a large number of companies worldwide in selecting thos e services that meet their own particular needs. This will raise the level of information and communications usage in Japan and will help stimulate the Japanese economy as a whole. This barrier-free competition may in the short run prove to be a very seve re one for some companies in Japan. Nevertheless, those companies who attra ct sophisticated telecommunications users and who have been tempered in a fi ercely competitive Japanese market will then be very competitive worldwide. Though the removal of barriers in recent years deserves praise as forward- looking, it must be pointed out that many outstanding issues remain. One, f or example, is that of the barriers to competition between broadcasting and telecommunications companies. Vast technological and infrastructural differ ences used to separate communications and broadcasting quite naturally. Bro adcasting was more strictly regulated than communications, on the grounds of the scarcity of the wavelengths and the impact of broadcasting. Technologi cal progress has, however, rapidly melded the two areas. The barriers that still separate broadcast and telecommunications companies and prevent them f rom participating in each other's business are quickly losing their meaning. One example of this is the distinction between lines of businesses. Telec ommunications companies are divided into Type 1 carriers, who have their fac ilities and equipment, and Type 2 carriers, and this division has become a i mpediment to the entry of newcomers into the market. Newcomer companies ge nerally wish to enter markets on a low fixed cost/high variable cost low-ris k low-return strategy and then switch to a high-fixed cost/low variable cost style of management and operate in the pursuit of high profits. Translating this into the telecommunications market, newcomers initially wish to enter a s Type 2 carriers and switch over by stages to possession of their own facil ities and equipment in those areas in which they have secured a stable custo mer base, a Type 1-Type 2 hybrid strategy. Competition should be promoted, to include those companies that could be labeled Type 0 that simply lease ou t facilities/equipment and do not themselves provide service, so that owners hip or non-ownership of facilities by companies is decided strategically not because of regulations but because of economic rationality. The gains of barrier elimination are not without their pains. Newcomers w ho have entered the market since 1985 on the premise that these barriers wou ld continue to stand have suffered. Cable television companies, for example , have made investments without imagining that broadcast operations might ut ilize NTT infrastructure. With the removal of barriers, a number of these companies might even be forced out of business. Although these companies do deserve sympathy, Japan can no longer afford to permit the continued existen ce of barriers that hinder adaptation to new trends, given the worldwide exp ansion of competition in the information and communications industry. Even while giving due consideration to employment for those working at companies which have become unprofitable due to barrier removal, Japan should move bol dly ahead with reform.
14. [Using the Principle of Competition to Secure Access to Quality Informa tion Infrastructure for All Residents of Japan]	For Japan to continue makin g cultural and economic contributions to the world economy, it is necessary that all Japanese residents and companies be well-versed in the use of infor mation technology. "Transparency" has become a keyword in the reconstructio n of Japan's political, economic, and social systems, and these reforms will require information disclosure systems that fully utilize information techno logy. Access to information infrastucture should not be restricted to a sma ll number of well-to-do people but rather guaranteed to all people, and it i s thus imperative that all residents of Japan enjoy an environment in which they can inexpensively benefit from world-class quality information and comm unications services. The long-standing mechanism of providing universal ser vice in total disregard to market principles no longer functions properly, a nd appeals should be made to users as well as suppliers in both promoting co mpetition in the information and communications industry and achieving unive rsal service. Japan has until now been in a leading position worldwide in production tec hnology as well as technology designed to improve living standards, and to c ontinue making cultural and economic contributions to the world economy, Jap an must take its skills and sublimate them into forms more suited to the Inf ormation Age. To this end, all Japanese citizens and companies should be we ll-versed in the use of information technology. These skills can be most ef fectively developed from childhood, and children should be given a wealth of chances to come into contact on an everyday basis with information technolog y and to develop their ability to use it. This has become an urgent issue today. "Transparency" has become a keywor d in the reconstruction of Japan's political, economic, and social systems, and an information disclosure system is needed that fully utilizes informati on technology. Access to disclosed information should not be restricted to a small number of well-to-do people and should be guaranteed to all people l iving in Japanese society. It is thus imperative that all residents of Japa n enjoy an environment in which they can inexpensively benefit from world-cl ass quality information and communications services. In frontier fields, eq ually important as having the most advanced technology, or perhaps even more so, is determining the standards for an information environment that would a llow all people access. From the standpoint of economic rationality, information technology, and e specially networks, have limited effectiveness when only a certain segment o f people can use it but demonstrates a very powerful potential once access i s opened to all people. It is easy to understand this by imagining the inco nvenience of a society without telephones or postal service that serve as me ans of communications for all people. Stressing the importance of access to information infrastructure by all re sidents of Japan is simple; actually realizing this aim is more of a problem . Historically the significance of providing "universal" access to an infor mation network has been discussed within the context of "universal service" in a systematic fashion. The difficulty here is that universal service cann ot be provided by any of the mechanisms used thus far that ignore market pri nciples. The order of things in the telecommunications industry has heretofore been one of requiring companies to offer universal service through funding from t he monopolistic profits that regulations have generated. Even after the col lapse of this system due to the 1985 liberalization of the Japanese telecomm unications market, universal service has in fact been established by requiri ng NTT, the dominant company, to provide such service. As competition sprea ds even to local communications markets and grows fiercer with the emergence of companies that specialize in highly profitable localities, however, this funding is drying up. With NTT unable to bear the burden, it seems a given that local differences will have to be applied to telephone charges. Effort s will also likely shift to the corporate marketplace, where profits can be more easily made. To both promote competition in the information and communications industry and achieve universal service, appeals must be made not to suppliers but to users. This should be done not only by granting special privileges to desig nated companies and then imposing burdensome obligations and regulations on them, but also by providing incentives and/or subsidies to individuals, comp anies, and localities on the demand side of the equation to purchase informa tion and communications services; these customers can then choose and use, from among a large number of companies, the best service at the cheapest prices. There are number of concrete formats possible (although none of these can be achieved as long as NTT regional companies are obliged under company law to provide telephone service nationwide), but in regions where service will not be provided without subsidies, for example, competitive bids could be so licited from service provider companies to provide the desired services and rates. Service for that locality could then be entrusted to the company whi ch agrees to provide service for the least subsidy. Funding for these subsi dies theoretically should be taken from the government's general account, bu t more practically a small and broadly charged donation to a universal servi ce fund could be added onto communications charges.
15. [Reforming Telecommunications Charges for the Construction of a Value-C reating Cyberspace]	It is important that companies with offices in Japan an d people who live in Japan actively participate in the process of knowledge creation through the medium of computer networks, and a fixed rate system th at promotes use should be introduced for this purpose. From the experience of the US, we have discovered the immeasurable merits of an environment in w hich communications can be carried out with others worldwide 24 hours a day without concern about additional costs. Japan, too, should promptly seek to expand introduction of fixed rate service systems that promote usage in line with new concepts and should endeavor to establish more economical rates. As the world becomes increasingly interlinked by networks, it is important that those companies with offices in Japan and those people who live in Japa n actively participate in the process of knowledge creation through the medi um of computer networks, and a fixed rate system that promotes use should be introduced to this end. The Internet has developed explosively in the US, and behind the fact that the information industry as well as other industries and social activities t hat use in the Internet have prospered lies the fixed-rate system used for l ocal communications rates in the US, by which users can access networks with out worrying about usage time. The charges for Internet access that users pay are the total of the amount paid to the Internet service provider and the amount paid to the local telep hone company, and in both the US and Japan the provider charges are usually a relatively small fixed rate; the problem is the local communications charg es. In contrast to the US where local communications service can be used at a fixed cost of a few thousand yen per month, in Japan one must pay a minimu m of 38,000 yen to have access to service which can be used at a fixed cost 24 hours a day. Even as the gap between other communications charges narrow s, in decisively important portions such as this there still exist considera ble disparities. For telecommunications companies the local fixed-rate system is bothersome , as necessary facilities and equipment must be expanded even as revenues re main steady, and indeed the fixed rate system in the US was not so much a st rategic decision as an accidental product of history. Even while recognizing this difficulty, we are continually discovering the immeasurable merits of an environment in which communications can be carried out worldwide 24 hours a day without concern about additional costs. Intell ectual production activities are characterized by the "gradually increasing yield" phenomenon, whose mechanisms have not been sufficiently explained, bu t in which the value of this asset of knowledge grows more when combined wit h a variety of other knowledge than when isolated. A concrete manifestation of this is the Internet. The low variable cost structure of the Internet cr eates a space in which information can be easily combined together and where frequently the value of knowledge becomes self-multiplying. When such a cyc le starts, there follows a chain reaction of explosive innovation throughout society that could not possibly be achieved within a single company. In fac t, many important products of the information society -- such as software bo asting a high global market share and network connection hardware -- arise f rom this method of using this space. Unlike in the US, which has from the outset adopted a fixed rate system fo r local telephone service, hastily introducing a fixed 24-hours-a-day rate i n Japan would likely result in extreme overload of existing local telephone exchanges and require a radical expansion of facilities and equipment. Designing an approach that would aim to construct a network separate from the current telephone network, however, would allow a fixe rate system that promotes usage to be maintained. One example of this is the OCN service now being offered by NTT. Especially for communications using packets such as t he Internet, a switch could be made from the traditional formula where commu nications rates increased based on distance and time to a system where a bas ic contract for a certain maximum speed of communications would be combined with network usage-based rates for different packet priority levels where th e usage-based rate for low-priority communications would be zero. This woul d allow users to accept low priority in exchange for a low fixed rate and ut ilize the available volume in networks constructed with the revenues receive d from service to customers who demand a high and stable level of service (i .e., high-priority service) with little cost flexibility, and would ensure t hat usage could be promoted even while securing reasonable revenue. This kind of thinking has in fact become a common vision within the commun ications industry, and a switch-over to this new rate system might accompany a conversion from networks based on telephone networks to ones based on comp uter networks. In the US intra-city service provided through existing telephone networks is offered at a fixed rate in many locations, and this infrastructure has al lowed an explosive linking-up of knowledge. Japan's telecommunications rate system should be promptly reformed with an eye to the future.
16. [Developing Global Standards for Interconnection Rules to International ize Telecommunications]	The globalization of the information and communicat ions industry seemingly knows no bounds. On the one hand, corporate managem ent has moved towards greater alliances and mergers/acquisitions, while on t he other hand, the universalization of digital technology has let technology completely transcend national borders. In the midst of these changes, thoug h, individual countries continue domestically to apply their own peculiar in terconnection rules. Communications comprise one of the most important elem ents of infrastructure in these countries and social demands, in addition to technological and economic conditions, have helped in great part to determin e the overall framework of interconnection rules in individual countries. N ow that it has become clear that the welfare of consumers worldwide is enhan ced through competition, rules should be drafted that facilitate market entr y in all countries. Global interconnection rules must be formulated that em phasize efficiency and long-term development. The information and communications industry is forecast and expected in fu ture to have an increasingly competitive industrial organization due to tech nological innovation. On the other hand, the formulation of global rules fo r local telephone networks which constitute the core of this industry is an extremely pressing issue and is important in two reciprocal senses. First, as local telephone networks are almost completely dominated by thos e carriers who were first to open up these markets -- for the most part thes e companies were known as natural monopolies -- these networks comprise a bo ttleneck for competitor carriers. Competitors are confronted with the choic e of constructing their own local networks or receiving permission to use th e networks of established carriers, and because the cost of constructing the ir own networks is so enormous, these carriers have no choice but to rely on the first-comer companies. The questions of whether or not these carriers c an get their forerunners to lease use of their networks and how much they wi ll demand in return for leasing them are ones that can make or break competi tion. Policy-wise, the first question has been resolved in the affirmative, but the second issue of how much leasing will cost is an interconnection rat e issue shared by all countries. To resolve this issue, the technical struc ture of these local networks must be made clear and connection rules and rat es set out that are acceptable to both lessors and lessees. An increasingly important method of formulating interconnection rules of l ate is that for calculating interconnection rates employed in the UK and the US based on the concept of incremental cost. This involves breaking down lo cal networks technically, delineating the elements of these networks, and th en developing models of the cost of each of these elements in terms of the l atest technology. Adopting this scheme would make it possible for individua l countries to formulate interconnection rules that at least have methodolog y in common. Adopting this method, on the other hand, would put companies a t risk of not being able to recover the costs that would arise therefrom, an d hence this method continues to be the subject of debate within many countr ies. The telecommunications market thus has transcended man-made national b orders and entered a borderless era. A system must be set out that will fun ction not only for domestic competition between first-comers and latecomers, but also for competition from abroad, and this will require global interconn ection rules that disclose the elements of local networks. As the present technological revolution moves ahead, it remains to be seen just how long the local networks possessed by first-comer carriers will cont inue to be bottlenecks. Even if a fair method of calculation is adopted, hi gh connection rates to established local networks will deter competitor comp anies from using them and give them an incentive to construct their own loca l networks. Thus competition may actually arise in the area of infrastructu re itself. Connection rules are important in sparking such competition and in clearly outlining the social opportunity cost of existing local networks.