Introduction
The following report is based on a July 22, 1999, presentation given at the Canadian Embassy in Tokyo by Dr. Sunao Ishihara, Director of the Basic Research Laboratories at the Nippon Telegraph and Telephone Corporation (NTT), located in Atsugi City. Tokyo Report Memorandum #98-17, dated December 2, 1998, describes Internet-related R&D activities at NTT's Yokosuka research and development (R&D) Center.
Dr. Ishihara's corrections and suggested modifications to an earlier draft of this report are gratefully acknowledged.
Reorganization of NTT
For reasons roughly analogous to those which led to the breakup of AT&T in the United States in 1984, NTT was reorganized, effective July 1, 1999, into four companies: the NTT Holding Company, two companies to handle local communications (NTT East and NTT West, respectively), and NTT Communications, which handles long distance and international communications. The first three of these companies, in which the Japanese Government remains the majority shareholder, are regulated entities. The fourth has been completely privatized. NTT East, NTT West, and NTT Communications have their own R&D facilities where applied research and some experimental development activities are carried out. The NTT Holding Company has facilities for conducting what it refers to as core-technology R&D, a good deal of which qualifies as basic research. The research activities of NTT Holding Company laboratories are financed by contributions from NTT's other daughter companies, and through contracts with, and technology sales and licenses to other companies, both Japanese and foreign.
NTT's Research System
R&D has been important to NTT for half a century. Soon after its creation as a public corporation in 1952, NTT took over the Electrical Communications Laboratories, which had been created in 1948, as its corporate R&D laboratory. At the time of its reorganization in July 1999, NTT had 15 R&D facilities located throughout Japan. Over the period from 1995-97, the NTT group invested an average of approximately \300 billion ($2.5 billion) per year in R&D, making it one of Japan's principal investors in information- and communications-related R&D. Only three US information and communication technology companies made greater average R&D investments during this same period: IBM, AT&T/Lucent, and Hewlett Packard. The individual R&D investments of the NEC, Toshiba and NTT groups, for example, each exceeded those of both Microsoft and Intel, whose average R&D investments during 1995-97 were approximately $2.0 and $1.8 billion, respectively.
In 1998, NTT had over 5,000 scientists and engineers conducting R&D in its laboratories: approximately 3,500 in core-technology R&D, and the remainder in applications-oriented R&D. During that year, these R&D employees published about 1,000 scientific publications-60 percent of them in peer-reviewed foreign journals-and made almost 4,000 presentations at scientific meetings in Japan or abroad?i.e., about one paper or presentation per R&D employee. These 5,000 R&D workers were also responsible for approximately 3,000 patent applications. The number of patent applications filed by Toshiba in 1998 exceeded those filed by NTT by a factor of four, and those filed by NEC exceed NTT's by a factor of three. On the other hand, in 1998 NTT employees contributed almost twice as many publications to the scientific literature as Toshiba, and six times as many as NEC.
These data suggest that NTT's research tends to be more basic in nature than that of other large Japanese companies in the information and communication industry. The decision to emphasize basic research within the NTT Holding Company's research laboratories following the July 1, 1999, breakup of the parent company is a clear demonstration that NTT recognizes the importance of basic research to the future competitiveness of its daughter companies.
Research Strategy
NTT's long-term research strategy is based on its vision of the future expansion of information technology in both quantitative and qualitative terms. As in other countries, the increase in mobile phone and Internet use in Japan has increased phenomenally. In 1995, there were fewer than 5 million mobile phone users in the country; in 1998 there were 45 million, out of a population of approximately 120 million. In 1995, fewer than 1 million people in Japan used the Internet; in 1998 there were almost 11 million people (out of perhaps 40 million Japanese households) who reported that they were regular Internet users.
NTT's corporate R&D vision considers three categories?or gwavesh?of global information sharing: (1) business-to-business, (2) business-to-consumer, and (3) consumer- to-consumer. Business-to business communication was the first wave to be apparent; business-to-consumer was the second. NTT expects that although business-to-business communication will continue to grow steadily, that first wave will be exceeded by business-to-consumer communication in the year 2000. It expects that these two waves will level off around 2005.
NTT is convinced that consumer-to-consumer communication, facilitated by Internet providers, will be the true wave of the future. Although this third wave is barely apparent as yet, NTT projects that it will be almost twice as important as either business-to- business or business-to-consumer communication by 2005, and that it will thenceforth rise steadily and remain the dominant mode of global information sharing.
Selected Research Priorities
In 1998, NTT accounted for one-half of one percent of all the electric power consumed in Japan, a datum that at least questions the tacit assumption that information technology is completely ggreenh. NTT recognizes that electrical power consumption cannot increase in direct proportion to information technology usage. As a consequence, much of the basic research conducted in its corporate laboratory emphasize possibilities for devices that can continue a trend long characteristic of the information and communication industry by reducing unit energy consumption still further. One line of research concentrates on obtaining the fundamental knowledge required for practical photonic (as opposed to electronic) devices that would use light, carried by fiber optics networks, to transmit information from business-to-consumer and from consumer-to-consumer. NTT is also conducting basic research aimed at workable single-electron devices that could eventually replace the massive-electron devices prevalent in most currently-used commercial microchips and ancillary devices.
Status of Non-Industrial Information and Communications Research
NTT's decision to maintain its centralized basic research and core-technology facilitates contrasts with the situation in the United States where many large companies that formerly maintained significant corporate research laboratories have devolved those capabilities to their operating units. In response to a direct question on this matter, Dr. Ishihara stated that at least in the information and communication industry, Japanese companies need to maintain their basic research capabilities. In contrast with the United States, universities and national laboratories in Japan have not yet developed sufficient research capability to carry out the basic research that they (or the Japanese information and communication industry) will require to remain competitive in the new century.
NTT is trying to make at least an incremental change in this situation. Over the past 20 years, approximately 500 of its senior research staff have succeeded in obtaining tenure positions in universities throughout Japan. Several of these former R&D employees continue to cooperate with NTT to help it realize its research-based vision for the 21st Century.