For Information Release
September 19, 1996


NTT Improves Its Operational Management for Multimedia Era

1.Evolution of Telecommunications Business and Nippon Telegraph and Telephone Corporation's (NTT's) Involvement

The information communications industry is at a turning point, with multimedia and globalization bringing about fundamental changes worldwide.
Rapid technological innovation mainly in digitalization is the driving force of the move toward realizing an information distribution industry related to trade and finance on the electronic network, the so-called cyber business.This situation is likely to result in multimedia services in which a variety of information is distributed with no limits on distance or time.
In addition, with the development of multimedia communications and globalization of the economy and society, there are now increasing needs for a global information network for companies doing business overseas. Such needs could lead to global multimedia services targeting small companies and mass users.
Responding to these changes in the information communications industry, NTT will take positive measures to develop the industry as well as to strengthen its international competitiveness.

2.Main Points of Operational Management Improvement

NTT needs to improve its operational management system fundamentally in order to respond to the changing environment of the telecommunications and also to prepare for the anticipated severe business environment resulting from the opening of our network to other operators and lowering of toll charge rates. To achieve this, NTT intends to carry out the following measures:
  (1)
Reinforcement/Utilization of Our Software Development Abilities

In the multimedia era, needs for software are expected to increase in terms of both quality and quantity. Software development abilities will be the key to staying at the cutting edge of the telecommunications industry in the future. NTT will supply its existing cumulative software development technologies and know-how to other operators through its Group affiliated businesses. In so doing, NTT will respond to new software needs that will result from the opening of our network to other operators and the advance of multimedia communications in the future. In addition, the NTT Group's affiliation business could establish a smooth management system of software-related operations, contributing to lower costs and improvedefficiency of software development.

  (2)
Human Resource Shift and Training toward Multimedia and Globalization

The completion of digitalization at the end of fiscal year 1997 will improve the functions of various operation systems, bringing about significant labor saving in network management. NTT will improve its operational management fundamentally by making use of this achievement of technological innovation. NTT also intends to conduct intensive staff training and promote the shift toward development of multimedia and globalization.

  (3)
Promotion of Smooth and Flexible Business Management of NTT Group

NTT will contribute to the vitalization of the industry by offering its technologies and know-how to be applied in the activation of the telecommunications industry. NTT considers it important to respond to changes in the market with strengthened managerial capabilities, including quicker decision-making and enhanced efficiency. NTT will promote this smooth and flexible management through spin-offs.

  (4)
For Efficiency Promotion

NTT has already taken various measures for efficiency promotion related to the directory assistance service system as seen in the consolidation of offices and the expansion of request-reception counters targeting customers in broad areas. NTT will make efforts to lower costs by transferring the operation services to affiliated companies and also by introducing a new directory assistance service system.
The company will also further improve the efficiency of customer equipment business by transferring sales, installation and maintenance to NTT Telecom Engineering (TE) companies.

3.Concrete Measures Aiming at Operational Management Improvement

  1)
Spin-off of software-development related operations
  2)
Drastic reform of facility management and maintenance
  3)
Drastic reform of directory assistance service
  4)
Drastic reform of sales, installation and maintenance of customer equipment
  5)
Other
Following completion of the above measures, NTT will have a staff of about 150,000 by the end of fiscal year 2000, 35,000 less than at the end of fiscal year 1995.


Attachment

Concrete Measures Aiming at Operational Management Improvement
  1)
Spin-Off of Software-Development Related Operations
  2)
Drastic Reform of Facility Management and Maintenance
  3)
Drastic Reform of Directory Assistance Service
  4)
Drastic Reform of Sales, Installation and Maintenance of Customer Equipment

I. Spin-Off of Software-Development Related Operations

  1.
Purpose

NTT believes that by making the company's cumulative software development technologies and know-how available to other operators through its Group affiliated businesses, and by meeting new software needs resulting from the opening of NTT's network to other operators and multimedia communication progress, it will be able to contribute to the growth of the information communications industry. In this regard, NTT plans to spin off its software-related operations, which are currently conducted by the company's Software Headquarters.
The spin-off is expected to bring about a smooth and flexible management system in software-related operations, resulting in R&D costs reduction, and improved efficiency.

  2.
Outline

  (1)
The new company will start the following businesses, all of which are currently conducted by NTT's Software Headquarters:

- Communication software (mainly for switches) development operation

- Information system operation to develop and manage operation support systems

- Field service such as trouble shooting for software of switches

- General affairs, such as issuing bills

  (2)
The main function of the new company will be to conduct the above- mentioned businesses for NTT. In addition to these main businesses, the company also plans to develop the following businesses for NTT Group companies, other operators, etc.:

(i) Provision of systems for domestic and foreign operators

(ii) Provision of multimedia software, focusing on middleware

(iii) Provision of design, construction, and operation services for LAN, etc.

II. Drastic Reform of Facility Management and Maintenance

  1.
Purpose

To improve the efficiency of operations for switching and radio transmission facilities, NTT has transferred operations that can be conducted in remote areas to broad-area maintenance sites (in principle, one site per prefecture) in line with network digitalization. NTT will further enhance customer services and make its business management more efficient. To achieve this, the company will improve the functions of operation systems, which will enable automatic, flow-through designing, enriched remote surveillance functions, and local-oriented businesses, etc.

  2.
Outline

  (1)
Operations to be conducted by NTT Telecom Engineering (TE) Companies

NTT will allow TE companies to conduct local-oriented operational tasks,such as line installation and repair work.
Services provided by the TE companies should be under the direction and control of NTT, which will be responsible for customer services. In addition, the TE companies will integrate network maintenance and facility management operations, thus enhancing the efficiency of operations.

  (2)
NTT's operations

Area-free operations, such as surveillance/control of networks and node facilities, and designing of line/path network plan, will be further consolidated into one nationwide block site or area block sites to improve end-to-end service quality and to enhance overall efficiency.
Facility planning and engineering operations, etc. will be conducted by NTT's regional headquarters or operational centers in prefecture to achieve efficient operational management.

III. Drastic Reform of Directory Assistance Service

  1.
Purpose

NTT has until now made efforts to reduce costs by streamlining the directory assistance service: hiring part-time workers, consolidating offices, and expanding request-reception counters for broad areas. However,as the directory assistance business still has a huge deficit, NTT will further endeavor to reduce the cost, and will take radical measures to improve its management, while introducing a new directory service system and reviewing methods of conducting connection operations.

  2.
Outline

  (1)
Directory assistance

  (i)
Transferring all the operation services to NTT Group companies

NTT will transfer all the operation services to its Group companies and do its utmost to reduce costs thoroughly.

  (ii)
Review of 104 Directory Assistance Service during late-night and early-morning hours

As there are few calls to the directory assistance service during thelate-night and early-morning hours, operational costs during this time are very high. Also, the users represent only a part of our total customers.
NTT will therefore review the 104-service hours.
NTT will, however, continue to receive urgent inquiries at special numbers.

  (iii)
Disseminating the use of the automatic directory assistance service

In response to the multimedia society utilizing PCs, NTT will provide more directory assistance software and will remove the restriction on the number of telephone numbers that a customer can receive for one call. These measures will make NTT's services more convenient for customers, thus enabling the company to promote the dissemination of its automatic directory assistance service.

  (2)
Connection operations

NTT will transfer all connection operations to its Group companies simultaneously when all the directory-assistance business has been transferred.

IV.Drastic Reform of Sales, Installation and Maintenance of Customer Equipment

  1.
Purpose

To secure fair and effective competition in sales operations as well as to improve customer services and achieve operational efficiency through integrated operations (sales, installation and maintenance), NTT will transfer sales, installation and maintenance operations to the TE companies.

  2.
Outline

(1)
Transferring sales, installation and maintenance operations

To secure fair and effective competition and improve customer services, NTT will transfer the operations to TE companies.

(2)
NTT's customer equipment business

(i)
NTT will continue to conduct business planning, product development, procurement, etc.

(ii)
NTT will abolish the existing branches for customer equipment operations. Instead, TE companies will conduct sales of customer equipment. However, for the sake of customers' convenience, NTT will continue to sell simple products requiring no installation work at its branches.


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