Is this the end of NTT’s former monopoly advantages?

Japan's government said it will instruct Nippon Telegraph & Telephone, the country's largest phone operator to improve its business because its sales operations may have harmed competition.

The telecommunications ministry will ask NTT East and NTT West to submit their improvement measures by March 31, Yasuhiko Taniwaki, director of the ministry's telecommunications policy division, said by phone.

The two fixed-line units may have used information on their customers to sell fiber-optic Internet services, the ministry said. They also may have sold mobile phones of NTT DoCoMo and given preferential treatment to affiliates including providers of NTT's fiber-optic Internet services, it said.

“We haven't engaged in any practice that stifles fair competition,'' Hideki Ohmichi, an NTT spokesman, said by phone.

NTT, which was privatized in 1985, is Japan's biggest provider of fixed-line and wireless phone services and Internet access. It incorporates five major units under a holding company structure that followed a state-led reshuffle in 1999.

The government introduced a monitoring system last year to prevent NTT from using its advantage as a former phone monopoly.

It plans to resume talks on the break up of the company in 2010.

Will NTT be able to thrive in a more competitive environment?