Using Joskow's framework of regulatory reforms in network infrastructure in
dustries with economies of vertical integration between natural monopoly se
gments and potentially competitive segments, we examine Japan's experience
of telecommunications reform since 1985. Its background and contents is exp
lained, and the post-1985 regime and industry performance is examined. The
implementation of Japan's reform does not fall within Joskow's polar cases
of the big bang approach, where all steps are taken at one stroke, and the
piecemeal approach, which allows transition period during which the industr
ial organization and regulations evolve according to a preplanned program.
Japan's experience is rather the unstructured gradualist approach, where th
e initial model is monitored and reoriented in view of the spontaneous evol
ution through competition in the liberalized segments. This approach presup
poses the intangible infrastructure reform of regulatory framework and deci
sion-making mechanism. Japan's rocky reform experience is partly due to the
lack of such an intangible infrastructure reform.