n Setting Standards as a Global Business Strategy

n Setting Standards as a Global Business Strategy presented by Setsuo Harada Head of Technical Relations Office Corporate Technology Department Sony Corporation ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 1

Basic of Standards Setting Who/What is Necessary for International Standards Setting? "A double-headed person/Two minds in one human body" Keywords of standards setting: Laws and agreements - Intellectual Property Rights (+) Copyrights and Encryption (+/-) WTO/TBT Agreement (+/-) Antitrust/Antimonopoly Act. (-) Every law or agreement is made by human beings and can be changed also by human beings. There is no law or agreement, which is considered to be applied “forever” or to remain unchanged “forever. ” ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 2

A Face of International Standards Setting (1) Definition of standards A specification of a product is documented as a criterion, and that criterion when followed by some people is called a standard. Specification: A known state Criterion: An asked-to-follow state Standard: A used-widely state (2) Process from specification to criterion, and then to standard A standardized state does not mean a process but means an established state. Every standard has been made differently, not through the same process. ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 3

A Face of International Standards Setting, Continued (3) International Standards Organizations - International Telecommunication Union (ITU) Established as a UN organization. Responsible for telecommunications/broadcasting field. The MPHPT is the representative to the ITU. - International Electrotechnical Commission (IEC) Established under agreement of major developed countries. Responsible for electric/electronics field. It is an advisory organization to the UN. The JISC (METI) is the representative to the IEC. - International Standards Organization (ISO) Established under agreement of major developed countries. Responsible for materials/machinery field. It is an advisory organization for the UN. The JISC (METI) is the representative to the ISO. - ISO/IEC Joint Technical Committee 1 (JTC 1) Established under agreement between the ISO and the IEC. Responsible for computers and information technologies. Standards Organization ITU ISO/IEC National Representative MPHPT METI ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Standards Sellers ITU-J JSA Slide 4

Standards Setting Process in the USA ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 5

Standards Setting Process in Europe ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 6

Standards Setting Process in Japan No 1 2 3 Category Standardization Organization Governmental Telecommunications policy/strategy Council/ Telecommunications Technology Council Information JISC National Telecom. /Broadcasting. Telecommunications standardization Technology Council Radio Regulatory Council Wired Telecom. Wireless Telecom. Broadcasting Information International Telecom. standardization Information Telecom. / Information, etc. Private Defacto standards Setting Dejure standards National International Proposal Standards (Mandatory) TTC ARIB IPSJ/ITSCJ JEITA, etc. TTC standards ARIB standards (Not mandatory) ARIB standards JIS MPHPT ITU Rec. Companies* JISC ISO/IEC standards Companies Forums Defacto standards Forum standards *ITU sector members only ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 7

Essential Knowledge Regarding Government Every country starts industrialization using national enterprises to protect its market. Therefore, standards setting is a job of the government in the beginning, but it will be privatized in time. Today, standards setting is fully privatized in the USA, semiprivatized in Europe, semi-governed in Japan, and fully governed in the other Asian countries. You need to know what the government is in detail. - It is unknown by those referred to as engineers. - It is unknown by those working in private companies. - It is unknown by those from country towns. It is highly dependent on. . . ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 8

Essential Knowledge Regarding Industrial Bodies Standards setting is part of the job to be carried out by industrial bodies. It significantly relates to the work to be done by the divisions of the government. (1) General electric/electronics/computers/information processing equipment Japan Electronics and Information Technology Industries Association (JEITA), Japan Business Machine and Information System Industries Association (JBMIA), Japan Electrical Manufacturers' Association (JEMA), and Information Technology Standards Commission of Japan (2) Broadcast/Telecommunications/Radio communications Association of Radio Industries and Businesses (ARIB), and the Telecommunication Technology Committee (TTC) Special Characteristics: - There are too many owners, and the workers tend to be irresponsible. - Standards development persons tend to become careless of money matters. - The work tends to become making other works; this opposes general business practices. TYPE A: To find a task -> To find talented persons -> To get a profit TYPE B: To obtain a budget -> To adjust a head count -> To find a job Standards are of quality, not of quantity. People who cannot measure "quality" tend to count it as “quantity. ” Never count the number of standards, of committees, etc. because doing so is meaningless. ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 9

A Background of International Standards Setting (1) The word "Standards" Things which some people want to observe. Standards are criteria. A specification of a product can be a criterion but it has not yet been a standard until it is recognized and used widely. Specification: A known state Criterion: An asked-to-follow state Standard: A used-widely state If a patented technology is used in an international standard the patent owner can make money from the standard. When a technology or specification which people perceive as better is globally used they feel convenience when traveling overseas, but: ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 10

An example of an oligopoly or monopoly NOTE: This is a fiction, not a true story. - “Brother, why are you named differently? ” “Please be inferior for awhile for our profits. ” 455 255 355 ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 11

An example of a co-agreed or co-owned state NOTE: This is a fiction, not a true story. - You jump through a hoop. Respect the hoop, not the technology. NOT international standards International standards WTO TBT We have not yet sold it in the market, but it is. . . XX Government We have already sold it a lot in the market, but why. . . ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 12

A Background of International Standards Setting (Continued) (2) Bifocal view of standardization - A standardized state means an oligopoly or monopoly state, or a co-agreed or co-owned state. Never use the word "standards" in business. That word makes the entity vague. A person has to have a bifocal view on standardization. NOTE: The word "oligopoly or monopoly" used here does not mean it is against Antitrust/Antimonopoly Act. (3) Be gradual (slow) or be radical (quick) Move gradually (slowly) for standardization in an oligopoly or monopoly state, but move radically (quickly) for that in a co-agreed or co-owned state. ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 13

The Front and Back of International Standards Setting Production Development Research IPRs Legal Patent Inter. Company Committees Government Forum Domestic/ Overseas Anti Monopoly Act. Copyrights Encryption Domestic Official Stds Bodies Overseas Official Stds Bodies Stds bodies of other fields Government ISO/IEC/ITU (a grave or a cradle of standards) ANSI Annual Conference 2002 Breaking Down Border: Business, Standards and Trade Slide 14