The Right to Use a Used Right

In mid-1993, about six months after renting my own apartment, I left work early because I was not feeling well. By evening, it was clear I had a very bad cold. I felt nauseated, my head was pounding, and my joints ached. I was also very hungry (I almost never lose my appetite when sick), but I had no food in the house and no cash on me to buy any -- even if I could have made it to the supermarket. And I couldn't call anyone, because I had no phone. Just when things looked their bleakest, there was a knock on the door. It was my girlfriend. She had called me at work, been told that I had gone home sick, and come to my apartment because that was the only way to reach me.

Yes, I had no phone.

In those days, Nippon Telephone & Telegraph (NTT) held a monopoly on land lines, and cell phones were so rare that my friends and I used to call them "asshole detectors" -- as in "anyone who had one had to be an asshole." NTT used its monopoly position to charge an exorbitant fee for the "right" to have a telephone. (Not the phone, not installation, not a phone number -- just the "right" to own a phone.) And, in 1993, the fee for a telephone right was 70,000 yen, or about $700. In Japan, public phones in good working order were everywhere, including a block away at the 7-11. Prepaid telephone cards obviated the need for large amounts of coinage. And, from special gold phones, you could even call the US. Plus, I spent 8 hours a day in my office, where people could always reach me, and most of the rest of the time out doing stuff. Plus, after living in a dorm for a year, I had already gotten used to not having my own phone and I kind of liked it. No wrong numbers in the middle of the night. No telemarketers. No calls from Mom when I was in the middle of something. As a matter of principle, I refused to give NTT 70,000 of my hard-earned yen just for a telephone.

Of course, being at the invincible age of 23, it never occurred to me that I might get sick. Or that I might get sick and have no food in the house. Or that I might get sick, have no food in the house, and be too sick to go to the nearby 7-11 to buy food. Or that I might get sick, have no food in the house, be unable to go to the 7-11 to buy food, and be unable to call a friend from the nearest pay phone because the nearest pay phone was at the 7-11. After returning to health, I decided that my principle was silly and I needed a phone.

It turned out that a secondary market existed for "used" phone rights. Rather than pay $700 for a "new" phone right directly from NTT, you could go to a broker and buy a used one for about $650. After returning to work, I found a phone line broker in the Japan Times classifieds. For my $650, I not only got my phone "right" but the broker also arranged for NTT to come to my apartment to install the phone line -- for which, of course, there was a separate fee. I got a used telephone/answering machine from a friend, so at least I did not need to pay for that. And I did get most of my money for the "right" back eventually. When I moved back to the US in 1994, I sold my "right" back to the same broker for 60,000 yen ($600).

Nothing about the telephone right system ever made sense to me. If NTT wanted the highest number of people possible to subscribe to telephone service to amortize the initial cost of installing telephone infrastructure around Japan, why would it charge such a high fee? And if NTT was simply exercising its monopolistic power to screw the Japanese consumer, why did it allow people to utilize "used" rights for which NTT did not get a single yen, when it could have simply charged the 70,000 yen as a fee to every subscriber? Or, instead, why didn't NTT itself buy back "used" rights for 60,000 and resell them at the regular price? At least that way, it would have gotten 10,000 for each of the rights sold in the secondary market rather than give money away to brokers. Finally, if the right was not subject to wear and tear, why would a used one be any cheaper than a new one? Like a new car, a new right lost value the moment you purchased it, but, unlike a car, a telephone right lacked moving parts that wear down.

The only reasons I can imagine why used rights are sold at a discount are the transaction cost involved in having to go to a third party to get one and the lesser prestige of a used right. Japanese people typically don't like used things -- for example, Japanese houses are typically built to last only 30 years (compared to 100 years in the US), because most Japanese don't want to live in houses with other people's cooties -- so they tear down the house they just bought and build anew. Perhaps it was the same with a telephone right: the fact that someone had used it before somehow made it kind of icky.