Japan's broadcasting stands at the crossroads, due to digital innovation. The government policy of introducing digital technology to satellite and terrestrial broadcasting by the early 2000 will greatly affect the competitive behaviour of broadcasters, and this will also influence the structure of the broadcasting market. This paper argues that although broadcasting's special role cannot be ignored in a democratic society, government should not create boundaries between industries when digital technology is bringing about convergence. Since it is difficult to predict the effect of digital innovation on broadcasting, policy should let the market be the prime arbiter of the deployment of digital innovation.
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