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[IP] on high speed broadband activities in JP?




Delivered-To: dfarber+@xxxxxxxxxxxxxxxxxx
Date: Thu, 02 Oct 2003 18:48:58 +0900
From: Adam Peake <ajp@xxxxxxxxxxxx>
Subject: Re: Is there any paper on high speed broadband activities in JP?
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To: Dave Farber <dave@xxxxxxxxxx>


Some, but nothing that lays out exactly what's happening (Tsuchiya-san and I at GLOCOM plan to write this story of how and what, but other things keep getting in the way. One day soon!)

But what we do have:

See attached excel file, shows the number of subscribers to DSL, fiber and cable. I've taken the numbers from ministry of post and telecom (now MPHPT) data. Just hit 25% of homes (assumes subs are residential rather than SME, so not strictly accurate.)

Eaelier this year an ITU researcher and a guy from Nomura Reserach Institute wrote a paper for an ITU workshop on broadband <http://www.itu.int/osg/spu/ni/promotebroadband/casestudies/japan.pdf>. There's a similar'ish paper by Teruyasu Murakami (NRI's CEO) another here <http://www.nri.co.jp/english/opinion/papers/2003/np200366.html> "Establishing the Ubiquitous Network Environment in Japan" Mainly about broadband.

I wrote a paper about broadband in the UK which includes about 4 pages on Japan (kind of comparison), please see <http://www.glocom.ac.jp/odp/library/75_01/> and section "setting the scene".

Why broadband in Japan (in no particular order)

- Masayoshi Son, entrepreneurship and innovation.
- Govt. policy and (I think) general belief in the importance of broadband among business, academia and other policymakers/influencers.
- "Catch up" with Korea.
- Co-location, etc., is affordable and easy. Hard battle to get it (some detail in my brief explanation, UK paper above) but now not problem. NTT has not been as obstructionist as many incumbents (it was for a couple of years, but not recently.) It may be that NTT actually believes that IP is the future and acts accordingly.
- NTT policy and NTT break-up:
+ NTT was defending voice revenues and allowed costs associated with DSL frequencies to be set very low (around $1.50/month for line sharing.) + plenty of fiber to the central office. When NTT was building "fiber to the home" during the 1990s most of the massive investment went into the backbone and to network feeding the COs (it didn't particularly go into network feeding the home.) This fiber is now available to competitors, i.e. # tariff for inter-central office fiber was set extremely low. When NTT Communications was created as part of the NTT break-up it was given a bit of a helping hand to create its network, it really needed cheap fiber to the CO. NTT Comms was set-up to succeed. It was on the books, eAccess (competitor, smart) found it and demanded and got the same price.

Access to the CO: the line in from the customer is cheap; co-location, etc., is easy; fiber out of the CO is available and cheap.

So now Japan has:

- a wholesale DSL product from NTT that's resold by ISPS.
- 2 competitive wholesellers (eAccess and ACCA networks) that resell their own wholesale DSL product to ISPs (built on NTT's loops, cheap inter-CO fiber and widely available and cheap backbone fiber. Direct competition to NTT's wholesale. I think this is unique to the Japanese market.) - Yahoo!BB, Masayoshi Son's company. Yahoo!BB has built its own DSL service built on NTT's loops, cheap inter-CO fiber, etc. but does not resell to ISPs, it is the ISP. Also a very success VoIP service.

Competition has lead to innovation in services (VoIP, TV over DSL, etc.), and innovation is technology. eAccess and ACCA in particular have driven the introduction of higher speed services (latest is a 26Mbps DSL product.) Do not see this on the typical DSL wholesale products offered by incumbents. And Yahoo!BB drives lower prices. Son has been quoted as saying he set the price according to what he thought consumers wanted to pay (nice anecdote!) But eAccess are only slightly higher and they are pretty adamant that they are making money.

Fiber to the home is also competitive: NTT, power utilities and Usen (the old cable radio company.) There's broadband wireless, and cable (high speed, I don't know much about cable services, but understand there are 20Mbps products.)

Hope this helps.

Adam

Adam Peake
GLOCOM Tokyo
<http://www.glocom.ac.jp>
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