[IP] Broadband in France and Japan
Begin forwarded message:
From: John Conor Ryan <john@xxxxxxxxx>
Date: March 30, 2006 2:22:55 AM EST
To: dave@xxxxxxxxxx
Subject: Re: Broadband in France
Dave:
I struggle with the right term to describe the regulatory construct that
enables low-cost, unbundled broadband. I agree with Robert Shaw of
the ITU,
writing the note "Broadband in France", that 'deregulation' is not
apposite.
In Japan, as we surely all know, broadband has exceptionally high take
rates. Originally, NTT was quite slow in marketing DSL. Only
unbundling, and
aggressive tactics by Yahoo!-Softbank-Broadband (here: Y!S) succeeded in
opening up the market. Today, Y!S has enormous market penetration.
Fiber-to-the-home will perhaps overtake DSL as the dominant form of
broadband physical medium this year. High speeds to homes and
businesses.
Consumers benefit. Japan is held up as a paragon.
Behind the scenes: curious business models.
1. Where NTT deploys fiber to the home it also must unbundle it - at a
government-set rate of (as I recall) Y1800/month (Eu13, USD15). I cannot
imagine a positive ROI for this absent a separate program of national
subsidies, tax incentives, etc.
2. Y!S operates nearly entirely on unbundled local loops. Its
financials are
quite impenetrable, but the firm, now at scale (no longer in startup,
customer-acquisition mode) continues to hemorrhage cash.
The peculiar outcome seems to be that a/ NTT loses on the wholesale
unbundled loop and b/ Y!S loses on the retail package.
At first glance, the construct now operating in France seems similar.
FT is
forced to unbundle at low wholesale prices. Perhaps there is some
behind-the-scenes machination to make FT whole on this, else it looks
like
extortion.
A semantic question: is liberalization the right expression for brute-
force
market intervention?
A policy question: when is brute-force market intervention the right
policy
to accelerate broadband deployment?
Thanks,
John Ryan
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