2001 Is Year Of Rising Broadband
Access For Japan
(12/20/00, 11:33 a.m. ET) By Eriko Amaha, Reuters
TOKYO -- With a slew of companies rushing to wire
Japan for high-speed Internet access, analysts say 2001
will be the year of broadband for Japan as it finally
moves to catch up with peers such as South Korea and
the United States.
The race will intensify this month when telecom giant
Nippon Telegraph and Telephone Corp.'s local service
providers, subsidiaries NTT West and NTT East, begin
offering broadband fiber-to-the-home (FTTH) and
DSL services.
With revenue from voice traffic shrinking and
deregulation opening its existing networks to
competitors, the NTT group is particularly pinning its
hopes on FTTH services as a key driver of growth.
"Anyone who can get fiber to homes and offices will be
competitive," NTT president Junichiro Miyazu told the
Mainichi newspaper. "I want optical fiber to be our ace
product."
But analysts said there may not be enough demand for
high-speed services to pay for the costly migration from
copper to fiber, especially in a country where even
ISDN, much slower than either FTTH or DSL, is still in
its infancy with only 10 million users.
Shinya Sano, an analyst at Mitsubishi Research
Institute, said a dearth of "killer contents" such as
interactive games or video streaming would also
discourage consumers from subscribing to high-speed
Internet services.
As of March, 220,000 kilometers of optical fiber was in
place nationwide, compared with 1.027 million
kilometers of copper lines, according to NTT, which
owns 36 percent of the total optical fiber network.
"Everyone has equal footing in the broadband market,"
said Toshiaki Iba, a telecom analyst at
Tokyo-Mitsubishi Securities. It's unclear who would
succeed, Iba added.
Before the market for faster and more expensive
optical-fiber networks takes off, however, analysts said
the first test will come for DSL services, which provide
the easiest and cheapest way of promoting broadband
access since they use existing copper lines. They can
deliver data at speeds up to 1.5 Mbit/s, or more than
20 times faster than dial-up modems.
Nomura Research Institute predicts the DSL market
will grow, to $570 million in annual revenue by 2005
from the current $4.4 million.
The DSL market is already looking crowded, with
entrants ranging from small startups like Tokyo Metallic
Communications and eAccess to big-name telecom
companies, most of them concentrating on urban areas.
DDi Corp. (stock: DDIC), Japan's second-largest
telecom group and widely known as KDDI, joined the
fray last week with an announcement it will begin DSL
services in the spring of next year and will offer
fiber-optic services in the near future.
The stiff competition is also eroding pricing and NTT is
struggling to match its competitors.
Venture firm Tokyo Metallic charges $240.20 for initial
installation and a monthly fee of $55.97 for unlimited
access at 640 Kbit/s receiving and 250 Kbit/s sending.
Last week, NTT lowered its DSL charges to about
$71.83 a month with an initial installation fee of
$168.82.
FTTH services, the focus of NTT's broadband hopes,
come with a much higher price tag: $115.51 per month
plus a $239.93 initial installation charge for capacity of
up to 10 Mbit/s.
NTT plans to spend $1.7 billion to build optical-fiber
networks in the business year to next March, and the
cost is likely grow as it aims to boost its fiber coverage
in metropolitan areas.
"The risk scenario for NTT is to be stuck with high
capital spending while demand remains sluggish," said
Tokyo-Mitsubishi Securities' Iba.
Eric Gan, chief operating officer of DSL venture
eAccess, also sees risks in NTT's strategy of offering
full-line services. Gan said a focused strategy will be
key to surviving in the fast-moving broadband market,
where infrastructure costs are steep.
"Big companies are operating like a supermarket or
deparment store," he said. They offer everything from
ISDN to DSL to fiber-optics.
More challenges lie ahead for NTT with a government
panel proposing to open up its fiber-optic networks to
competitors |
