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To: Jim Oravetz who wrote (144)	7/8/2002 12:35:31 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 211

Semi-OT:KDDI's IP Service to Help Offset Decline in Fixed-Line Operations Nikkei Net Interactive July 8th TOKYO -- KDDI Corp. will start an IP (Internet Protocol) telephone service in October that is much less expensive than existing phone services, company sources said Sunday. The new service will charge 8.5 yen (7 cents) per three minutes for calls anywhere in Japan. KDDI will be the first major domestic telecommunications carrier to make a full-scale entry into the market. The move is part of the long-distance phone company's efforts to expand its Internet-related businesses and make up for shrinking fixed-phone operations. Nippon Telegraph and Telephone Corp. is expected to follow KDDI's lead, meaning domestic telephone charges will come under further downward pressure. IP phone fees can be held to low levels because each circuit can handle multiple calls. KDDI plans to offer the IP phone service initially to subscribers of its ADSL (asymmetrical digital subscriber lines) Internet access service. The company plans to charge some 900 yen a month for the service, including the basic monthly fee and a fee to rent a device containing a modem that will connect a user's phone terminal and personal computer to communications circuits. A similar IP phone service was launched by the Softbank Corp. group this spring for 7.5 yen per three minutes. Explaining why the KDDI service will be more expensive, a company official said, "We have improved the sound quality." KDDI is also poised to begin an IP phone service for corporate customers in October at the same rate as for individuals. Thanks to the spreading use of the Internet, the number of IP phone users in Japan has climbed rapidly to an estimated 1.6 million at the end of last year. Some industry observers say about 30% of fixed-phone users will switch to IP phones in the near future. KDDI expects revenue from its fixed-phone business to total 360 billion yen in the current year through March 2003, down 15.3% from the 425 billion yen posted a year earlier.