Development of the Japanese broadband Internet market 1

I have worked for NTT Communication Corporation, one of the main subsidiaries of NTT, the largest telecommunication company in Japan, like BT in the UK. As I was in charge of designing and planning of Internet related services such as IP (Internet Protocol) telephone, I will write about how the Japanese Internet connecting services (especially broadband services) have developed so far.

Anyway, do you know how many subscribers of broadband services are in Japan? In June 2008, the number of these users was about 290 million. (ADSL (130M), Optical fibre (120M), CATV(40M)) Some of you might be surprised at the number of a optical fibre service called FTTH (Fibre To The Home). Maybe the adoption rate of FTTH in Japan is No.1 in the world. Why and how have so many people used the FTTH service in Japan? I’d like to describe a development of the Japanese broadband market historically on this blog in order to get its answer.

On page 70 of the text, you can see a description of Softbank, one of the major telecommunication companies in Japan (one of competitors of my company). The text says that a partnership between Softbank and Yahoo! Japan pioneered inexpensive, fast broadband Internet access. It was true but I think that the partnership was one of the reasons which they could succeed at that time.

In September 2001, Softbank began to offer its broadband service (ADSL) called Yahoo! BB. It also offered IP telephone service called BB phone to customers of Yahoo! BB in December 2001. (This was so-called Phone to Phone Service, unlike Skype.)These two services were very cheap. Especially, the BB phone was a price buster. That is to say, it was about a tenth of traditional telephone rates. Furthermore, it offered a 24/7 free of charge service between its customers.

On the other hand, other telecommunication companies couldn’t offer the same service immediately, because offering cheap IP telephone service had a risk of taking away revenue from their core traditional telephone operations that comprised about a half of their total sales. (At that time, Softbank was just an ADSL provider, so they didn’t have to concern about cannibalisation between BB phone and a traditional telephone service.) Therefore, Softbank could increase its customers quickly.

However, in the middle of 2002, other telecommunication companies could not help offering the same service as BB phone. (To be continued.)