DSL is Different in Japan

How do you get 26 Mbps for $40 per month? You live in Japan, where competition has made it possible.

by Alex Goldman ISP-Planet Associate Editor [September 11, 2003]

While the news in U.S. bandwidth this week is that Comcast is upping speeds to 3 Mbps by the end of the year, which is double the best U.S. residential DSL, the latest DSL offering in Japan is 24 to 26 Mbps.

The first company to offer these speeds was Softbank's Yahoo! BB, but the infrastructure is that of defunct CLEC Tokyo Metallic. DSL analysis firm Point-Topic describes the history:

In April 2000, the company had ¥5 billion of capital, and planned to invest this money into equipment and network build for the commercial DSL trial, taking place in six COs in Tokyo. However, by early June 2001, Tokyo Metallic had run out of money. During 2001 there were several postponements by incumbent NTT in both local loop unbundling and in the launch of DSL products. Tokyo Metallic was unable to offer DSL services where it wanted to, and did not benefit from the widespread awareness of DSL that was generated in Japan during 2001. Tokyo Metallic was not able to control its costs tightly enough to see it through the difficult second half of 2001.

Nowadays, however, NTT seems to be allowing unbundling, perhaps because unbunding brings in a lot of money for the company. NTT charges Yahoo! BB customers ¥4,300 ($37). The website of @NIFTY, a DSL reseller, says that the NTT setup fee can be as high as ¥9,500 ($81) if lines have to be run into the home. With Japanese DSL ISPs connecting hundreds of thousands of customers each month, these setup fees are big bucks, even for a company as large as NTT.

According to website Kakukaku, the cheapest DSL in Tokyo is offered by resellers of eAccess, another CLEC, this one founded in November of 1999. Promotional discounts drop the monthly rate to ¥2,467 ($21).

eAccess (ii Access in Japanese, which means good access, with the word "access" borrowed directly from English to make it cool or nifty), has about a dozen ISPs offering DSL to end users: @NIFTY (which was one of Tokyo's first non-ILEC dialup ISPs), AOL, BIGGLOBE, DOIN by KDDI (KDDI is a large long-distance reseller), DTI, tigers-net.com, Panasonic hi-ho, isao.net, SpinNet, ODN, Point Powered Internet, SANNET, and U-Net SURF.

Knowing a good thing, NTT East has entered the market with its own offering, which it calls FLET'S. The company's website is very slick, but it's already promoting fiber instead of DSL with a boy band and the tag line, "listen to it, it's the sound of light."

Oddly enough, a fiber line to an apartment building may not be as fast as DSL. Residential fiber offerings require at least 8 units in a building to sign up, carry steep sign-up fees, and offer a maximum of 10BaseT Ethernet (10 Mbps) to each home.

On the other hand, users with home wireless networks face the bottleneck of Wi-Fi, which has a theoretical speed limit of 11 Mbps, and can deliver far slower speeds in practice.

Is NTT serious about providing DSL? Like every ILEC around the world, NTT wants to lock customers into a bundle of services. NTT's own FLET'S offering is expensive, and offers only the lower 24 Mbps with the specious explanation that "amateur" installs (i.e., self installs) achieve speeds of 24 Mbps, while "professional" installs (i.e., NTT's own resellers) can achieve speeds of 26 Mbps.

The price is not competitive with the CLECs—unless you're an NTT telephone customer. 24 Mbps DSL is ¥4,950 alone, but ¥2,750 for customers paying for NTT telephone service.

The fee for a self-install is ¥3,500 or ¥2,200, but to have NTT do the install, the fee is at least ¥15,000 ($128).

NTT sells 24 Mbps-capable modems for ¥9,800 ($84), and rents them for ¥490 per month to phone customers and ¥440 per month to DSL-only customers.

Without competition, however, NTT would not be offering DSL at all. The initial rollout of DSL itself, the subsequent upgrades, and the price drops, have all been done first by CLECs, then imitated later by NTT. NTT preferred ISDN, which competitors could not offer.

Japan has made startling progress since NTT finally allowed competition in 2000 (see Inside the Goldmine, NTT Bags DSL in Related articles, below) after government intervention, and is quickly rising in the national ranks in terms of total number of DSL subscribers (see DSL Bests Global Economic Woes in Related articles, below).

However, as NTT rolls out fiber across the nation, it may find ever fewer reasons to continue to allow competition in DSL. As DSL technology improves, or even at Japan's current DSL speeds, NTT may find that fiber is even slower than DSL, unless it upgrades to a faster type of Ethernet. With its 10BaseT last mile, NTT's ILEC may have to resort to anti-competitive measures or upgrade its network if it wants to make fiber competitive with DSL.

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