DSL

Inside the Goldmine, NTT Bags DSL

Japan's telco has long preferred ISDN over DSL, but with friendly regulation, NTT could learn to love DSL—and could learn the DSL tricks of other nations' telcos.

by Hugh Ashton [December 26, 2000]

In January 1998, NTT, Japan's largest carrier, was conducting experiments to test the viability of DSL through its infrastructure. At the same time, it was pushing ISDN services like there was no tomorrow.

The prices of ISDN routers dropped dramatically, and they became more common on the store shelves than analog modems. But on the other side of the Pacific, some journalists were already bringing out the black armbands for ISDN, predicting that DSL would be the wave of the future.

NTT, having sunk a considerable amount of effort into the development and promotion of ISDN throughout Japan, seemed reluctant to see any other players corner the broadband market before it was ready to make a move itself. With cable partially knocked out as a competitor (regulations forbid multiple cable operators per region, and cable connections typically cannot be made to condominiums, apartment buildings, and the like, which make up a high proportion of Japanese urban housing) NTT was in a good position to control the flow of the broadband game.

Some statistics: in October 2000, some 460,000 Internet users in Japan were estimated to be connected via cable (Korea had about twice that number), and a mere 3,171 through NTT's trial DSL services (Korea had just under 2 million DSL users at that time).

It's my party...
NTT had kept the numbers in the DSL game low through controlled access to its switches. Since every ASDL provider must use the final mile provided by NTT, the traditional stalling game, familiar to many overseas CLECs, was used on domestic competitors. Delays of up to nine weeks were common for reports on whether space was available for third-party equipment at NTT locations. Bills for engineering work were presented with no itemization. Strangely, when the Ministry of Posts and Telecommunications stepped in to clear up the rules covering interconnection, report times dropped from a matter of weeks to about four days.

Of course, the cost of using the service is also another way of keeping out the opposition. The few companies who have had the courage to see their way through the swamp of NTT-imposed difficulties, mainly Tokyo Metallic and eAccess, saw an ¥800/month charge (about US$7) slapped on their users by NTT as a payment for being allowed to use their (existing) lines for DSL. This is in addition to the normal line rental and the per-minute charges for all POTS calls (as well, of course, as the fees to the DSL provider). There may also be engineering fees to be paid to NTT by the subscriber to downgrade an ISDN line to analog.

The bureaucrats dug in their heels and demanded that the usage charge for DSL lines be halved again to ¥200 (about $2). Although eAccess wanted this fee to be reduced to ¥66, this wasn't forthcoming immediately, and the price went down to ¥190.

Hideo Kobayashi, speaking for eAccess, actually professes a slight relief with regard to NTT's entry into the arena. As he told me, ISDN had always been popularly perceived, thanks to NTT's propaganda machine, as the fastest thing around. NTT's market entry has now legitimized DSL as a speedy contender in the eyes of the public. Of course, the pricing has caused a serious rethink in the non-NTT camps. eAccess, whose business is to sell the service to ISPs, rather than to the end-user, has had to remain competitive, though Kobayashi was a little coy regarding the exact details.

Tokyo Metallic, on the other hand, are furious, loudly and publically. They state that NTT has played a foul, and they also accuse the press of pandering to the whims of NTT by publicizing DSL as an NTT "invention" when the spadework has actually been done by Tokyo Metallic. They also make it clear that in their opinion the reason for the delay in providing end-user applicants with the service, some of whom have been waiting for three months or more (I recently talked to two friends who were both in this position), rests fairly and squarely with NTT

Actually, there are some very interesting shifts in the attitude of the public media. The latest proposed budget, with its trillions of yen being spent on unwanted public works, has attracted criticism from even the usually compliantly uncritical NHK (public broadcasting service) news.

The government's "IT initiative" with its focus on (hideously expensive) fiber-to-the-home is being publicized and praised. The 21st century equivalent of dams, tunnels and airports? But even while extolling the virtues of the new service, the NHK interviewer talking to a NTT spokesman expressed shock and horror over the proposed ¥13,000/month charge (about $115) for this broadband service. Some concern was also expressed over NTT's proposed business model for broadcasting, whereby NTT would levy charges on both the provider of the content and on the subscriber.

Are we at last seeing a public revolt against the heavy-handed tactics of NTT? Stay tuned for future developments.

—End