FTTH moves into mainstream in Japan

[Dave Farber <dave () farber net>]

http://www.americasnetwork.com/americasnetwork/article/articleDetail.jsp?id=93689


FTTH moves into mainstream in Japan

As the sub count races past 1 million, ADSL service providers feel the pain
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May 1, 2004
America's Network
[]



TOKYO - Fiber-to-the-home (FTTH) services in Japan quietly marked a major 
milestone in February when the millionth subscriber was connected. It was 
just three years ago when USEN Corp launched the country's first commercial 
FTTH service in March 2001.

"This is a key milestone and means that FTTH is reaching critical mass as a 
consumer product in the Japanese market," said USEN's chief spokesman 
Joichiro Suzuki.

"The way the market is developing shows that people are prepared to pay for 
FTTH-speed broadband even without fancy services like video-on-demand. It's 
a matter of price," explains Daniel Newman, market communications analyst 
at IDC Japan. "Japan has found the sweet-spot."

FTTH started to take off last April when the number of new FTTH subscribers 
a month surpassed 50,000. It took just over six months to go from 500,000 
to 1 million.

USEN, which has just a 14% market share but over 40% of subscribers living 
in condominiums in 11 cities where it has service, expects to start 
breaking even later this year on its FTTH business. NTT East and NTT West 
dominate the market, mainly because they are able to offer the service to 
around 70% of the country's population.

Although the FTTH subscriber base pales in comparison with that of ADSL 
which passed the 10 million mark in December, FTTH is already casting a 
cloud over the long-term business future of ADSL service providers, 
especially Yahoo! BB. The total number of new subscribers for ADSL fell 
from more than 435,000 a month in early 2003 to about 335,000 a month at 
the end of last year.

USEN's customer registration data shows that more than 44% of new 
subscribers had switched from ADSL. Research by KDDI, which entered the 
market aggressively last October, introducing bundled Internet, IP phone 
and TV services for just 6,500 yen ($65) a month, suggests that 70% of ADSL 
users intend to move to FTTH.

That is not surprising since FTTH offers much more speed for only $15-$30 
more per month.

Both FTTH and ADSL are offered on a best-efforts basis. But whereas the 
FTTH service reliably provides 50% to 70% of the 100-Mbps upload/down speed 
advertised, ADSL subscribers often only get about 25% of the optimum 
40-Mbps rate. Being two kilometers from the local exchange cuts throughput 
by about half, and the bundling of VoIP by Yahoo! BB has also affected the 
stability and throughput of the service.

Always viewed as an interim technology, ADSL'smain legacy may well be that 
in Japan it helped make FTTH affordable for the general urban population. 
FTTH in Japan is by far the least expensive in the world.

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