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Evolving broadband market & policy developments in Japan

EDUCAUSE Policy Conference 2006. Evolving broadband market & policy developments in Japan. April 27, 2006 Taka Ebihara Japan Chair Center for Strategic & International Studies. Agenda. Broadband Market in Japan Market statistics Services Broadband Policies

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Evolving broadband market & policy developments in Japan

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  1. EDUCAUSE Policy Conference 2006 Evolving broadband market & policy developmentsin Japan April 27, 2006 Taka Ebihara Japan Chair Center for Strategic & International Studies

  2. Agenda • Broadband Market in Japan • Market statistics • Services • Broadband Policies • Policies that have accelerated BB deployment • Analysis of policy implications

  3. Broadband Market in Japan Market statistics Services

  4. Snapshot:Japanese Broadband Market Tokyo Osaka 1,000 miles Japan (US) • Population: 127 mil, (290 mil) • Households: 50 mil, (110 mil) • Geography: 380,000 km2 • BB Subs: 22 mil*, (43 mil**) • BB Penetration: 17.6%*** (16.8%***) 11th (12th) • * As of Dec 2005 (MIC)** As of Jun 2005 (FCC)*** As of Dec 2005 (OECD)

  5. Growing Broadband Market in Japan In Million 20 ADSL Total: 22.3mil 14.5mil (65%) 10 5 FTTH 4.6mil (21%) CABLE 3.2mil (14%) 1999 2000 2001 2002 2003 2004 2005DEC Source: Ministry of Internal affairs and Communications (MIC)

  6. In Thousand FTTH 80 60 40 20 ADSL 2004 NOV 2005 NOV Broadband Monthly Net Increase In case of NTT EAST (the largest incumbent operator)

  7. Broadband Home Passed In case of NTT EAST Home Passed 98%=25M households 73%=18M households (FTTH) Source: Information NTT EAST (As of Mar 2005)

  8. $35 50Mbps Price for 1Mbps 45Mbps $31 Speed $30 40Mbps 26Mbps $23 12Mbps $3.30 $0.60 $2.50 8Mbps 1.5Mbps 2004 2000 2001 2005 2002 2003 Broadband Competition • ADSL price & speed competitions (2000~mid 2005) • Average monthly price down 47% in 5 years • $56.30/mth (1.5Mbps)  $29.8/mth (50Mbps) • Increasing value-added services (mid 2005~) Price per 1Mbps in ADSL Source: InfoCom Research

  9. Everything over FTTH Triple Play & Fixed Mobile Convergence Broadcasting & Telecom Convergence Broadcasters Internet PSTN ISP Internet VoIP IP TV RF TV Cellular FTTH Home Networking

  10. Advanced mobile phone applicationse-payment • Electronic wallet Train ticket Retail shop ATM Vending machine

  11. Advanced mobile phone applicationsDigital mobile TV • “One Segment Broadcasting” or “One Seg” based on ISDB-T • Available nationwide by the end of 2006 • Delivering richer content (visuals, related info, URLs) • Benefits • Major broadcasters: more viewership, more ad revenues • Mobile operators: increasing data ARPU, e-commerce opportunities “One Seg” enabled devices Service availabilityas of Apr 2006

  12. Japanese Broadband Policies Policies that have accelerated BB deployment Government initiatives Analysis of policy implications

  13. u-Japan strategy & estimated impact • Estimated economic impact in 2010 • Ubiquitous networking industries: $730 billion* *1 USD = 120 JPY Source: White Papers for Information Communication 2004

  14. Mitigating Digital Divide:Gov’t financial supports for broadband • Primary beneficiaries are municipalities • For public sector • Municipality intranet projects (schools, CCs, libraries) • Rural FTTH projects (details in later slides) • For both public and private sectors • Zero- or low-interest-rate financing* • For private sector • Tax incentives* • Deferred income tax payment • Reduction of fixed asset taxes for designated network equipment *a very limited financial impact for the private sector due to a zero-interest-rate policy of Bank of Japan

  15. Gov’t-financed rural BB deployment:Rural FTTH Projects • Collaboration of municipalities and service providers • 1/3 of construction costs is subsidized • Municipality-owned fiber networks to be wholesaled • Level playing field must be ensured Source: MIC

  16. Analysis of Policy Implications • Unbundling mandates for dry coppers and dark fibers • Line sharing requirement • Appropriate guidelines for co-locations and ROW • Less technological complexities in BB deployment • Fierce price competitions in ADSL market forced incumbent operators to move up to FTTH market • Role of e-Japan and u-Japan • Comparatively better understanding on long-term investments

  17. Net Neutrality Debate in Japan • Consumers have sufficient choices • “ISP-free” resale business model prevails • CLECs have full-control over their networks • Bandwidth limitation in access networks is NOT significant • Sustainable development and “free rider” issues • Demise of flat rate model? • ISPs’ self-regulation against P2P traffic • Rapidly increasing ad-supported FREE IP unicast video content

  18. Conclusion • Fastest and cheapest broadband • Reasonable CLEC market share • Mixed results of facility-based competition • National broadband strategies played a significant role • Need a good balance between long-term and short-term development goals • Maintaining incentives for innovative investment is the key to sustain broadband deployment

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