Telecommunications

April 2005

Tepco, Kepco to Spend 100 Billion Yen to Double Home Fiber-Optic Lines
Tokyo Electric Power Co. and Kansai Electric Power Co. plan to spend a total of about 100 billion yen this fiscal year to each double the subscribers to their home-use fiber-optic communications networks, The Nihon Keizai Shimbun learned Wednesday. The two major power companies aim to grab about 20% of the market combined by taking on the Nippon Telegraph and Telephone Corp. group, which has also announced plans to double its fiber-optic subscribers. Tepco and Kepco have already set up their key backbone networks, so in order to expand market share they will focus on laying down the so-called last mile, which connects networks to homes. Right now, NTT essentially has a monopoly on lines to the home. But this field is expected to see full-scale competition once the two power companies launch major offensives. Fiber-optic lines offer transmission speeds of up to 100 megabits per second, about double those of ADSL, enabling household users to send and receive large video files with image quality on a par with that of high-definition television broadcasts. Japan has more than 2 million fiber-optic subscribers, far more than the U.S. and Europe. If NTT and the two power companies achieve the targets in their business plans, domestic fiber-optic subscribers would top 4 million by March 31, 2006. The spread of fiber-optic communications is expected to lead to growth in new content and services, such as high-quality video broadcasts and fiber-optic IP (Internet Protocol) telephony. Tepco plans to increase its current 130,000 or so fiber-optic subscribers to about 320,000. It plans to spend 44 billion yen, double last year's figure, to lay down lines in residential areas in six prefectures, including Tokyo and Kanagawa. The firm plans to make clear its stance to vie with NTT in the key market by making its service available to 10 million households, up from the current 8 million. Tepco plans to spend 37 billion yen next fiscal year, which would bring its total investment in this field for the three years through next fiscal year to more than 100 billion yen. Kepco plans to boost its fiber-optic subscribers from the current 220,000 or so to 430,000 by fiscal year-end through subsidiary K-Opticom Corp. The power company will be spending more than 100 billion yen over two years starting last fiscal year on its communications operations. By setting the rate of its fiber-optic service at around 5,000 yen per month, roughly the same as ADSL service, the power company aims to take a market share in major Kansai urban areas that matches that of NTT West Corp. The NTT group has some 1.7 million fiber-optic subscribers and has announced plans to double them to about 3.5 million this fiscal year and switch half of its 60 million fixed-line phone service subscribers to fiber by 2010.
(The Nihon Keizai Shimbun, April 14, 2005)

NTT Feels Crunch as Power Firms Bolster Fiber-Optic Operations
With Tokyo Electric Power Co. and Kansai Electric Power Co. announcing plans to double their fiber-optic line subscribers, Nippon Telegraph and Telephone Corp., which currently dominates this field, has a sense of crisis. "A growth in market share by Kansai Electric is a threat," said President Shunzo Morishita of NTT West Corp., the NTT regional firm that competes with a subsidiary of the Osaka-based power company. NTT West is nervous about the moves of its rival, which is expanding its customer base by setting low prices. Kansai Electric unit K-Opticom Corp. is projected to grab a market share equal to NTT West when looking at just Osaka and five surrounding prefectures. And it is beating NTT West by a 60-40 margin in some months, said K-Opticom President Tadao Tanabe. Twenty years have passed since the deregulation of the communications industry, but NTT has enjoyed a near-monopoly in fixed-line communications lines placed in homes. It would be an extraordinary situation for NTT if it has to play second fiddle to another firm in communications infrastructure. Although NTT still dominates in terms of the number of subscribers when viewing the country as a whole, Tokyo Electric and Kansai Electric, which aim to take a combined 20% share of the fiber-optic line market, are not its only competition. Other power companies such as Kyushu Electric Power Co. and Chugoku Electric Power Co. are increasing their subscribers by focusing on lucrative urban areas. With the rapid spread of ADSL now starting to slow down, the main battlefield is shifting to fiber optics. This year, when fiber-optic lines are projected to attract more new subscribers than ADSL for the first time, NTT's hopes for fiber optics are big, and so is its sense of crisis. Facing tough times, NTT is expected to make strong appeals to the Ministry of Internal Affairs and Communications as well as lawmakers to lift its obligation to lend its communications lines to other firms at a low cost. It will likely claim that the obligation, which only NTT is bound to, does not reflect the current competitive environment. However, depending on how NTT handles the matter, it may end up dampening the infrastructure-building race that has just begun. This would affect other firms that are planning full-scale fiber-optic line services, such as KDDI Corp.
(The Nihon Keizai Shimbun, April 14, 2005)

KDDI Announces Subscribers to 3G Cellular Phones Exceed 18 Million
KDDI and Okinawa Cellular announced that the total number of subscribers for third-generation cell phones provided by KDDI and Okinawa Cellular exceeded 18 million on April 6, 2005. KDDI and Okinawa Cellular launched CDMA 1X au cellular phones On April 1, 2002, enabling the use of nationwide services exclusive to 3G cellular phones, such as "Movie Mail", "Photo Mail" and EZ "Chaku Uta". CDMA 1X WIN, based on the CDMA 1x network, launched in November 2003, enabling high speed data communications of up to 2.4Mbps, and allows the popular 3G EZweb services EZMovie and EZ Chaku Uta. In addition, CDMA 1X WIN hosts a series of rich services dedicated to CDMA 1X WIN, including EZChannel, a service that automatically distributes various genres of program, and Live Camera, a service that delivers desired video content in real time.
(NE Asia Online; April 12, 2005)

Cell Phone Shipments up For 2nd Straight Month In February
Domestic shipments of mobile phones surged 23% in February from a year earlier to 4.27 million units, the second consecutive monthly increase, according to the Japan Electronics and Information Technology Association (JEITA). While demand for cell phones was sluggish throughout 2004, manufacturers have released a slew of new 3G (third-generation) handsets so far this year, for which consumers continue to exchange their old 2G phones. NTT DoCoMo Inc. introduced in February its most inexpensive 3G FOMA handset series yet. Consumer choice has broadened, and services such as KDDI Corp.'s music download option have proven popular among the young. The market appears to have entered a replacement period, such as that seen in 2003, when customers replaced their old cell phones with new handsets equipped with cameras. "Growth will continue to be strong through March and beyond due to the ongoing migration to 3G phones," JEITA said.
(The Nihon Keizai Shimbun, April 12, 2005)