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Re: Internet access in Japan (was Re: BitTorrent swarms have a deadly bite on broadband nets)

  • From: Tom Vest
  • Date: Tue Oct 23 04:13:02 2007

Yup, matches my experience (designing/deploying AOL's swan song JP network infrastructure) during the same period.
The "ILECs" were artifacts of the Japanese regulators' 1997 effort to relieve the last mile facilities death grip on services, ala the (1984) US MFJ / AT&T breakup. The new c. 2001 "pressure" was possible because the Japanese gov was still NTT's largest shareholder.

The same "pressure" that prompted FTTH rollout also delivered the metro and access facilities unbundling that begat YahooBB and ubiquitous 20-100Mbps to the home over conventional facilities -- the latter mandate being similar in form the US Telecom Act of 1996, with the minor exception that it actually worked there...


On Oct 23, 2007, at 9:42 AM, Rod Beck wrote:

I did consulting work for NTT in 2001 and 2002 and visited their Tokyo headquarters twice. NTT has two ILEC divisions, NTT East and NTT West. The ILEC management told me in conversations that there was no money in fiber-to-the-home; the entire rollout was due to government pressure and was well below a competitive rate of return. Similarly, NTT kept staff they did not need becuase the government wanted to maintain high employment in Japan and avoid the social stress that results from massive layoffs. You should not assume that 'Japanese capitalism' works like American capitalism. It doesn't. NTT only reveals financial statistics at the aggregate level; the cross subsidies between divisions is completely hidden and this enables them to pursue the government's social objectives.

Moreover, it is not clear that you should desire broadband rollout at any cost. Presumably broadband access should be justified as satisfying some net benefit criterion (benefits minus costs).

A better model is the French model which generates very high broadband penetration rates and is economically rational. France has successfully forced the ILEC to open up the central offices and you now have two highly successful and publicly traded DSL providers, Neuf Cegetel and Free.

The US effort failed because of silly arguments based on the equally silly notion that private property is an absolute right and that forcing the ILECs to share facilities even when they are receiving a fair return of return in a form of 'confiscation'.

As always, these comments are mine and not the position of Hibernia Atlantic.

Roderick S. Beck
Director of EMEA Sales
Hibernia Atlantic
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