ADSL in Japan

In Japan, Nippon Telegraph and Telephone (NTT) planned a step-up process from dialup (54 kbps), ISDN(64 kbps), to FTTH. Under the plan, NTT had been selling ISDN lines primarily toward private users while corporate users sometimes skipped ISDN entirely and immediately upgraded to the still-expensive FTTH service. In late 1990s, CATV operators began offering their own broadband services, but relatively high initial installation cost and cheaper alternatives limited its spread.

ADSL service started by a venture company, Tokyo Metallic in 1999. After this NTT started and some other companies followed. In 2001, SoftBank started ADSL (12 Mbps) service. It was a shocking event, because the price was around only 3000 yen (30US$), which was half of other companies and aggressive marketing campaigns led to capturing large shares of market. Competitors and Softbank each dropped prices in a price war and repeatedly readied higher speed services to entice customers (12 Mbps 24 Mbps, 50 Mbps). In 2004, Japan had the best cost performance ADSL service in the world (50 Mbps, 35US$) which it held on in the successive year.

At the same time, NTT and electric power companies expand FTTH areas. In most urban area, people can use FTTH (100 Mbps, 50US$), but ADSL is still mainstream. However, large discounts and free installation have boosted adoptions. Many new apartments are built to accommodate FTTH service with little or no wiring. In 2005, Kansai Electric Power started 1 Gbit/s FTTH service at 8700yen (90US$).

In September 2000, the MIC (communications ministry) forced Nippon Telegraph and Telephone, the incumbent operator, to unbundle its copper local loop. The price was fixed considering the line cost were covered by vocal telephony, alternative operators should only support incremental costs bond to newly offered functions. For the fiscal year 2004, partial unbundling rates were 120Â¥ per month and 1,300Â¥ per month for total unbundling.

In 2000, rules for operators colocation inside NTT facilities and lines delivery terms were established. In 2001, NTT were required to unbundle their interconnection optic fibers between exchange points. Finally, It was forbidden for NTT East & NTT West to offer internet access services.

Softbank, a major Nippon ISP, launched in 2001 its DSL service "Yahoo! BB" and massively invest in DSL technology to become in 2003 the largest DSL operator before the incumbent.

In March 2005, DSL had more than 13.6 million customers. The concurrence of FTTH is stronger and stronger, with the arrival of operators like TEPCO (Tokyo Electric Power Company), allied to KDDI and NTT. Three millions customers were wired with FTTH in March 2005 and it could supplant DSL in 2007 according to Yano Research (FTTH Market in Japan and its future prospects, 1 September 2005).

The Japanese model of optic fiber deployment is difficult to compare to other markets. The last kilometre is often done in an aerial manner on pylons, shared between operators, even non-telco. This distribution technique reduce the vulnerability to earthquakes and lower costs dramatically.

The unique problem facing Japan's broadband situation is that because of popularity of FTTH, operators struggle to maitain enough bandwidth to let users enjoy their service fully. Even the largest operators have capacities for only tens of Gbits even though customers with FTTH service may number in thousands if not more. This problem is further compounded by limits caused by router.