more on Broadband in France and Japan

[David Farber <dave () farber net>]

Begin forwarded message:

From: IKEDA Nobuo <ikedanob () db3 so-net ne jp>
Date: April 2, 2006 12:10:54 AM EST
To: David Farber <dave () farber net>
Subject: [IP] more on Broadband in France and Japan

Mr. John Conor Ryan's post on March 30 regarding Japan's broadband is
inaccurate in several points.

The name of Softbank's broadband operator is not "Yahoo!-Softbank- 
Broadband"
but Yahoo!BB.

> Fiber-to-the-home will perhaps overtake DSL as the dominant form of
> broadband physical medium this year.

This is wrong. According to the government's statistics in March 2006,
the number of FTTH subscribers in Japan is 2.9 million, in contrast to
that of DSL, 13 million. Nobody can tell when (or whether) FTTH will
overtake DSL.

> 1. Where NTT deploys fiber to the home it also must unbundle it - at a
> government-set rate of (as I recall) Y1800/month (Eu13, USD15).

Indeed FTTH price is regulated, but NTT's standard wholesale price is
Y5074($43)/month. It's so high that other operators offer FTTH services
that are cheaper than NTT's without using NTT's fiber in metropolitan
areas. It's ironical that NTT can't sell FTTH services to end users more
cheaply than the wholesale prices.

> 2. Y!S operates nearly entirely on unbundled local loops. Its  
> financials are
> quite impenetrable, but the firm, now at scale (no longer in startup,
> customer-acquisition mode) continues to hemorrhage cash.

No, Yahoo!BB is making money. According to Softbank's latest report, it
recorded operating profit of Y23.5 billion ($200m) in the third quarter
in 2005.

Since unbundling local loop is good for competitors but bad for  
incumbents,
the most difficult part is the enforcement of the regulation. As 45% of
NTT's stock was owned by the government, NTT obeyed the regulation.
However, it was not easy to enforce the regulation for RBOCs in the U.S.
that resisted the regulation strongly and won many lawsuits over the  
FCC.

Thus the unbundling policy will be effective only if the incumbent is
owned or heavily subsidized by governments. So it would be promising to
regulate France Telecom to unbundle the local loop, because it is also
partly owned by the government. For the detail, see my article:

http://www.rieti.go.jp/jp/publications/summary/03110001.html

--
Ikeda, Nobuo
ikedanob () db3 so-net ne jp



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