Why broadband is 5x cheaper in Japan

By Richard Koman - April 4, 2007

How do you like these statistics? Japanese broadband customers pay about 70 cents per megabit per second of bandwidth. In the US, we pay $4.90, on average, according to Takashi Ebihara, senior director of the corporate strategy department at NTT East Corp.

Why? A wide-ranging government policy on broadband, coupled with healthy competition, said Ebihara, according to InfoWorld.

Forum host Information Technology and Innovation Foundation has argued that the U.S. needs a more aggressive broadband policy, saying broadband adoption creates new jobs and new innovative products. As of June 2006, the U.S. ranked 12th among Organisation for Economic Co-operation and Development nations in broadband adoption, behind Canada, Iceland and Sweden, among other countries.

Japan, through its u-Japan broadband strategy, provides money for cities to wire schools and community centers, provides zero-interest or low-interest loans for cities and businesses to deploy broadband, and provides tax breaks for the purchase of networking equipment, Ebihara said.

The problem is that the Bush administration doesn't want anything to do with government-sponsored initiatives. "I don't think at the moment, the United States has any national policy," Ebihara said. "The idea is, let the market do it."

This is manifested in the difference in common carrier rules. Japanese policy requires the two national incumbent telecoms to share their networks with competitors. While, in the US, the FCC ended common carrier requirements, even as it allows more and more consolidation of the telecom industry.

NTT East has "mixed feelings" about sharing its broadband networks, Ebihara said. The two incumbents have less competition in the fiber space than in DSL, partly because competitors want to recoup their investments in DSL, he said.

"The people are happy, and our competitors are happy," he said. "Personally, I think [the policy] is right when you look at the long-term strategy."

Asked why NTT East continues to invest in fiber when it must share its network, Ebihara said the company, partly owned by Japan's government, sees the benefits for the country. "We see the future, and then we do what we feel is right," he said. "[Making low-yield investments is] very difficult for American companies like Verizon and AT&T. They have to answer every quarter to investors."

                   

April 4, 2007 | Permalink | Comment | Category: NewsWatch | Subscribe to SVW

Comments (1)

Laura Unger:

I am a telecom worker and a member of the Communications Workers of America. We have a program called SPEED MATTERS (http://www.speedmatters.org) which focuses on exactly the issues you discuss. For us it is also a jobs issue but more importantly a social one. It is ridiculous that the US broadband speeds are so much slower and so much more expensive than so many other countries. We just were listed as seventh in the The Global Information Technology Report 2006-2007’s "Networked Readiness Index" (Denmark was first). We need public policy to support high speed, affordable internet access for all. There are many different ways to go -- tax incentives, changes to the Universal Service Fund, public/private partnerships. It's good to see some of the candidates discussing these issues. Let's hope something can get done so we don't continue to lag behind.

Posted: April 5, 2007 9:31 AM

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