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Japan's
Telecommunications Overview
In summer 1999, the giant Nippon Telegraph
and Telephone Corp. (NTT) will be divided into two local telephone
companies (NTT East and NTT West) and a long distance telephone company
(NTT Long distance). Before that, NTT, the world's biggest telecom company
with annual sales of $71 billion (as of 1998, http://www.businessweek.com/1998/14/telecom/tccos.htm),
monopolized local service *and* dominated the long distance market.
Three major companies, Daini-Denden, Japan Telecom, Nihon Kosoku Tsushin,
and Tokyo Tsushin Network, entered the long distance market after it became
competitive in 1985. These "New Communications Companies" (NCCs) had 23%
share (based on number of calls) in 1997, while NTT had 77%. International
telephone market is dominated by KDD with 60% share.
Pay $700 to Have Telephone
When you arrive in Japan and install a telephone, you will find you have
to pay $700. You pay refundable 72,000 yen for the commonly called "telephone
subscribing right" (Denwa Kanyu Ken). Monthly basic charge for home telephone
is 1,750 yen in big cities (areas with more than 400,000 subscribers).
No flat rate options are provided for local calls. On top of paying
1,750 yen monthly charge, you pay 10 yen per 3 minutes (4 minutes between
11 PM to 8 AM) for each local call. This local toll charge is a major obstacle
to the proliferation of the Internet in Japan. It was an obstacle to a
wide-spread use of electronic bulletin board systems (BBSs) among citizens.
It will be an obstacle to future electronic commerce, network computer,
virtual desktop, or any other network based applications. (Who wants to
window-shop virtual storefronts if you have to pay for that? Who wants
to store your data on the network, instead of your hard disk, if you have
to pay each time?)
NTT introduced Limited Flat Rate plans in 1995 to target heavy Internet
users. These are only for late night and early morning. With a total monthly
fees of 2,550 yen, one of the plans provides flat rate local calls to specific
two numbers between 23:00 and 8:00. Though a step to right direction, the
service is condemned by the Internet nerds that it further deteriorated
their not-so healthy life schedule. The time restriction surely prevents
children, housewives, or any ordinary daytime workers from extensively
using the Internet. (A good thing, you may say...)
Figure 1 Japan's Telephone Service Rates
(Inside parentheses are
Pacific Bell charges.)
Installation:
72,000 yen installation
(refundable) and 800 yen contract fees
(PacBell: $34.75, nonrefundable,
$10.00 for lifeline)
Monthly basic charge,
business: 2,600 yen
residential: 1,750 yen
(PacBell residential:
$11.25 flat rate
$ 6.00 measured
$ 3.00 lifeline )
Local calls (toll call
only)
8:00-23:00
10 yen/ 3 minutes
23:00-8:00
10 yen/ 4 minutes
(PacBell residential:
none for flat rate.
For measured,
3 cents for first minute, 1 cent for additional;
30% off in evening,
60% off in night/weekend.)
Limited Flat Rate plans
Plan 1 (2 local destination
numbers):
1,800 yen plus basic
charges (total: 2,550 yen)
Plan 2 (2 neighboring
area numbers):
3,600 yen plus basic
charges (total: 5,350 yen)
Long Distance Telephone
Long distance calls also are expensive in Japan, where "long" is not so
long in the small country, one twenty fifths of the United States in size.
In the United States, "10 cents per minute anywhere anytime" plans are
common, and prepaid phone cards are even cheaper and proliferated. The
figures below show the rates for long distance calls from homes and from
pay phones in Japan. The official rates, which use a rather complicated
per-10-yen calling time measure, are converted to per-minute rates. Pacific
Bell's intra-LATA call rates are shown for comparison.
Figure 2 Official NTT Rates (Time allowed for 10 yen):
8:00-19:00 19:00-23:00 23:00-8:00
Local
3min. 4min.
Neighboring -20km
90sec. 2min.
20-30km
45sec. 1min.
30-60km
36sec. 1min.
60-100km
22.5sec. 30sec. 45sec.
100km-
20sec. 22.5sec. 30sec.
(Weekends and holiday charges correspond to the 19:00-23:00
charges.)
Figure 2 NTT Rates (per 3 minutes, miles), Yen
8:00-19:00 19:00-23:00 23:00-8:00
Local
10
10
Neighboring -13m
20
20
13-19m
40
30
19-38m
50
30
38-63m
80 60
40
63m-
90 80
60
(Weekends
and holiday charges correspond to the 19:00-23:00 charges.)
Figure 3 Pacific Bell's Local Intra-LATA Rates, Cents
8:00-17:00 17:00-23:00 23:00-8:00
0-12m(Local)
0 0
0
13-20m
25 20
15
21-40m
36 29
22
41-70m
40 32
24
70m-
42 34
25
(Weekends and holiday charges correspond to the 23:00-8:00
charges.)
Figure 4 Pacific Bell's Pay Phone Rates, Cents
8:00-17:00 17:00-23:00 23:00-8:00
0-12m(Local) 35
35 35
13-20m
55 45
40
21-40m
70 60
50
41-70m
75 65
55
70m-
90 70
70
(Weekends and holiday charges correspond to the 23:00-8:00
charges.)
ISDN
One of the interesting features of the Japanese telephone market is the
wide spread use of the Integrated Subscriber Digital Network (ISDN). Unlike
the American telephone companies, NTT made a major investment in ISDN since
the 1980s. Their ISDN service - INS (Information Network System) - caused
an Internet-like hype around 1985. Though the fever having soon receded,
the explosion of the Internet in the 90's revitalized the veteran products.
There were only 27,000 ISDN lines for 64Kbps speed and 560 ISDN lines for
1.5Mbps in 1990. The numbers increased to 330,000 and 6,000 respectively
in 1995. Then the installation doubled every year, reaching 1,701,044 for
64Kbps and 27,997 for 1.5Mbps in September 1998.
The ISDN rates are not cheap. The initial installation is 17,100 yen
(the rate you pay when you convert your telephone to 64Kbps ISDN). The
monthly ISDN basic fee is 2,890 yen. The 10-yen-per-3-minutes local toll
charges still apply.
Yet, fees of your plain, old telephone (POT) being already expensive,
you may feel ISDN relatively cheap. One 64Kbps ISDN line accommodates two
telephone connections. Two POT lines monthly basic (1,750 x 2 = 3,500 yen)
is cheaper than 2,890 ISDN monthly basic. ISDN flat rates were introduced
in February 1996, again only between 23:00-8:00.
Figure 5 ISDN Rates (INS Net64, 64Kbps Service), Yen
Residential Business
Installation
72,800 (Same as telephone)
Monthly Basic
2,830 3,630
Toll Charge
10 /3m local (Same as telephone)
Flat Rate 1 fees
2,400 4,600 (2 local numbers, 23:00-8:00)
Flat Rate 2 fees
4,800 9,200 (2 neighboring area numbers,
23:00-8:00)
DSL
Though appropriate in current technological environment, critics claims,
the ISDN proliferation delays deployment of Digital Subscriber Lines (DSL).
A widespread deployment of one particular technology (particularly by a
monopoly) sometimes hinders adoption of newer technology (possible example:
Minitel in France). No DSL services are provided in Japan as of early 1999.
NTT announced in December 1998 a plan for experimental service by Fall
1999.
In the United States, telephone companies are rushing to DSLs largely
because of competition from the cable modems. DSLs are telephone companies'
key products to compete with faster connection of cable medems. In Japan,
the penetration of cable TV (Toshi-gata CATV) is about 10 percent, compared
with U.S.'s more than 60%. It is debatable if telephone companies in Japan
are threatened by the cable TV industry.
OCN
NTT's current biggest hype is the Open Computer Network (OCN), an Internet
service using NTT's vast infrastructure. The TCP/IP based OCN network provides
"best-efforts" connections data communication. Whatever it is, consumers
are happy if it provides cheaper Internet access. The cheapest "OCN Dialup"
service is 2,300 yen up to 15 hours connection per month (plus traditional
10-yen-per-3-minutes local call charges). Doesn't sound particularly attractive.
The 128Kbps "OCN Economy" is a flat 38,000-yen-per-month service for continuos
connection. A big improvement from previous dedicated lines. Yet it is
still 10 times more expensive than some 1.5Mbps ADSL services provided
in the United States. Pacific Bell () introduced in January 1999 a 1.5Mbps
downstream (minimum 384Kbps guaranteed) and 128Kbps upstream ADSL service
for $39 per month if installed on one year term. The equivalent "OCN Standard,"
which has a 1.5Mbps speed, costs 350,000 yen.
Links:
Ministry of Post and Telecommunications
(MPT)
Nippon Telegraph & Telephone (NTT)