NTT Reduces Cost of Internet Access

In the most expensive telephone market in the world, the monopoly provider reduces Internet prices and rolls out new experimental services.

by Alex Goldman ISP-Planet Associate Editor [February 24, 2000]

For a long time, Internet growth in Japan has been stunted by metered local telephone rates, high prices, and slow installation. Now NTT, Japan's local telephone monopoly, is expanding Internet use through two major promotions: basic WebTV-like email-only service and flat-rate ISDN.

NTT Group, is making a big push into the modern era. American observers have been critical about NTT's policies for some time. As recently as July of 1999, Forbes magazine ran an article about NTT called The Last Empire. One of the article's main complaints (besides installation delays) concerned the price of NTT's unlimited Internet access plan, which at the time was $83 per month (in addition to telephone costs).

Now NTT is offering a WebTV-like service and is reducing its ISDN prices.

On February 15, NTT Multimedia Engineering (NTT-ME) launched "WAKWAK Station Pack," a WebTV-like service. It offers email only, with no Web access. The PC-free package costs ¥2,980 ($27) per month for up to ten hours per month. In a nation with relatively low PC penetration, PC-free web packages are more viable than elsewhere. Currently, there is a PC-free web package on the market, and it is doing well: video game consoles that attach to a television and are equipped with a 56K modem, such as Sega's Dreamcast, are bringing the Ineternet to homes that previously had no Internet access. Perhaps the popularity of the Dreamcast's Internet features encouraged NTT to invest in WAKWAK.

But NTT is also lowering prices for those who desire premium Internet access. Although DSL is not yet offered in Japan, NTT is reducing the price of ISDN access. Starting in May, NTT will offer a reduced flat-rate plan for Internet access calls to its ISDN subscribers in Tokyo and Osaka under a pilot project. This will reduce the monthly rate from ¥8000 ($73.50) to about ¥4000 ($36.75). For users in the same calling area as the ISP's POP, the fee will be around ¥2000 ($18.50). At this lowest level, total monthly costs will still be about ¥8000 ($73.50): ¥2830 ($26.00) for home ISDN service, ¥2500 ($23.00) for the ISP fee, and the rest for phone service. If the pilot project is successful, NTT will roll out nationwide ISDN service around November.

NTT expects Internet use to compensate for declining telephone revenues. Japan is still in a recession, and telephone use is declining as people spend less and move to cheaper wireless services, such as PCS.

It is unlikely that DSL will be offered in Japan in the near future. There is no competition from Japanese cable TV companies. Organized around railroad lines, they do not have national coverage. Furthermore, they would need to upgrade their equipment to provide cable modem access, and are saddled with debt and with assets whose value is declining. NTT has the technology to offer DSL, and is even testing ADSL, but is promoting ISDN instead.

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