NTT Reduces Cost of Internet Access

Japan’s NTT has yet to roll out DSL to consumers, but has reduced ISDN prices and is offering a WebTV-like service.
With metered local phone calls, basic Internet access can still cost
$100 per month.

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 e-mail only, with no Web
access. The PC-free package costs ¥2,980 ($27) per month for up to 10
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.

It is unlikely that DSL will be offered in Japan in the near future.
Japanese cable TV companies, organized around railroad lines, are unable
to provide national Internet coverage and would need to upgrade their
equipment to provide DSL. NTT has the technology to offer DSL but is promoting
ISDN instead.

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