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(Nikkei BP Group)

(No.1 High-Tech News Site in Japanese)

  • Japan's CATV Companies Start Offering Internet Access Services
  • September 14, 1998 (TOKYO) -- Increasing numbers of Japanese cable television (CATV) companies are launching high-speed Internet access services for their customers.
    As of July this year, 17 CATV companies were already offering such services, and it is expected that the number will grow to 32 by the end of the year. Most of these services give users unlimited access to the Internet for a monthly fee of around 5,000 yen (US$35).

    However, many of the CATV companies are financially in the red at present, and they aren't particularly concerned about using their cable infrastructure to try and encourage more private households to start connecting to the Internet. Rather, for the time being, they are concentrating their efforts on existing PC users.

    In contrast to those services intended for household users, it appears likely that there will be an increase in services offering full-time connections targeted at small- and medium-sized businesses.

    This fall, several companies, including Titus Communications Corp., will launch services that will be both faster and cheaper than the open computer network (OCN) Economy service currently offered by Nippon Telegraph and Telephone Corp. (NTT) (See table).

    Services that are faster and cheaper than NTT's OCN Economy, in which data is transmitted at 128kbps and costs 38,000 yen (US$280) per month, will certainly be appealing to potential users.

    Fee of 5,000 Yen May be High for Mail-Only Users

    Internet access services offered by CATV companies are almost the same as those available from ordinary dial-up IP connection services. IP addresses are dynamically allocated to cable modems in the network when users log on. In other words, because IP addresses constantly change, it is impossible for users to set up their own Web or mail server.

    Tokyu Cable Television Co., Ltd., a major CATV company which currently boasts 54,090 subscriber households, offers an Internet access service with a transmission speed of 14.3Mbps (upstream/downstream). Actual access to the Internet is made via a 1.5Mbps leased line which connects the CATV station to Internet Initiative Japan Inc. (IIJ) -- a primary Internet service provider.

    Initial installation work costs 18,000 yen (US$130), but if a user is not already subscribing to the CATV service, then the cost of laying the cable combined with the join-up fee comes to 41,000 yen (US$300). The monthly fee for using the Internet service is 3,200 yen (US$20) if fees for viewing CATV channels are also being paid, or 5,200 yen (US$40) for the Internet service alone. These fees include the rental of a cable modem and use of a mailbox.

    Other CATV companies offer services that cost pretty much the same amount. Fees for initial installation work are typically in the 20,000-40,000 yen range, and the monthly charge for the basic service is usually around 5,000 yen.

    Some of the other services offer such options as net-news subscriptions or space for creating Web pages as part of the basic service covered by the monthly charge. There are also services that are not based on a fixed monthly charge, but where the costs vary depending on the length of time spent accessing the Web, or depending on the volume of data a user sends or receives through the network.

    A monthly fee of 5,000 yen may well be appealing for users who intend to spend a lot of time accessing the Internet, but for those who just want to use an e-mail account, it seems a little too expensive. At present, using an ordinary dial-up connection, it is possible for users to run an e-mail account for as little as 2,000 yen (US$15) per month, telephone charges included.

    CATV Companies Can't Expect Large Profits for a While

    So, is 5,000 yen a month the correct fee to charge, as far as the CATV companies are concerned?

    Suppose that there are 1,000 users for a particular service. In this case, the cost of depreciation of the cable modems added to the cost of connecting to a primary Internet service provider would come to a total of around 3,000 yen per month per user. When extra costs, such as those necessary for setting up and maintaining company facilities and a user support service, are also taken into consideration, then the 5,000 yen monthly fee does indeed seem appropriate.

    As the number of users of a service grows, the cost per user of connecting to the primary ISP decreases. If, for example, a company could garner 10,000 users, then it would be possible to offer a low-cost service for a fee of around 2,000 yen per month.

    However, CATV companies don't have much room to maneuver. According to 1996 statistics from the Ministry of Posts and Telecommunications, 83 percent of CATV companies were running cumulative losses on their operations, with the average loss per company reaching 10.6 billion yen (US$78 million).

    CATV companies offering Internet access services are unable to look forward to large profits at present. Taking Tokyu Cable Television as an example. Despite being a CATV heavyweight, the company says that its target for the first three years of operation after launching its Internet service (in April 1998) is to collect 6,500 subscribers.

    The number of households covered by Tokyu's cable network service area (in other words, the number of potential users for the Internet access service) is 586,000. Therefore, the 6,500 user target that the company hopes to achieve is only roughly one percent of households that could make use of the service if they so wished.

    Some companies are more positive. LCV Corp., which will start a new Internet access service in October, intends to try and create new users, and thus develop the market. It will do so by collaborating with equipment manufacturers to offer complete packages, including the PC hardware, to households with no previous computer experience. If these types of forward-looking companies can gain significant numbers of new users, then it is likely that others will follow suit.

    New Services Appear as Rivals to OCN

    A noticeable number of CATV companies are launching new full-time connection services this fall aimed at small- and medium-sized businesses and other power users (see table). There are already similar services on offer, targeted at large-scale enterprises, but these are expensive, typically costing between 90,000 yen and 300,000 yen (US$660-2,200) per month.

    This month (September), Tokyo Cable Network is starting up a new service in Tokyo's Bunkyo ward. It will offer a single IP address for 31,000 yen (US$230) a month. Maximum transmission speeds will be 128kbps when a user sends data (upstream) and 256kbps for receiving data (downstream). Connection to the Internet will be made via a 1.5Mbps leased line which connects the company's CATV station to Tokyo Telecommunication Network Co., Inc. (TTNet).

    Titus Communications is also scheduled to launch a low-cost service in Kashiwa City, Chiba. It will offer transmission speeds of 2.5Mbps upstream and 10Mbps downstream. Optional extras, such as Virtual Private Network (VPN) and guaranteed bandwidth, will also be available. Fees will vary, depending on whether or not options are included in the service, but they will probably be in the range of 10,000 yen to 30,000 yen per month.

    In addition, another CATV company is currently considering the launch of a full-time connection service that would offer users an IP address for 20,000 yen per month. It seems highly likely that more and more CATV operators will be setting up low-cost, full-time connection services in the future.

    Table: Companies that have started/are scheduled to start Internet services.

    Company name

    Service launch date

    Monthly fee

    Transmission speed

    Musashino Mitaka CATV

    Oct. 1996

    255,000 yen

    down 10Mbps, up 10Mbps

    YOU TV

    Apr. 1998

    98,000 yen + 5,000 yen (Domain administration fee)

    down 8Mbps, up 2Mbps


    Apr. 1998

    195,700 yen + 10,000 yen (Domain administration fee)

    down 10Mbps, up 10Mbps

    Tsu Cable Television

    Apr. 1998

    80,000 yen

    down 8Mbps, up 2Mbps

    Tokyo Cable Network

    Sept. 1998

    31,000 yen (single IP address)

    down 256kbps, up 128kbps

    Titus Communications

    Oct. 1998

    10,000-30,000 yen (plan)

    down 10Mbps, up 2.5Mbps

    (return to news)

    Related story: Titus to Offer Internet Link Via Cable TV Network

    (Tadashi Nakamichi, Staff Editor, Nikkei Byte)

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    Updated: Sun Sep 13 09:49:40 1998 PDT