FTTH in JapanFTTH in JapanLessons from a Broadband SocietyLessons from a Broadband Society

AFL Telecommunications:

• AFL = Alcoa Fujikura, Ltd.• Established in 1984 to provide optical products

for power utility applications.• Headquartered in Franklin, TN.

– Major manufacturing operations in:•Duncan, SC•Belmont, NH•Mexico and the U.K.

Overview:• Japan is experiencing widespread deployment of

fiber-to-the-home (FTTH).• Deployment is driven by a competitive telecom

environment.• Power Utilities are a key player in this

environment.• Competition and economy of scale have enabled

development of inexpensive and scalable technologies.

• Public Power can help lead the United States toward similar competition and benefits.

Jul. 2003 OF Networks Co., Ltd. Private research results

NTT West(Pink dots)

NTT East(Yellow dots)

Usen(Blue dots)

TEPCO(Red dots: Tokyo area)

Chubu Electric Power(Red dots: Nagoya area)

K-Opticom(Red dots: Osaka area)

Energia(Red dots: Hiroshima area)

QTNet(Red dots: Fukuoka area)

FTTH In Japan:

Aug. 2003 OF Networks Co., Ltd. Private research results

Carriertotal number of

subscribersNo. of increase /

month

NTT east141,047

Jul. 2003

30,000

Jul. 2003

NTT west151,000

Jul. 2003

30,000

Jul. 2003

Usen124,300

Jul. 2003

12,500

Jul. 2003

TEPCO10,000

Jul. 2003

1500

Jun. 2003

Chubu

Electric Power

3,800

Jul. 2003

500

Jul. 2003

K-Opticom46,000

Jun. 2003

2,500

Jun. 2003

Energia6,000

Jul. 2003

2000

Jul. 2003

QT-Net18,000

Jul. 2003

2,000

Jun. 2003

June July2003

81,000 increase / month

587,000

Number of FTTH Subscribers in Japan

End of 2003

1,200,000 – 1,300,000

Rate of Deployment:

Why this deployment rate?

• Japan has a national broadband policy. However:– FTTH deployment is not government subsidized.– Labor rates to install new cable are generally

higher than labor rates in the U.S.– High population density enables DSL of 10 Mb/s.

DSL, cable modem, and wireless are all widely available.

– The nationwide number of landline voice subscribers is actually decreasing.

• So, why FTTH?

Reasons for FTTH Deployment:

1. Competition2. Competition3. Nothing4. Nothing5. Competition

The Winner gets there “first with the most.”

NTT Telephones

NTT Fiber

Usen (music) Usen (Fiber)

TEPCO (CATV)

TEPCO (Fiber)

Cable TV

The View from Tokyo:

Who is Competing?

• NTT– Incumbent– Largest deployer of FTTH

• USEN– Sells data, video, and music on demand– Second largest deployer

• 5 of the top 7 deployers are power utility companies.

• Some municipalities have deployed their own networks.

Implications for the United States:

• Where there is infrastructure-based competition, no one can afford to be “overbuilt” with a superior technology.

• Japan is deploying a strong national telecom infrastructure by encouraging competition.

• Power utilities can be a key competitor.• U.S. Public Power companies serve 40 million

Americans.– Typically in areas with a shortage of high

speed data options. • Therefore, Public Power is a good place to

start.

Jul. 2003 OF Networks Co., Ltd. Private research results

CarrierProvided Services over FTTH

Internet Telephone Video Streaming

NTT east VoIP(by NTT

communication)

NTT west VoIP(by NTT

communication)

Usen VoIP MPEG over IP

TEPCO

Chubu

Electric Power

K-Opticom

Energia

QT-Net VoIP

Services Available over FTTH:

Services Available over FTTH:

• Where is the so-called “killer application?”• Japan’s carriers have found a solid business

case for future-proof media in today’s applications.

– FTTH offers good cost-distribution.– FTTH also means that your competitors are not

going to render you obsolete (assuming you have competitors).

Technology Behind the Services:

• Designed around two objectives:1. Deliver enough bandwidth to support all services.2. At price points which allow cost-recovery for data-

only services.– Low Cost of Entry

• Usually Ethernet-based.• Security and admin features to enable

operation in the telecom environment.• Highly scalable.

$400-$450/sub in “last mile” electronics

Aug. 2003 OF Networks Co., Ltd. Private research results

CarrierService fee / month

in Yen in $

NTT east5,600 Yen

+ ISP fee (less than 2,000 Yen)Approx. $63

NTT west5,300 Yen

+ ISP fee (less than 2,000 Yen)Approx. $61

Usen 5,700 Yen Approx. $48

TEPCO 7,400 Yen Approx. $62

Chubu

Electric Power5,800 Yen Approx. $49

K-Opticom 6,000 Yen Approx. $50

Energia 6,500 Yen Approx. $54

QT-Net 5,500 Yen Approx. $46

Cost of Services:

Cost of Services:

• Japan:– Average consumer pays $46-$63 per month for FTTH

service (anywhere from 10 Mb/sec to 100 Mb/sec).

• United States:– T-1 line (1.54 Mb) in Public Power coverage areas is . . .

$800? . . $1500? . . .

• T-1 lines and Japan’s FTTH are not a direct technology comparison. However,

– Clearly, Japanese consumer has more and better options.– How many of our schools, small businesses, and local

government facilities could use a $50 FTTH connection?

Lessons Learned:• FTTH can be a low cost-of-entry / low risk

proposition.• Competition in telecommunications is good. • More competition is better.• Power utilities can play a key role in creating

facilities-based competition.• Public Power is willing to compete, and can

take a lead role in building a new national telecommunications infrastructure.

Questions?

Guy SwindellAFL Telecommunications

(864) 486-7236guyton.swindell@alcoa.com