Kiminori Sato.ppt

1

November 14, 2007

Kiminori Sato

Vice President

Global Business Office

NTT West Corporation

Telecommunications Market in Japan

and NTT’s Strategy for FTTH

DigiWorld 2007 Summit Executive Seminar "Who should pay for FTTx?"

2WEST Copyright 　 NTTWEST

1. Telecommunications Market in Japan


Changes in the ICT Market Structure

0

20

40

60

80

100

Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07Telephone/ISDN 3G Mobile Phone Boradband Mobile Phone

Source: WHITE PAPER Information and Communications in Japan, Ministry of Internal Affairs and Communications in Japan* 3G mobile phones include W-CDMA, CDMA2000 types.** Broadband includes DSL, FTTH, and CATV.

Telephone/ISDN subscribers 54.2M (6/07)

3G* Mobile phone subscribers 74.7M(6/07)

Mobile phone subscribers 103.1M (6/07)

Broadband** subscribers 27.2M (6/07)

(million)

97.6NTT Law amended

99.7NTT

reorganized

Fixed-line subscribers have declined since 1998


Broadband carriers in Japan

Electric Power Group

Electric Power Group

KDDI GroupKDDI Group SoftBank Group SoftBank Group NTT GroupNTT Group

KDDI

PoweredCom Tokyo Electric Power Co.

Fusion

Other Electric Power Companies

JapanCablenet

SoftBank Telecom

SoftBank BB

BB Technology

JCOM

CATVCATV

sold

47%

FTTH business sold

Fixed Telephone

FTTH

ADSL

IP Phone

NTT Holdings

NTT West

NTT Communications

NTT East

InternationalLongdistance

Regional communication

CATV Internet FTTH

Acquired, Former Japan Telecom

DDI KDDMerged


Higher-speed of the Internet Access

100Mbps

10Mbps

40M

24Mbps

12Mbps

8Mbps

1.5Mbps

500kbps

64kbps

2000 2001 2002 2003 2004

ISDNISDN

FTTHFTTH

ADSLADSL

48M

1Gbps

2005


100Mbps

Decrease in a Service Charge-Fixed Monthly Charge-

20

100

80

60

40

(US$)

2000 2001 2002

FTTH(for detached house )ADSL100Mbps

500kbps1.5M

12M24M 40M

8M

2003 2004

1US$=\110

47M

2005

FTTH(for apartment)

100Mbps

10Mbps

1Gbps


Broadband Penetration Rate and Cost Levels by Country

Source: Broadband penetration rate is calculated as number of broadband subscriber lines divided by number of households in each country.- Number of broadband subscriber lines: figures of regulatory agencies each country as of the end of 2005- Number of households in Japan: MIC publication of March 2006: “Inhabitant Basic Ledger Population Directory”; other countries: “Yearbook of Statistics 2006” by ITU for end of 2004Costs per 100kbps data transmission: “ITU Internet Report 2006”

41.4%39.6% 37.8%

27.4%

0%

10%

20%

30%

40%

50%

$ 0

$ 0.25

$ 0.5

$ 0.75

$ 1

$ 1.25

78.5%Cost per

100Kbps Data transmission

(in US$)

(Broadband penetration

rate)

Japan U.K. GermanyFrance S. KoreaUSA

47.4％as of end of June 2006

$ 0.07

$ 0.49

$ 0.63

$ 0.52

$ 0.08

$ 0.36

Broadband penetration rate is higher in Japan than in all the listed countries other than South Korea, and the cost level in Japan is the lowestBroadband penetration rate is higher in Japan than in all the listed countries other than South Korea, and the cost level in Japan is the lowest


0

5

10

15

20

25

30

FTTHDSLCATV

Total: 27.2 million

FTTH: 9.7 millionFTTH: 9.7 million

ADSL: 13.8 millionADSL: 13.8 million

CATV: CATV: 　　 3. 7 3. 7 millionmillion

(June 30, 2007)

Broadband Market in Japan

Broadband subscribers (million)

Source: Ministry of Internal Affairs and Communications

FTTH subscribers are increasing rapidlyFTTH subscribers are increasing rapidly

2002 2003 2004 2005 2006 07


From DSL to FTTH

- 250

0

250

500

750

1,000DSLFTTH

2004 2005 2006 07

Net growth of subscriber


(thousands)


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

FTTH Subscribers in JapanTotal: 9.7 millionTotal: 9.7 million


30%

70%

(June 30, 2007)

FLET’S

Other FTTH service providers

NTT West

Subscribers (million)

B FLET’S Family 100 launched

B FLET’S Family 100 launched

NTT East

2002 2003 2004 2005 2006 07

B FLET’S launchedthe end of 2000

B FLET’S launchedthe end of 2000

*1 B FLET'S" is the brand name of our service which connects subscribers via optical fiber to ISPs .

*2 "B FLET'S Family 100" is a network service which provides connections to ISPs at speeds up to 100 Mbps .


2. NTT West’s Approaches for Promoting FTTH


【 Change in Communications Market】

Fixed Telephone MarketFixed Telephone Market■ Intensified competition under scale reductions in the overall pie

・ Shift to mobile and IP communications ・ Competition in rate reductions started with the introduction of carrier selection system

Mobile MarketMobile Market■Intensified competition under rapid market ・ Expansion of data communications by i-mode, etc. ・ Initiation of 3G and competition

Internet MarketInternet Market■Intensified competition under rapid market growth and

progress on broadband ・ Spread and expansion of diversified Internet access services ・ Progress of broadband services such as optical and ADSL ・ Competition in rate reductions

【 Change in Regulatory Environment】

Opening of NetworksOpening of Networks Amendments of Telecommunications Business Law Amendments of Telecommunications Business Law and NTT Lawand NTT Law

(1) Further opening of fixed telephone networks(2) Promoting the opening of

Internet facilities

(1) Establishment of asymmetric regulations (2) Establishment of wholesale telecommunications service system(3) Establishment of Committee to settle disputes in

telecommunications business(4) Establishment of system relating to securing of universal service(5) Expanding the scope of business by NTT East/West

Change in Environment Surrounding NTT


NTT Group’s Medium-Term Management Strategy

Government broadband

strategy, aiming towards

the realization of an

“energetic, worry-free,

exciting, and more

convenient” broadband

society

Towards Developing a Broadband Society

Fixed telephone & metallic access

2G mobile phone

IP network & optical fiber access

3G mobile phone

Promotion and

Collaboration

Improving Efficiency

Seamless migration

　 Strengthen our competitiveness and financial base

・ Develop and provide user-friendly broadband/ubiquitous services・ Build a competitive IP network

Review of regulations

・ Rules of competition for the development of a broadband society

・ System for the maintenance of the existing fixed telephone network as a “last resort”


FLET’S HIKARI PREMIUM: Service Schematic 　　　　

Regional Regional IP network IP network

(IPv4) (IPv4) NTT NTT

WestWest

ISPsISPsetc.etc.

Broadband Broadband IPv6 IPv6

function function User intercommunication

Stable, high throughput free from interference

from other users

Vast “address space” available

Intercommunication via optimal route

B FLET’S FLET’S HIKARI PREMIUM

Internet connection (optional)

Videophone server

Security server

Content distribution

server

Internet

ISP ISP

Family 100: \4,970/month Condominium type: from \2,840/month

Family type: \4,970/monthCondominium type: from \2,940/month 　　　 *v6 applications included

Access line speeds of up to 1Gbps


NTT Group’s Video Distribution Business

Services 4thMEDIA On-demand TV OCN TheaterSky PerfecTV!

Hikari

Content Supplier

Broadcast on Telecommunicatio

ns Services

Service Provider

（ Sales/Marketing, 　

　 Fee Decision ）

+

Platform owner

Access Line ／Services

Technological Specification IP Specification

RF Specification

Plala On-demand TV

On-line TV

Content Supplier [CS]（ Jupiter/Itochu/TOHOKUSHINSHA/SONY, etc. ） Terrestrial/ BS

Opticast, Inc.

I-CAST

OCN 《 Sales 》OptiCast Marketin

g, Inc.

NTT East/West B FLET’S networks, etc.

NTT East/WestVideo

Communications Network Service（ VCAST）

NTT Group(Ownership is

50% or more）

Investing company (Ownership is less than 50%)


0

100

200

300

Various efforts were made to improve construction technology, etc., and enhance the system so massive volume of installation can be achieved

Improvement of design and construction technology

Strategic deployment of optical cable plant Strategic deployment of optical cable plant

Net Growth of FTTH subscribers in NTT West

2004 2005 2006 2007

(thousand)

Intensified approach to mass provision of FTTH service


(Japanese Yen)

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

4-62005

7-9 10-12 1-32006

4-6 7-9 10-12 1-32007

4-6 7-9

B_Flet's Aggregate Fixed Line(telephone subscriber line+ISDN)

ARPU of B Flet’s tends to rise in line with the increase in the take up of

new services including “Hikari Phone (IP Phone)

ARPU of B Flet’s tends to rise in line with the increase in the take up of

new services including “Hikari Phone (IP Phone)

NTT West’s ARPU of B FLET’S and Aggregate Fixed Line


NTT Group’s Estimated Share for Broadband Market

47.3

69.062.6

57.457.9

36.4 36.538.1

38.039.1

28.932.3

35.1

39.143.1

20.0

30.0

40.0

50.0

60.0

70.0

2003 2004 2005 2006 2007

FTTH ADSL Overall BB Market*

(%)

*Overall BB Market includes FTTH, ADSL and CATV

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Thank you for your attentionThank you for your attention

Kiminori Sato.ppt

Business

Transcript of Kiminori Sato.ppt