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Table 5. NTT local companies' FTTH share (Wholesale) (%)
2005
2006
2007
2008
2009
Metallic
94.8
93.9
92.8
92.2
90.6
FTTH
78.6
78.9
78.9
78.8
77.3
Total
93.8
92.5
91.0
90.0
87.9
Source: Calculated based on MIC data
in the U.S.A. Although cable modem users are
increasing steadily, the percentages of cable mo-
dem users among broadband users in Japan is still
16.1% as shown in Figure 2. This reflects the late
approval of MSOs in Japan. As the MIC (Minis-
try of Internal Affairs and Communications)
limited the business areas of cable operators
within each city, town or village and did not ap-
prove MSOs until 1993, the market was long
dominated by a number of very small operators.
Since the liberalisation of MSOs in 1993, MSOs
like J: Com (Jupiter Telecommunications Co.,
Ltd.) was formed by Liberty Global, Inc. and
Sumitomo Corporation. The number of users of
J: Com is only 2.6 million as of March 2010com-
pared to 24 million users of Comcast as of the
end of 2007. Its revenue is about a tenth of NTT
local companies (Table 7). It is hard to expect that
such a financially weak company can compete
effectively with the huge NTT local companies.
We can conclude that cable regulation has re-
tarded the development of inter modal competition
between FTTx and cable modem
9
.
However, this understanding is not necessar-
ily shared by many and the discussion on the
structural separation of NTT has been revitalised.
The report of the 'Ministerial Panel on the Frame-
work of Communications and Broadcasting' issued
in June 2006 (MIC (2006a)) stated as follows.
Accounting separation, reinforcement of the
system to secure the observance of the intercon-
nection rules, realisation of equality of access to
NTT local companies' bottleneck facilities are to
be considered and measures to secure fair com-
petition regarding video distribution through the
IP network are also to be considered. Further it is
necessary to functionally separate the bottleneck
facilities divisions within NTT local companies.
10
Further, it was decided to investigate whether it
is appropriate to introduce ownership unbundling
of NTT group companies in 2010 (MIC (2006b)).
However, the measures taken in the U.K. where the
main access technology to broadband is metallic
cables and FTTx is little deployed and the market
power of BT is still strong do not necessarily fit
to Japan where the broadband market structure is
different. The reason why ownership unbundling is
Table 6. FTTx share (Retail market) (%)
Business &
Independent
Houses20042009
Flats20042009
Total20042009
NTT Local Companies
74.6
77.5
35.0
70.1
57.5
74.4
Subsidiaries of Electric Power Companies
22.3
11.5
8.8
5.8
16.2
9.2
USEN
1.6
20.3
6.7
9.7
3.0
KDDI
8.0
7.3
8.0
8.0
Others
1.4
3.0
28.6
9.4
16.7
5.3
Source: MIC
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