Japan`s cable-TV trials struggle
paul mortensen
Last year, Japan`s faltering cable-TV industry was rejuvenated when the Ministry of Posts and Telecommunications revised its cable-TV policies and allowed multiple system operators to have 30% foreign participation and to provide full-service broadcast and telephony services.
As a result, more than 20 nationwide cable-TV multimedia trials, some of which are fiber-optic cable based, were launched. A major player in these trials is nascent multimedia company Nippon Telegraph and Telephone Corp. in Tokyo. As controller of the local loop, NTT is the only serious contender that can build nationwide fiber-optic networks to deliver multimedia services.
Major issues, however, overshadow the service trial experiments among the participants. One issue is the desire to tackle the convergence of communications and broadcasting beyond the conventional concept of the cable-TV business. This motive is supported mainly by groups related to Japanese trading companies. Another issue deals with providing a full-service lineu¥as a part of multichannel services, which is being pushed by cable-TV operators.
Last year, the Full Service Network Committee in Tokyo presented a series of cable-TV experiments to the Cable TV Association, a nonprofit organization of cable-TV operators. This committee was established by the Ministry of Posts and Telecommunications last year to accelerate cable-TV operation throughout Japan. It aims to promote cable-TV experiments on full-services networks and to share experimental results. These services include near video-on-demand, teleshopping, ticket reservations, electronic libraries, video-on-demand, and such interactive video services as video telephone and telemedicine.
The major service to be tested is cable telephony, however, because the connection with telephone service is the basis for other cable-TV applications, including teleshopping and ticket reservations. Telephony services are considered the first ste¥toward the development of advanced multimedia applications.
On the business side, however, most cable-TV operators are losing money and struggling to stabilize their activities. Consequently, they are not keen about getting into new services; they just want to find additional value in their existing networks. Also, linking u¥with Nippon Telegraph and Telephone for cable-telephony experiments worries many operators who are concerned that NTT could soon be dismantled by the government.
The expected decision on NTT`s breaku¥this year will have a major impact on the cable-TV industry. For one, the breaku¥should result in bolder market moves by the cable-TV industry.
On the other hand, NTT expects the status quo to be maintained. But, if the breaku¥decision is realized, implementation of the breaku¥might not match the speed of technological change. In other words, the telecommunications industry will change under NTT breaku¥much as the computer industry changed during the IBM antitrust investigations from 1967 to 1981, according to Stephen Anderson, project director at the Center for Global Communications in Tokyo.
Regarding the possible breakup, NTT`s President Masahi Kojima says, "We can be large and efficient at the same time. ...We often encounter the argument for breaking u¥NTT, but seldom do we see clear reasons why we need to do so." NTT`s survival strategy is to emphasize research and development, make their networks easier to use and to customize, emphasize the fiber-by-the-year 2010 plan and expand into multimedia services
Currently, Nippon Telegraph and Telephone, once only a telephone company, is evolving into a multimedia company. However, NTT needs more software engineers to balance its surplus of hardware engineers--similar to the practices of Microsoft Corp. in Redmond, WA. During the past two years, NTT has signed a string of alliances with several U.S. companies.
In line with its new image, NTT has agreed to jointly develo¥an interactive multimedia systems with Silicon Graphics Inc. in Mountain View, CA. Trials will begin in the fourth quarter of this year.
In keeping with the nationwide fiber plan, NTT will deliver services over an all-digital optical carrier, level 3 (155.52-megabit-per-second) network to 300 to 500 subscribers in Urayasu, a suburb of Tokyo. The network will drive Silicon Graphics` visual software interface through an asynchronous transfer mode switch. Each node will handle four to 16 optical fiber outputs to as many households.
Silicon Graphics will provide "visually intuitive viewer interfaces," interactive applications and set-to¥boxes based on a 64-bit microprocessor architecture. The trial will use open standards, including the motion picture experts group-2 digital video compression standard.
Trial services will include information-on-demand, multiple-player games, karaoke-on-demand, video-on-demand, telephony and cable services. One snag, however, appears to be the lack of stimulating content--such as locally produced movies and associated software--for delivery across NTT`s multimillion-dollar trial network.
In fact, this situation is a key weakness of Japan`s cable-TV industry, which has convinced many investment and industry analysts that cable TV will be a minor player in the delivery of fiber-to-the-home services. According to Global Communications, Japan`s businesses and their multimedia applications and needs will provide the main reasons for fiber installation.
To motivate Japan`s cable-TV industry, a joint venture between U.S.-based Tele-Communications Inc. and trading company Sumitomo Corp. in Tokyo, has established Japan`s first multiple system operator-- Jupiter Telecommunications Inc. Initially, six Sumitomo-managed cable systems that are concentrated in suburban Tokyo will be transferred to Jupiter. These systems cover 775,000 households. Approximately 30,000 subscribers are connected, and the venture`s aim is to increase this subscriber base to 125,000 by 1997. Total capitalization is expected to rise to Y50 billion ($0.45 billion). If all goes according to plan, the venture is expected to capture at least 20% of the Japanese cable network market. q
Paul Mortensen writes from Tokyo.