Feature Article

November 21, 2012

Japanese Consumers Dropping Fiber to Home for Mobile Broadband

Japan's NTT is finding consumers are shifting demand from fixed networks to Long Term Evolution mobile networks, which is a real world test of whether LTE 4G networks can compete with fixed network high speed Internet access.  

As a result, NTT has cut fixed network broadband access prices by 34 percent, from JPY5,460 (USD67) to JPY3,600, TeleGeography says.

You might say that price cut now shows there is serious evidence for the view that Long Term Evolution is a suitable replacement for fixed network service, with the greatest danger emerging where you would expect, with younger users.

Executives at NTT East and NTT West say the biggest single reason for the slowdown in FTTH subscriber growth is the fact that many young subscribers now prefer to have their own personal LTE-based high speed broadband service, rather than paying for a FTTH service.

That also seems especially true when those customers have to pay for a mobile broadband connection anyhow. Some might question the long-term viability of that approach, if users start to watch lots of longer form streaming video. But it seems as though Japanese consumers are smart enough to make choices.

Users in Japan who have abandoned fiber to the home seem to be watching short form video, but avoiding streaming or downloading long form video that would put pressure on their mobile data plans.

Once again, we see that consumers are smart, and will alter their behavior and spending plans to gain the optimal value from the range of services available to them, deliberately choosing not to watch long form streaming video if it means saving money.

That is probably worth keeping in mind in other markets, as possibly more consumers weigh the value of fixed broadband and high speed mobile alternatives driven for the moment principally by Long Term Evolution.

As it turns out, and as many have predicted, LTE is a reasonable substitute for fixed broadband service, under some circumstances.

The value appears to be highest for single and younger users, in smaller households or households including unrelated people, who are willing to forego watching lots of long form entertainment video.

Edited by Stefanie Mosca

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