Providers of fixed broadband in Japan are being forced to drop their prices in order to attract customers that are signing up for cheaper and more convenient mobile LTE services instead, according to an analyst.
"Fixed-broadband giants NTT East and NTT West have been forced to slash their FTTH [fiber to the home] prices for new subscribers by an eye-watering 34 percent from ¥5,460 (US $66.70) to ¥3,600 per month to try and re-ignite their subscriber growth and stop the outflow of subscribers to cheaper LTE mobile broadband services," wrote Tony Brown, senior analyst with Informa Telecoms & Media, on the company's blog.
Brown contends that wireless networks are a poor option for delivering high-bandwidth services. Nonetheless, Japanese customers, particularly young adults, are increasingly turning away from FTTH and toward LTE, even though they have usually have unlimited data allowances with the former and restrictive data caps with the latter.
NTT DoCoMo only launched LTE about two years ago and its rivals--KDDI, Softbank and eAccess--launched LTE this year. DoCoMo, Brown noted, reached 6.2 million LTE subscribers by the end of September.
Meanwhile, NTT East and NTT West's FTTH subscriber growth is sluggish. The companies' combined net subscriber adds for the year ending June 2012 came in at 1.2 million, down from 1.7 million annual adds announced a year earlier and from 2 million for the year ending June 2010.
Similar trends are being seen in the United States. Early this year, bipartisan CEO network TechNet released a study showing that U.S. home broadband adoption has flattened out since 2009 while smartphone use has risen dramatically. The group called upon government and private groups to consider new programs to encourage home broadband adoption.
Meanwhile, some U.S. telcos are turning toward LTE as a home broadband solution. In March, Verizon Wireless (NYSE:VZ) began offering HomeFusion Broadband LTE service as an alternative to DSL both inside and outside of Verizon Communications' landline footprint.
And AT&T's (NYSE:T) new multibillion-dollar network initiative--Project Velocity IP (VIP)--will include a focus on the company's mobile premises solution. AT&T currently offers a home phone that uses the wireless network to complete calls instead of landline, and future iterations of this product will allow consumers to share wireless minutes with their family talk plans. AT&T has recently rolled out the product nationwide and plans to expand it to include data services as well as voice.
- see this Informa Telecoms & Media blog entry
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