ABSTRACT
Japan’s high-speed Internet access services, or broadband services, have rapidly developed since 2000 and are reputedly the cheapest and fastest in the world. Particularly noteworthy is the explosive diffusion of the fiber to the home (FTTH) service: whereas asymmetric digital subscriber line (ADSL) service is an easy step to broadband services, FTTH is the final broadband service. Two problems must be faced when discussing broadband migration. The first is migration from narrowband services (including dial-up Internet) to broadband services (including ADSL, cable TV (CATV) Internet, and FTTH), which seems to have quickly dissolved. The second is migration inside broadband services. FTTH has consistently increased, while ADSL and CATV Internet market shares have decreased since 2003 when the FTTH market exploded in Japan. In time, the center of broadband services will undoubtedly shift from ADSL to FTTH. We reach two main conclusions in this chapter. First, individual characteristics significantly influence broadband migration from ADSL to FTTH; a high-income broadband user who frequently views moving-pictures and lives in an apartment is more likely to migrate to FTTH. Second, for NTT significant lock-in effects exist; NTT’s previous ADSL users rate NTT’s FTTH higher by ¥2,400 (US$21.2, where ¥1=US$110), while Softbank’s previous ADSL users value NTT’s FTTH lower by ¥1,600 (US$14.5). We may consider this asymmetry in rates as switching costs in broadband migration.
