I received some interesting commentary last week from Kennedy Gitchel, self-described “Long-time Japan resident and wireless watcher” and — until recently — consultant at a major foreign consulting house. Gitchel was responding to a recent WWJ Viewpoint wherein we stated “the cost of fixed-line access plays very little or **no** part in Japan’s mobile Net boom,” to point out that the initial total cost of fixed line access is, in fact, a hefty proposition when you consider both the cost of installing a new phone line and monthly fees together.
Gitchel says in part:
If you are a young person (the usual early adopters of Net access) just venturing off to college, or just getting your own apartment for that first job in the big city, look at the options of costs that you face: Hand over a big chunk of cash to NTT (it costs about 70,000 yen to buy a phone line from NTT), then pay all the assorted monthly fees (including per minute charges for all calls), vs. getting a (usually hand-set subsidized) Net-enabled mobile phone.
He concludes that NTT’s high fixed-line costs have continue to make the decision to pay the costs for mobile Net access a much easier decision in Japan than in, say, the US, and points to the decline in fixed-phone lines in Japan as evidence to prove that many young people are foregoing land-lines altogether (this decline is also aided by the slow demise of the fax machine). “The fact that Americans have always had free local calling and unlimited ‘free’ dial-up access after paying the provider fee,” says Gitchel, and “the fact that a new land-line is generally very cheap to install, have certainly always been a higher bar to clear for [competing] mobile phones.”
To be fair, he’s got a point. There’s no doubt that initial start-up costs are heavily weighted in mobile’s favor in Japan; the Viewpoint cited above referred only to the ongoing usage costs — particularly for Net access (as opposed to voice access).
Later, Gitchel explained that, while it has long been possible to avoid the 70,000 yen land-line purchase fee by using brokers (and, more recently, NTT directly) to, in effect, “rent” the phone line, this adds even more to monthly fees and is only cost effective for those keeping a phone for less than a year or two. “All-in-all, I would guess that mobile phones have virtually killed the market for phone lines” he says — particularly where it comes to short-term foreign workers, such as English teachers and the like.
His comments add constructively to the debate, and illustrate that the situation regarding relative costs for voice and Net access via mobile vs. fixed-line in Japan is complex — and will become more so as voice-over-IP (VoIP) telephony grows in popularity (Yodobashi Camera in Machida had a table setup outside yesterday to reel in new users of Yahoo BB’s retail VoIP service).
But WWJ reserves the right to righteous ire when (mostly based elsewhere) media folks bleat out the long-standing fallacy that the cost of fixed-line Internet access was or is much higher in Japan than the cost of mobile Internet access, ipso facto, mobile Internet (i.e. i-mode) is a success. One-dimensional thinking like this adds nothing and subtracts greatly from overseas’ understanding of Japan’s mobile economy.
Fixed-line Internet penetration was no lower in Japan than in Germany when i-mode started and is now, more or less, dirt cheap. The mobile Internet continues to blossom here because the data services are fun to use, among other factors, not because of competing costs.
– Daniel Scuka