Tuesday, November 9, 2004

NTT Outlines Migration to IP/Optical Network by 2010

Japan's NTT Group outlined its plans to migrate a majority of its customers to a next generation optical access and IP telephony network by 2010. This "medium-term management strategy" is aimed at advancing the company's long-term "Vision for a New Optical Generation," which NTT first disclosed in November 2002. NTT said it was setting its sights on 3 near-term objectives:

1) Use the combined strengths of NTT to actively build the ubiquitous broadband market and help achieve the e-Japan Strategy and the u-Japan Initiative.

(2) Build a safe, secure and convenient communications network environment and broadband access infrastructure, while achieving a seamless migration from fixed line to IP telephone service and from metal wire systems to optical fiber.

(3) Strive to increase corporate value and achieve sustained growth.

NTT outlined a number of specific actions, including the following:

  • NTT intends to migrate the majority of its customers to an optical access network by 2010, taking into account the interests of customers and operators of related businesses. The company said maintaining both metal wire and optical fiber access and fixed telephone networks, as well as IP networks, is a burden on business operations and increases the cost to society.

  • NTT will promote IP telephone services as an alternative to fixed line service and provide a variety of ubiquitous broadband services emphasizing high-speed and interactive features in order to shift 30 million customers from the existing metal wire and fixed telephone network to optical fiber access and next-generation network services by 2010.

  • NTT will move to a flat-rate pricing structure which is not based distances, that gives customers service options that meet their requirements for quality, speed (data volume), reliability and security levels, and with varied rates depending on service content.

  • NTT is currently reevaluating its existing fixed-telephone rates (basic rate, call rates, equipment installation rates) in light of the eventual move to IP telephony. It plans to announce a revision to its basic rates and other fees as a first step in this direction.

  • NTT will promote Fixed-Mobile Convergence, whereby high-speed interactive video communications over optical fiber will be combined with mobile communications services to provide ubiquitous services that can be accessed from PCs, TV sets, mobile telephones or information appliances. Its next-generation network will be based on a common service foundation that merges mobile and fixed communications. Each NTT group company will fill a role that plays to their strengths.

  • NTT will promote multi-site video conferencing and other services for vertical applications, such as remote medicine, remote education and remote consulting.

  • NTT will aim for early implementation of next generation technologies, including optical multiplexing technology and node architecture technology.

  • On the financial side, NTT aims to increase revenues from next-generation network solutions and non-traffic-sensitive businesses to 500 billion yen by the year 2010.

  • NTT plans to maintain the same equipment investment level as before, a cumulative total of 5 trillion yen for fixed communications operations through the year 2010. To do this, NTT will aim to substantially reduce costs for equipment investment associated with optical fiber access and the next-generation network by introducing technical innovations, reducing the cost of equipment, and improving production methods. Through these cost cutting initiatives, NTT will endeavor to make its new optical fiber access and the next-generation network businesses profitable in the near future.