Thursday, October 28, 2010

Softbank Proposes Fiber Broadband Highway for Japan

Softbank's Masayoshi Son outlined a bold initiative to create a far reaching fiber strategy for Japan under which NTT's access network would be divested into a new company in which Softbank and other competitors would invest. The plan follows the model of Singapore, where a single network access provider deploys and operates a fiber access network while providing equal access to competing ISPs. Under the Softbank plan, FTTH would be deployed rapidly to 100% of Japanese homes using no public funds.

Under the plan, NTT East and NTT West would spin off their fiber access businesses into a new company. NTT, the Government of Japan, Softbank, KDDI would be shareholders in the new access utility company. The government would become a 40% stakeholder by selling its other shares in NTT and investing 200 billion yen. Softbank and KDDI would each invest 100 billion yen in the company for a 20% stake each. NTT would also contribute 100 billion yen. The new venture would also need to absorb some of NTT's long term debt, but would have 500 billion yen to spend for a rapid fiber rollout across the country.

Softbank reckons that by moving to a 100% fiber architecture, the new company would reap significant long term savings compared to maintaining the current metallic infrastructure. Maintenance savings are estimated at 60% over ten years. Significantly, it calculates that the cost of optics broadband could be reduced from 5000 yen to 1150 yen. Moreover, a single access utility company for all of Japan would also become a profitable enterprise, according to the Softbank numbers, whereas the current access divisions are loss makers.


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