In response to recent rate reductions by competitors Softbank and KDDI, NTT went public this week with a plan to offer IP-based (Internet Protocol), fiber-optic phone services for small businesses starting in spring 2005. The service is presently only available for large companies with more than 100 phone lines. NTT plans to expand fiber-optic phone coverage to households sometime in 2005 as well.

 

Reports indicate that basic monthly fees for the service will run between 1,500 and 2,000 yen, with additional charges of 6-8 yen per three minutes for domestic calls. Fees for NTT's fiber-optic IP phone service will be lower than those announced for the fixed-line services of competitors KDDI and Softbank. NTT is betting that the new fiber-optic service will become a source of revenue to replace an estimated 1 trillion yen worth of revenue lost in the last three years from its fixed-line operations.

 

NTT's launch of fiber-optic, IP phone service is expected to spur the development of a national infrastructure for broadband communications, and is likely to intensify competition between NTT and its two competitors. The establishment of fair conditions for competition in fiber-optic communications is an increasingly important issue in Japan. NTT's terms of privatization obligated NTT to allow other companies to access their fiber-optic lines, but the company has recently fought to overturn such obligations, provoking stern opposition from KDDI and Softbank.