Value-Added Bandwidth
Staying competitive in the Internet service marketWhen basic Internet service reaches the point of becoming a commodity, how will the smaller providers and start-up companies be able to compete in the market with the large phone and cable companies? One way is by adding value to the product. Computing Japan looks at two new entrants in Japan's rapidly expanding Internet provider industry who are trying to do just that.
by Forest Linton
In an industry that is experiencing amazing monthly growth rates, it may sound strange to hear companies predicting their own imminent demise. However, this is what is happening in the US Internet service provider industry. In just the past couple of years, hundreds of new entrants have crowded into the field. Many fear that basic Internet service is now at the point of becoming a simple commodity, and some small and mid-size service providers gloomily predict that they will soon be eclipsed by the large phone and cable companies who are joining what used to be a cozy group of laid-back netsurfers.
So, what are these companies doing to survive? Many have realized that adding value to the bandwidth they sell is a powerful way to keep customers and grow the industry even further. Value-added services cannot be duplicated and replaced like simple commodities, and smaller companies often are at an advantage over larger companies in being able to offer specialized (niche) services. They can react to new trends and changing technologies quickly, while maintaining a high level of the kinds of services that their users want.
Two new start-ups provider companies in Tokyo have taken this to heart. Cyber Technologies International and Global OnLine Japan bring with them a full array of Internet services to the Japanese market. The recent entry of these newest provider companies signals a turning point in the Japanese commercial Internet market, reliant until now on large, unresponsive providers who offered minimal services. For the first time, we are seeing levels of service that equal the United States (albeit at a slightly higher price, due to the inherent structure of the Japanese market and restrictive government regulations). The Japanese Internet provider market is showing signs that it will mature to a full-blown service industry in the very near future, with multiple companies competing on both services and pricing (a refreshing thing to see in a Japan whose markets are so often tightly controlled). This is good news for consumers and providers alike. As more companies enter the fray, services will improve and the market will grow. And as the market grows, prices will drop, and the market will grow even more. Although the possibility exists that the phone and cable companies will jump on the bandwagon and gobble up market share, companies here in Japan have the advantage of being able to watch the developments of foreign markets and develop counter strategies.
While the two companies showcased here are not the only new entrants to the Internet service provider market, they are representative of coming market trends. And unlike many of the larger "big name" companies, GOL now offers (and CTI will soon offer) a full range of Internet services at competitive prices, and they provide support for that small niche market in Japan to which most of us belong (the English-speaking market).
Global OnLine Japan
Roger Boisvert has a long and distinguished history in Japan and the Internet provider business. As president of InterCon International KK (the Japanese office of InterCon Systems Corporation), Boisvert lead the pack in providing commercial Internet service to Japan in 1993. Now, he has decided to put his experience to work for him in the best way possible.In October 1994, Boisvert founded Global OnLine Japan to provide Japan's Net users with a level of service that is second to none. GOL's goal is clear and simple: to provide its members with the most stable service and the fastest, most efficient connections to the worldwide Internet.
GOL prides itself on the high level of technical support that it offers its users. In addition, the company stands behind what he sells. When GOL's full connection to the Internet was late in getting hooked up, the company waived monthly charges to its users until full service was available. GOL offers a full array of services, from a simple e-mail gateway to custom-configured corporate accounts and full leased-line and dedicated-line services.
GOL is starting off at a dead run. Their Pentium servers are now connected to the Internet via a 128K bps leased line to the US (with plans to soon increase that bandwidth). At the time of this writing, they are connected to their users through 26 incoming phone lines and V.34, 28.8K modems. Another 60 phone lines standing by, ready for use when their user base grows.
Individual dial-up shell accounts start at ·4,800 per month, and dial-up PPP accounts from ·4,500. GOL also offers new users a free three-week trial with graphical access to the World Wide Web using Netscape. Corporate users should contact GOL for dedicated dial-up, a leased line, and custom configurations tailored to their needs.
Cyber Technologies International
When a group of three Mitsubishi employees realized that there was something else that they would rather be doing, the result was the beginning of a new type of company. If they had their way, the guys at CTI would probably dispense with the formalities of a physical office and work only in cyberspace. They are planning to blur the line between the real and virtual world.CTI has planned a full spread of services, ranging from a very basic and easy-to-use BBS/e-mail gateway to dedicated dial-up ISDN lines for corporate customers. Individual dial-up shell accounts start at ·3,000 per month, and dial-up PPP accounts from ·5,000. For corporate customers, CTI offers the option of a dedicated phone number, with 28.8K bps connection over analog lines and 64K bps over ISDN. Through the dedicated dial-up, customers receive unlimited connect time for a fixed monthly charge. CTI will also assist companies in registering their own domain name.
In addition to Internet connectivity, they also offer a "Cyber School" to get their customers up and surfing the Net. For those individuals or companies that want to get Web pages up on the Net without the hassles of putting together their own server, Cyber offers a Web page design service. The Cyber Art Network provides a forum for artists to display their wares to the world. CTI is also taking an active interest in setting up companies to conduct business online.
The Japanese Internet market
When I asked representatives of these two companies about their general thoughts on the Japanese Internet market, they expressed great enthusiasm. Both agree that the entry of new Net providers is a good sign of Japan's maturing Internet industry, and they see the competition as only positive. They also see great opportunity in the hundreds of thousands of Japanese who are members of BBS systems like Nifty-Serve, and point to the growth of women users as a positive indication that online shopping will soon bloom.Why should a company get connected to the Internet today? The benefits (besides increasing accessibility to the market) include generating inexpensive sales leads through personal e-mail networking, publishing product information on the World Wide Web, technical support and follow up via interactive forms, market research and e-mail surveys, job recruiting and head hunting, and instant and inexpensive branch office communications. The bottom line is that it is getting easier and more affordable to get connected in Japan, and the potential benefits outweigh the cost.
Contact Information
Cyber Technologies International KK Phone: 03-3226-0961 Fax: 03-3226-0962 Modem: 03-3226-8631Global OnLine Japan Phone : 03-5330-9380 Fax : 03-5330-9381 Modem: 03-5330-9385
Cyber Space
I sat down with CTI's Matt Rosin over lunch to hear his vision and plans for the online world. Cyber Technologies intends to use the Internet and the World Wide Web to provide a way to for their customers to enter and explore the digital world. They aren't stopping at just the Web either; plans are in place for utilizing all sorts of new technologies and software to improve their customers' online experience and productivity."We want to create a distinctive presence in cyberspace for us and our customers ó a place where people will want to visit often. I think of the people that I meet and connect with on the Net as a kind of online family. We don't look at the Net as a network of computers, but as network of people. Together, we would like to build online spaces: virtual places for people to meet, collaborate on ideas, exchange information, socialize, and have fun." Regarding the wide range of services that CTI advertises (you may have seen the Cyber = Multimedia X Internet in recent ads), Rosin says, "We like to think of ourselves as media general contractors, with the Net as the glue that holds it together." ó Forest Linton
Recent innovations in Web server software and Net security standards suggest that electronic transactions will soon become a reality. Several companies in the United States are experimenting with online transactions with favorable results, and many people in the industry acknowledge that the future is heading in this direction.
This is an exciting new area of the Internet, and one that is sure to change the future of shopping and commerce. If you are interested in learning more about electronic cash being used here in Japan and have Web access, point your browser to: http://www.digicash.com/ecash/ecash-home.html.
Structure of the Japanese Internet
All commercial Internet traffic in Japan passes through one of three top-level providers: AT&T SPIN, Internet Initiative Japan (IIJ), and Global OnLine Japan (GOL). All of the other direct-to-public service providers connect (either directly, or through an intermediate provider) with one of these companies for their trans-Pacific bandwidth.While the accompanying article focuses on Global OnLine Japan as an end-user access provider, it is significant that GOL has become only the third company in Japan (as of late January) to lease a telecommunications line directly to the core Internet in the US. As Internet usage in Japan increases, that direct control over line usage could prove a big plus for GOL's end users. Growth of the Internet in Japan currently is being limited by the slow rate at which NTT responds to requests for leased lines and fiber-optic cable. A leased-line connection for a T1 hookup typically takes one week in the US; even a 64K leased-line connection in Japan can require six months or more. On the pricing side, a leased line in Japan is said to cost 50 or more times that of comparable bandwidth in the US.
There have been recent complaints from certain Internet users and second- or third-tier providers that some lines are enormously overloaded, and an unconfirmed rumor suggests that at least one provider has been overselling its capacity to corporate customers. (Reminiscent of the old Mel Brooks' movie The Producers, with, for example, 20 different users each being promised 10% of the total bandwidth ó not a problem unless they all try to use their full bandwidth at the same time.) Computing Japan will stay on top of the Internet picture in Japan, so far as it affects individual end-users and corporate clients. Watch for an in-depth look at the structure of the Japanese Internet provider market (who is connected to whom, and how) in an upcoming issue. ó Wm. Auckerman
