ADSL providers compete harder in shrinking market

BY KAZUO ASAMI,THE ASAHI SHIMBUN

Amid the race for ever-faster broadband connections to the Internet, super high-speed fiber-optic technology is fast overtaking asymmetric digital subscriber line (ADSL) technology across Japan.

Faced with the growing competition, some ADSL providers are hitting back hard. Critics say some providers are resorting to "underhanded" tactics, including offering subscribers unpublicized bargain price plans or advising prospective customers about how to end contracts with rivals.

Fiber-optic networks are poised to overtake ADSL connections in the next few years as the most-subscribed type of broadband Internet access.

This rise has been primarily fueled by the much higher data transmission speeds that fiber-optic networks allow for. And, while Japan's fiber-optic network infrastructure was originally limited, in recent years it has grown considerably.

At the end of December 2007, ADSL subscriptions slid to about 13.13 million, down from about 14.24 million at the same time the previous year, according to the Ministry of Internal Affairs and Communications.

In contrast, subscriptions for fiber-optic networks jumped to about 11.33 million at the end of December 2007, up from about 7.94 million in 2006.

Alarmed, some ADSL providers have been looking for ways to hang onto their clients. One new idea is to offer "niche" Internet services.

Acca Networks Co., a leading provider of ADSL connections, is wooing customers with low-price offers for a 12 megabits per second (Mbps), or mid-range speed, connection.

"Some Net users do not really need the kind of fast data transmission that fiber-optic networks provide," said an Acca Networks spokesperson. "Our new service is aimed at those people."

Acca Networks' subscriptions shrank to about 1 million at the end of 2007, down from about 1.15 million the previous year.

Another big ADSL player, eAccess Ltd., is resorting to a different tactic with the launch of its publicity campaign dubbed "Let's switch ADSL providers."

In an attempt to draw potential customers to its services, eAccess explains on its website the detailed procedures for ending subscriptions with rival ADSL providers.

Yahoo! BB, launched jointly by Yahoo Japan Corp. and Softbank BB Corp., with about 4.94 million ADSL subscriptions as of the end of December 2007, has taken an approach that some contend is not fair to subscribers in general.

When subscribers contact Yahoo to cancel their ADSL subscriptions, the company makes them a counter offer, allowing them to switch to less-expensive connection plans that are not publicized.

In fact, some weblogs have described tales of subscribers who ended up with better subscription plans after they tried to end their contracts.

A Softbank BB official explained that the practice is a type of "test marketing, designed to give a better service."

But the company makes these special offers only to subscribers who express their intention to terminate their plans.

According to one source, Softbank BB offered a customer in Hyogo Prefecture a better subscription plan after the 33-year-old man, who had been paying 5,253 yen per month for a 50 Mbps ADSL plan, informed the company in February last year that he wanted to cancel.

Softbank BB was quick to offer him a different deal: switch to an 8 Mbps plan for 2,188 yen a month. He accepted.

Yet, according to Yahoo! BB's advertising, its similar 8 Mbps plans was set at around 3,000 yen a month.

The man was also not charged the usual 2,100 yen fee to switch his subscription plan, even though such charges were clearly stated in his old contract.

On top of all that, he also got one month free under his new plan.

Softbank BB acknowledged that such offerings of unpublicized cheaper plans are sometimes made to existing subscribers, under its "test marketing" strategy.

"We conduct test marketing in different situations," said an official with Softbank BB. "It is normal to do that by limiting the target, period and areas of such offers."

But Makinori Goto, a professor of civil law and consumer law at Waseda University, is critical of the company's tactics.

"The subscribers who are not told of low-priced plans technically could lose out if the company only makes the lower-priced offers to those who apply to cancel their contracts," he said.

"The company should let other subscribers know about cheaper fare plans if they are available."(IHT/Asahi: May 15,2008)