Big telecom news

This past month brought some of the biggest news we've seen in over ten years of monitoring Japan's telecom industry. Not one, but two U.S. firms are (if all goes well) going to start acting as competitive access providers in Japan next year. See Industry briefs for details.

**********************************************************

TKAI banner achieves record clickthrough rate on Hole-In-One

Banner clickthrough rates generally average about 2%, but one of the latest banners we designed and placed on the popular Hole-In-One search engine (http://hole-in-one.com) achieved an average clickthrough rate of 33% for an entire month. And all this without prizes, sweepstakes, or "adult" innuendo! That's more than double the previous record set on Hole-In-One. During those same four weeks, our second-best banner generated clickthrough rates of 8%, 11%, 9% and 8%, respectively, again without any prize giveaways, sweepstakes, etc. Can't tell you how we do it, but you can look for our banners on Hole-In-One. And of course we'd love to achieve the same kind of results for you.

**********************************************************

One reason for WorldCom's success

We've been using WorldCom's services for almost two years now, and I've raved about them a couple of times in JIR. Now that they're in the news big time, I thought I'd share with JIR readers what I see as one reason for their success in the business long distance market. Our last long distance telephone bill for the month included over 120 calls (some 30-60 minutes long) all over the U.S., with more than 30 to Japan. The total charge? A frugal $104.87. All this in a clear, concise invoice that reads like a normal company's invoice, not the annoying, confusing presentation I used to get from other carriers. Go WorldCom!

**********************************************************

Interview with Rick Noelle of Akira PC and Networking

- Rick, tell us briefly what kind of Internet-related installations you were doing for Hokkaido businesses.

Our typical customers were small businesses, particularly law firms, who were interested in sharing office resources. We would set up and install a FreeBSD UNIX server machine which was utilized as a file server, intranet Web server and also capable of handling inter-office e-mail. For Internet access we would generally install a product available from California-based Ositis Software called "WinProxy" which allows multiple computers on a LAN to access the Internet through one dedicated modem or ISDN connection.

- In your work, what was the single most important application of the Internet you saw?

While working for Voice, we would often travel to remote areas of Hokkaido and do presentations about what the Internet was and how people were using it. The Internet was actually a very new concept to many of these people. One community, Shiraoi-cho, decided that they wanted to do some PR for their town by putting up a home page. This page attracted media attention and suddenly this small city in a remote area of Hokkaido was making headlines. When other towns saw what had happened for Shiraoi, the trend caught on and we put up many such home pages for these small communities. So I would say that one of the biggest uses of the Internet I saw in my particular line of work was public relations.

- Over the past year you spent in Japan, what changes did you see in the Japanese Internet itself?

Gerneral interest in the Internet is increasing very rapidly in Japan. The company I was working for is an Internet service provider among other things. When I arrived, we had about 50 dial-up clients. Over the course of the year I was working for Voice, our dial-up clients more than doubled and continues to rise. As the number of users in Japan increases, the number of quality Japanese language Web sites is also increasing. This is very obvious to anyone who has surfed Japanese sites. The number of quality sites that really have interesting news and information to offer is really impressive. I think this continues to draw more and more users which causes more and more quality sites, etc. I think that trends in Japan tend to come and go pretty regularly. Unlike a trend that will soon fade, I think that the Internet is here to stay in Japan.

- What is Akira PC and Networking?

Upon returning to the U.S. I started my own business building and selling high-end custom built computer systems. The idea started when I built four UNIX server machines for my former employer. I also built six Win95-based systems for the foreign members of the Yuki Jirushi pro ice hockey team in Sapporo. One of the things Akira PC specializes in is bilingual Japanese/English computer systems. We plan to focus our sales on foreigners living in Japan who need English systems as well as Japanese living in the U.S. who'd like Japanese systems. Of course we cater to people who'd like both languages installed on one system. Unlike some custom built computer outfits, we have strict guidelines about the quality of the parts we use. For more information please see our web site at or send me e-mail at .

**********************************************************

Industry briefs

WORLDCOM to offer services in Japan using own cable

Mississippi-based WORLDCOM will become the first U.S. telephone firm to offer services in Japan using its own fiber-optic cable. The fourth largest long-distance service provider in the U.S., WORLDCOM plans to lay optical fiber cable throughout Tokyo's sewer system and offer a variety of telephone, leased line and Internet services limited to the Tokyo Metropolitan Area, avoiding the tremendous expense of a nationwide expansion. Currently telephone operators within Japan that own their own circuits must limit foreign ownership to 1/3 of their outstanding shares, but two measures will make WORLDCOM's Japan market entry possible: deregulation of direct foreign entry into the type-1 carrier market effective in January 1998, and the city of Tokyo's implementation this month of a revised law that relaxes restrictions on placing optical fiber cable in sewer systems. WORLDCOM's Japan market entry is sure to rock the nation's turbulent communications sector, which is already reeling from vicious price competition and consolidation.

ART to become competitive access provider in Japan

ADVANCED RADIO TELECOM (ART) of the U.S., a company that provides wireless transmission services in 169 cities across the U.S., will establish a Tokyo-based subsidiary under a joint venture with communications equipment manufacturer SUN ELECTRONICS of Aichi Prefecture under a plan to offer wireless local telephone services sometime in 1998, industry sources said October 3. If ART's plan goes through, it will be the first time that a foreign entity has ever acted as a competitive access provider in Japan. ART intends to offer a limited set of high-speed corporate communications services to businesses, primarily in the Tokyo and Nagoya areas, focusing on exploding Internet and datacom traffic. It hopes at some point to enter the individual user market as well, and is currently in negotiations with MPT concerning technical and regulatory issues. ART's entry into the local telephone market would mean a new era of true competition in Japan's telecom carrier market, say industry watchers.

OCN subscriptions soar

NTT says that subscriptions to its OCN (Open Computer Network) Internet connectivity service have grown dramatically faster than originally expected. The company planned to sign up 32,000 dialup subscribers by April 1998, but now says it is on track to have 250,000 such subscribers, approximately eight times more than originally anticipated. It also expected to win about 4,000 subscribers to its 128Kbps leased line service during the same period, but now believes it will win about 12,000 such subscribers. A company spokesman cited rapid growth in Internet usage as the main reason for the unexpectedly high numbers.

KDD to lower Japan-to-U.S. charges

KDD will lower its charges for telephone calls from Japan to the U.S. The company has agreed with AT&T to lower international carrier fees for Japan and U.S.-originated calls by nearly 70% and 40%, to approximately $0.25 and $0.13, respectively. The move follows the U.S. Federal Communications Commission's adoption of an international "benchmark system" for equalizing what it says are unfair burdens on U.S. carriers for handling international telephone traffic. KDD plans as early as next week to file a suit in federal court protesting the FCC's move, but in the meantime hopes to demonstrate its willingness to voluntarily lower rates, say industry watchers. The lower inter-carrier charges mean lower rates to consumers and businesses are inevitable: today a three-minute call to the U.S. from Japan via KDD lines costs 450 yen ($3.72).

MARUZEN stepping up online bookselling activity

MARUZEN will link book inventory information for its commercial Web site with major publishers' data networks starting next month. In this way, users will be able to quickly check on the availability of books. The book retailer's on-line operation, which has about 19,000 members and rings up about 30 million yen ($247,934) in sales per month, will also start getting priority deliveries of new books from about 20 major publishers. The moves are aimed at separating the company from the competition.

KINOKUNIYA is, too

KINOKUNIYA BOOKSTORE will expand book sales on the Internet. The company, which opened its Web site, BookWeb, last October, distributes books on the site with a database of 3.2 million book data items including foreign books. Plans call for enabling users to review book content within the year and starting a "push"- type new publication information service via e-mail. There are 21,000 BookWeb members and about 1,000 books sold via the Internet daily. The company plans to increase Internet book sales from the current 60 million yen ($504,202) to 2 billion yen ($16.8 mil) by the end of 1999 and boost the number of members to 100,000.

More online bookselling news

The Japan Book Publishers Association has set up a Web site for searching for Japanese language books. The database of 530,000 books will be the industry's largest. The site, which will be ready for use on September 9, will have links to the publishers' Web sites and also offer the table of contents and excerpts for each book. The site is expected to lead to an increase in online book sales.

Japanese firms cheesed off at Web developers

Japanese firms are less satisfied with Web page developers and promoters than with any other vendors to whom they outsource work, according to the results of a study announced September 5 by the Nippon Omni-Management Association. The study of 1,800 listed firms with 300 or more employees queried respondents regarding outsourced services such as building management, advertising and public relations, data processing and Web site development and promotion. Nearly 13% of respondents were dissatisfied with their Web page providers, the highest level among all twelve categories. The study also found that Web site building was the function companies want most to outsource.

MATSUSHITA to incorporate UP's browser into cellular handsets

MATSUSHITA COMMUNICATION INDUSTRIAL has struck an agreement with UNWIRED PLANET (UP) of California whereby MATSUSHITA will incorporate UP's simplified browser software into cellular telephone handsets that will be capable of accessing the Internet. MATSUSHITA plans next year to release in Europe and U.S. cellular handsets equipped with the browser, then conduct feasibility studies concerning release of similar products in Japan. UP's limited-function microbrowser is slated to be adapted as the standard software browser for European cellular telephone manufacturers which produce GSM models, and industry watchers say ISP services designed specifically for this application are likely to appear next year. MATSUSHITA's agreement with UP covers cooperative technology development and licensing of the software.

NEC finally getting with the program

NEC will in late October introduce in the domestic market next-generation PCs based on the PC97/PC98 standard proposed by INTEL and MICROSOFT. In a move which is considered a shift from its proprietary PC-98 architecture, NEC will manufacture and market PCs based on the world standard that fully supports 32bit computing. Plans call for releasing a total of 26 variations in the PC98-NX Series which will include servers, desktop and notebook PCs, a NetPC, and A5- and B5-size mininotebook PCs.

BACKWEB TECHNOLOGIES moving into Japan

California-based BACKWEB TECHNOLOGIES, a developer and seller of "push" software for the World Wide Web, will enter the Japan market within the year. The firm plans to establish a wholly owned Japan subsidiary and sign dealership agreements with a number of major Japanese corporations, going head-to-head with rivals POINTCAST and MARIMBA, which are already active in Japan. BACKWEB has already started sample shipments of a beta Japanese language version of its server software, and will release a commercial version after evaluating user feedback and making any necessary modifications. It plans to sell the software for approximately 2.0 million yen ($16,807) in Japan.

PEOPLE WORLD getting with Internet program

Tokyo-based PEOPLE WORLD, an IBM JAPAN subsidiary that operates the PEOPLE commercial online service, will in September start offering unlimited Internet access for 2,500 yen ($21) per month. The company also offers a 10 yen (8 cents) per minute fee plan. The new Internet Power Access unlimited usage service also provides 5Mbytes of Web space at no charge, and will be limited to 10,000 subscribers nationwide. PEOPLE WORLD hopes the new service will attract new subscribers, particularly heavy users. The company also plans from October to offer 56Kbps analog access and to start making available PIAFS-compatible access points for PHS users.

Web applications get more useful

Osaka-based freight forwarder HANKYU KOTSUSHA will in October start offering an Internet-based air freight tracking service. Users will access a Web page, provide a shipment tracking number and verification ID, then view the status of a shipment. HANKYU will become the first air freight forwarder in Japan to offer such a service. The Web page will be available in both Japanese and English versions, according to a company spokesman.

Server sales booming

Server shipments are increasing rapidly. In the PC server market, NEC and IBM JAPAN plan to double shipments while COMPAQ (JAPAN) and FUJITSU are projecting 90% and 80% year-on-year increase, respectively. Among UNIX server vendors, NIHON SUN MICROSYSTEMS has maintained a twofold increase in shipments so far this year, and HEWLETT-PACKARD JAPAN is shipping units at an annual growth rate of 50%. In the high-end mainframe-caliber business server market, IBM JAPAN plans to boost shipments by 20-30% year- on-year. While growth in domestic demand for PCs has plateaued at a single-digit growth rate, computer makers are looking more seriously at the server market.

**********************************************************

Thoughts on online shopping in Japan

Japanese credit card companies generally charge merchants about 5% per transaction. This is basically because of the very low bad debt ratio in Japan. In other words, consumers pay their credit card bills faithfully and on time, meaning the credit card companies don't make money on interest payments like they do in the U.S. As a result, they have to charge merchants higher up-front fees in order to make the business profitable. What's more, Japanese credit card firms charge even higher rates for transactions that are executed without signatures. That means that merchants doing business online have to pay even higher fees. No wonder Japanese firms are scrambling to develop alternative online purchasing systems, many of which seem rather complex and convoluted.

**********************************************************

Reach 18,000 Japanese Web users twice monthly

One of the Japanese language newsletters we write and manage now has over 18,000 subscribers in Japan, and is growing quickly. The newsletter, the Japanese language version of Cyberian Outpost's Cyberian Express, contains computer industry commentary and news, product reviews and announcements, and other information of interest to users of both PC and Macintosh platforms.

PR/advertising insertions are now available in this newsletter for compatible product or service offerings. Please contact us at for more information.

**********************************************************

New subscriber rundown

This month we welcome new readers from Silicon Graphics, Netscape, Dell Computer, KDD and from Korea, Italy, Hong Kong, Australia, Taiwan, Belgium, Spain, Germany, Japan and the U.S.

**********************************************************

Copyright 1997 by TKAI and Digitized Information, Inc. All rights reserved

NOTE: Some JIR industry briefs appear later in Computing Japan magazine under modified titles.

JIR is co-sponsored by Digitized Information, Inc. of Tokyo, a leader in providing daily English language coverage of electronics industry developments in Japan.

For more information on monitoring electronics industry developments in Japan, or to receive a free e-mail sample of service offerings, please contact Digitized Information at diginfo@gol.com