A Poor Man's MAN

If TMAN has its way, companies big and small in Tokyo could soon be enjoying the high speeds of metropolitan area networks.

WE HEAR A LOT these days about the coming broadband revolution, but superfast broadband -- fast enough to painlessly download movies -- is already available. The problem is that only the biggest corporations can afford it. That's about to change in Tokyo, which is unique in that it crams thousands of bandwidth-hungry companies into a 50-kilometer radius. The density makes it the ideal environment to launch a new kind of metropolitan area network (MAN) -- one that allows numerous businesses, big and small, to share a single strand of fiber and thus bring the costs down.

"Businesses in Tokyo currently pay about JPY10 million for access to one 600-Mbps line over the SONET network," says Chris Tsumura, Japan sales executive for Brocade Communications Systems. His company has invested in a venture called TMAN, a shared-fiber pioneer that wants to provide companies who couldn't otherwise afford it with transfer rates of 2 Gbps.

Backed by a diverse array of shareholders, TMAN is more of a research consortium than a venture. The supporting cast includes, among others, Brocade, which is also supplying the MAN's fiber-optic switches; Tokyo Electron, a semiconductor manufacturer; Avex Inc., a media conglomerate; Oricon Direct Digital, a digital content provider; Advanced Technology and Systems, an IBM company; Alpha Omegasoft, a Fujitsu company; and Bit Isle, an Internet data center (IDC). Each has invested JPY2 million in TMAN's metropolitan area network, which is based on the fiber-optics backbone of TTNet, the No. 4 network operator in Japan. The new MAN sparked to life in June and is currently being tested by the partners.

The innovative aspect of this project is that it allows for the sharing a single fiber strand using dense wave-division multiplexing (DWDM), which works by splitting the light signal that carries data traffic over a fiber strand into multiple wavelengths, or colors of light. Transmitting data via DWDM is cheaper and more effective if the distances are short, so crowded Tokyo is the perfect locale for this project.

"Tokyo is the best city in the world to deploy a MAN," says Nobuya Minato, president of Business Port Systems, which operates the IDC Bit Isle. "About 80 percent of Japan's GDP is produced in the Tokyo area. Compare this with New York City, which produces about 8 percent of the US GDP."

If the tests go well, next spring TMAN will commercialize the network through partnering with Internet data centers, who will offer their business clients transfer speeds of up to 2 Gbps -- fast enough to download a DVD movie in just seconds.

Downloading entertainment is not, of course, why large corporations pay big bucks to use a MAN; instead, they need the high speeds for backing up their data and hosting applications, and for connecting various buildings located in the same city.

Besides IDCs, another potentially lucrative segment for TMAN is media companies. Avex, for example, is interested in using the new MAN to distribute media content and enhance digital production throughout its local stations. While greater returns will initially be earned through the IDCs, TMAN is well aware of how much it could make from media companies. Judging from the investments by Avex and Oricon, so are they.

"These companies now use satellite links to get this done, and that's a very costly exercise," says Erik Vollers, senior manager of customer solutions engineering at European network operator Carrier1, which has built a fiber-optic network in the pan-European region aimed at developing the same kind of services for TV stations. "We stepped into this market for that reason. It's very high volume, and there's a lot of money in it."

At the Data Storage Expo in June in Tokyo, TMAN ran a demo that included a real-time display of video-on-demand through Bit Isle's Tokyo IDC. It was enough to induce fantasies of consumer broadband, but businesses will be cruising fiber networks long before most consumers. Still, when media companies become fully digital in their production and distribution, the next logical step is fiber-enabling the home. That, however, involves the mammoth, expensive task of installing "last mile" fiber connections to homes throughout the country.

"Japan is definitely leading in fiber-optic deployment, but connecting each household by fiber optic is costly," says Yoichi Akase, CEO of StarDSL, a Tokyo provider of video-on-demand over copper wire lines via DSL. "DSL is the solution between now and the real broadband era."

In the meantime, TMAN is focusing on a specific market segment: businesses in need of data backup services that can't normally afford MANs.

"It sounds like TTNet is smartly taking a different approach, developing a unique network application customized for a niche group of customers," says Matt Walker, Asia-Pacific director of the optical transport program at RHK, a market research firm specializing in advanced telecom technologies.

It's impossible, however, to discuss telecom-related undertakings in Japan without bringing up the dreaded name of NTT, which has crippled more than a few innovative telco and Internet ventures in its time. Last year, startups Tokyo Metallic and eAccess challenged NTT in the consumer ISP space by offering DSL Net access. NTT wasn't interested in DSL at the time, but the growth of the two startups prompted it to move in on the space, whereupon it quickly captured most of the market. Tokyo Metallic struggled before being swallowed up by Softbank, and eAccess teamed up with Korea Telecom.

Says Walker: "NTT has not yet deployed DWDM in its urban network, and NTT East and West -- TTNet's actual competitors -- have not yet deployed DWDM [either]."

That may be true now, but will it be true in six months?