fj.providers.speak
Japan's Internet Market:
The Need for Consumer Education
In September 1993, there were just two commercial Internet providers
in Japan; today, there are more than 40. With so many vendors to select
from, choosing the right vehicle for cruising the Information Superhighway
can be a daunting task. Roger Boisvert offers an overview of the Japanese
Internet market and suggests some questions that you should ask to avoid
getting stuck with a lemon.by Roger Boisvert,
Global OnLine Japan By anybody's standards, the Internet is growing in Japan. New industries always do. But as consumers are presented with a new service, they are also faced with new choices -- and the choices can be confusing.
Hooking up to the Internet these days is not as straightforward as buying a car. In shopping for a car, most consumers today know what to expect, and how to avoid a lemon. But lemons exist among Internet providers as well, and until potential users learn to distinguish the differences between providers, they risk coming away with a sour taste instead of the sweeter rewards the Internet can offer. Bad support, slow connections, and long waits before connecting can alienate potential users soon after they turn on their modems.
Fundamental concerns
Probably the greatest danger to any new industry is not the threat of government regulation, but a lack of understanding by the general public and the news media as to what it is all about. New technology often causes fear, because it can change the way we live our lives and view our world.
The Internet is no exception. Japan has broken through the initial government-induced barriers (though more exist), but it now faces a lack of understanding by the public of how to use the Internet, of what it can do, and of what is hype and what is real. Even more fundamental, though, potential users need to understand what factors affect providers in order to select the best services and form the right expectations.
Trendy Japanese magazines are the worst when it comes to giving advice; newspapers and magazines generally don't understand what is important for the average consumer. The market in Japan is currently over-hyped on a massive scale, even to the level of some providers being guilty of false advertising. Companies make exaggerated claims, or charge outlandish fees for minimal services. Benefits are overstated and -- quite frankly -- in some cases, utterly false.
Further, there are legal problems regarding the Internet that are not being addressed by the Japanese and other governments. Much attention is being paid to "drug dealers" and "child pornographers" who supposedly use the Net to peddle their illicit goods, while virtually no attention is being paid to consumer protection of Internet users. Most governments regulate who can set up a service, but they don't check to see who runs an honest shop.
So, how does one select an Internet provider? The best sources of advice are experienced users (both satisfied and unsatisfied) and the few leading magazines that are targeted at a more professional audience. The Internet itself is perhaps the best source -- but that's of no value to you until you get connected. In any case, as with buying a car, it pays to shop around.
Asking the right questions
There are numerous factors to consider when selecting an Internet provider -- stability of the company, stability of the provider's system, quality of connectivity -- but the following are probably the three most important questions that everyone, whether corporate user or individual, should ask.
How many modems are available
to how many users?
Are there 2,000 users trying to reach 5 modems? What's the likelihood of being able to connect without a lot of busy signals? In Japan, the focus is clearly on sales rather than on service, with the preference for keeping the customer in the dark about what quality services are really like. Unless you enjoy redialing, the user-to-modem ratio is very important. Yet this is one factor that I have never seen highlighted in any Japanese magazine or newspaper article that offers information about Internet providers.
Phone lines cost an awful lot in Japan, so most Internet providers here skimp on the number of modem lines. Expecting to see the same user/modem ratio as in the US is unreasonable, true, but not enough phone lines means busy signals -- it's as simple as that. Where a 10:1 ratio is considered good in the US, even a 20:1 ratio in Japan is exceptionally good.
So ask. And if you get too many busy signals after signing up with a provider, complain.
To what extent does the provider oversell its bandwidth?
Your local phone company oversells its line capacity; the simple logic is that not every phone is used 24 hours a day, so there is no need to have enough line capacity to accommodate all phones being used at once. (For public phone lines, a 50:1 ratio of phones to line capacity is considered the standard. This is why, when there is a major disaster, one of the first announcements you hear is, "Please do not use the telephones to keep the lines free for emergency use.") Overselling bandwidth is normal in the telecommunications industry.
The same logic applies in the Internet: not all customers will use their modems (and allotted bandwidth) at the same time. In the US, an Internet provider with a T1 (1.5M) line typically resells that capacity as much as 10 times (good) or even 15 times (reasonable). A provider in the US that oversells its capacity by 20 times, though, is considered a poor provider. Because of the costs of doing business in Japan, and the costs of international lines, it is common here to oversell capacity by 40 times or more; some providers in Japan have been known to oversell bandwidth by as much as 100 times.
When too many users clog a provider's limited bandwidth, individual throughput slows down. This is why a 192KB leased line from one provider can actually feel much slower than a 64KB leased line from another provider. (The result for the dial-up user will be sluggish performance, resulting in more time spent online and larger phone bills.) While it may be hard to get a clear answer from a prospective provider, be aware that seriously oversubscribed providers do exist. It pays to shop around.
One reason it is hard to get a clear answer is that the situation in Japan is more complicated than that in the US. In the US, the simple answer to calculating the bandwidth/user ratio is to divide one leased line "to the Internet" by the average number of users consuming the bandwidth (modem and leased line users). In Japan, however, the nine major providers have leased both international lines to connect with the Internet in the US, and domestic lines to connect to the NSPIXP (which provides faster connections for intra-Japan traffic). With these multiple leased lines for connectivity, the simple question of "How much bandwidth per user?" has a complex answer.
Is support adequate -- and is it
available when you need it?
Whether you are a corporate IT manager or an individual dial-up user, support when you need it is important. Many providers in Japan provide support only through e-mail. Consider: Is it possible for a leased-line customer to reach a knowledgeable engineer at 9 AM, at 9 PM, or at 1 AM? Is it possible to reach user support staff who can answer questions in your language, and can you expect helpful answers that assist you in getting connected or reconnected? Is it possible to do so at 7 AM when you are trying to check your mail before breakfast, or at 9 PM when you are surfing the Web?
Because of the cost of labor, round-the-clock support from Internet providers in Japan is rare (or non-existent). Even prompt 9-to-5 support is lacking from many providers, and some large providers provide no voice support at all. Before choosing a service provider for your business, a simple test is to phone the provider after 7 PM to see if user support is available. Ask a reasonable question, though. Help desk people work hard, and their skills are rare; don't abuse them.
IT phone home
It took several years for businesses to learn that the telephone was an important business tool. Today, almost every desk-bound worker has a phone on his/her desk. Many of us even carry one when we travel between appointments or go on vacation.
The Internet -- like the telephone a century ago -- is still in its infancy. In a few of the more advanced countries, the value of becoming "wired" is just now becoming understood by businesses. The question that remains largely unanswered, though, even after cutting through the hype, is, "How is use of the Internet best applied in my company?"
It will take a few more years before all the answers are well understood. E-mail is widely available throughout the world, but the Internet is so much more today, and much more is to be developed in the near future.
This is an exciting time to be getting online. But it is also a time when, as a consumer, you must educate yourself. When selecting an Internet provider, exercise the caution and common sense that you would use in making any important purchase decision.
Roger Boisvert, formerly with McKinsey & Company, founded the very first government-authorized commercial Internet service provider in Japan. He is currently Vice Chairman of Global OnLine, a major commercial Internet provider with heavy national and international capacity, and locations in Japan and the US. Mr. Boisvert can be reached at rjb@gol.com, or +81-3-5330-9380.
