RIMNET: Solidly
Positioned on the Internet

interviewed by Terrie Lloyd

How would you characterize the current Japanese Internet environment?

Takashi Kobayashi: Americans, Australians, and Europeans understand what business strategy is. Strategy is your own position. But NTT doesn't know its position. Most ISPs [Internet Service Providers] here don't know their own position. "Where are we now in the world market?" is a question they can't answer.

Most ISPs entered the Internet market without any business strategy, just thinking they could make a profit. What the result has been, I need not explain. History will teach us.

RIMNET started with a position, and we have been developing our business based on that position. RIMNET is already in the black, with between 100 and 200 thousand customers. We know our limitations, and we're confident that we are satisfying these customers.

Is your customer base primarily corporate or individual?

Kobayashi: This is a hard question. Our products are primarily for dial-up service. Most Japanese businesses are very small; when you talk about segmentation, they could be considered "individuals," so I might say that our customer base is all individuals. What we want to do is connect these "individuals." Right now, 20% of our customers are corporate entities.

Do these small businesses have an interest in developing intranets?

Kobayashi: No, it doesn't go as far as an intranet. In general, they work in a small space where it's faster to communicate by mouth than send e-mail. So I think they will use LANs (local area networks). The LAN will connect these small businesses in the sense that the data transport media will change from floppy disk. I think they'll use their networks primarily as file servers.

Many times in the US, an intranet functions as an information resource, to help keep everyone informed and reach a consensus. But in a small Japanese company, when there are just a few people, they already have a consensus, so there isn't much demand [for an intranet]. For a three-person operation, the basic question is "How can we connect our thoughts to the world?" That's where we can help.

Can you explain your new Internet telephone service in Tokyo and Osaka, which I recently read about in the newspaper?

Kobayashi: What we're actually doing is two businesses. One is an Internet phone service business. We've been doing that since April 21, but this is run basically as a showcase [for our equipment]. The other business is equipment sales. So far, the Internet phone service is being offered in six locations: Sapporo, Tokyo, Yokohama, Osaka, Nagoya, and Fukuoka.

The service operates from 8 AM to 9 PM, since regular telephone rates are more expensive during the day. The reason is that telephone lines are used heavily by businesses during the day. But at night, when the lines aren't so busy, NTT offers its cheap, flat-rate Telehodai service [from 11 PM to 8 AM], so individual Internet access is heavy during this time.

The daytime ISP connection level is only about one-third that of nighttime connection. So, how successfully an ISP can increase its daytime usage affects how well it can profit. We've put our efforts into selling the open, daytime lines.

To connect to this network, does the caller need any special equipment?

Kobayashi: An auto-dial serial port phone, PhoneWay [for example]. If the computer is connected to an IP network, this phone can connect to any gateway in the world. For example, if I'm in the US on business, I can connect to Tokyo with this dial-up setup.

What do you think is the best business Internet opportunity in Japan now?

Kobayashi: One should be thinking about the state of the telecommunications market, not the Internet.

NTT and KDD handled the data and sound market. They guaranteed quality, which is why it was expensive. From 1985, the new common carriers, like IDC and DDI, began offering competition, and other competitors came into the market, all guaranteeing quality.

In 1992, a new factor entered this market: the Internet. But what did it offer? No quality guarantee; we'll try our best, but no guarantee. To put it in a worse way, it was experimental. What do you have when this nonguaranteed service enters the sound market? You get cannibalization, probably about 20% to 30%.

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