JIN-182 -- 2.5 Yen a Minute to Call the US Doesn't Sound Too Bad

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J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News
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Issue No. 182
Wednesday, May 29, 2002
Tokyo

CONTENTS

++ Viewpoint: 2.5 Yen a Minute to Call the US Doesn't Sound Too Bad

++ Noteworthy News
- Morgan Stanley Accused of Evading Tax on Profits of 18 Billion Yen
- Usen Broad to Launch Net Access Service That's Cheaper than ADSL
- Japan Telecom Transfers ADSL Network Operations to eAccess

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++ VIEWPOINT:2.5 Yen a Minute to Call the US Doesn't Sound Too Bad

"Wow! That's cheap!" That was my immediate reaction when I heard
about the launch of Yahoo! Japan's IP phone service BB Phone. I
probably wasn't the only one with that response, either. IP
phones have been popular among geeks over the past few years; they
could simply download MSN Messenger, plug in a microphone and use
the MSN voice messaging system for free voice conversations. But,
what is new about BB Phone is it allows phone-to-phone communications
via the Net, making use of Voice over Internet Protocol (VoIP).

BB Phone is the cheapest phone-to-phone VoIP service in Japan. For
domestic calls, BB Phone charges 7.5 yen per 3 minute (BB Phone to BB
Phone calls are free of charge), Fusion Communications charges 20
yen, JENS 45 yen and NTT-ME 40 yen. For calls to the US, BB Phone
charges 2.5 yen per minute, Fusion Communications and JENS charge 15
yen, and NTT-ME charges 18 yen. These are significantly cheaper than
traditional phone calls through existing public-switched telephone
networks (PSTNs), the main provider of which is NTT.

I immediately signed up for BB Phone when the service was launched in
April. It only took me five days this time to receive a modem from
Yahoo Japan (its ADSL service, Yahoo! BB, is notorious for being
slow. Despite the company's pledge to get everything installed within
10 working days, it took me almost two months to get the service!)
Installation of BB Phone is simple; all I have to do when I want to
make a call is connect the modem to the ADSL modem and NTT telephone
line. Now I can call anywhere in Japan or in the US for an average of
2.5 yen per minute! And, the quality is surprisingly good.

Yahoo! Japan initially planned to offer BB Phone services only to its
Yahoo! BB's subscribers, but decided to allow non-ADSL subscribers to
join for 390 yen per month (plus 690 yen for a rental modem). ADSL
subscribers are not required to pay the monthly fee. Yahoo! Japan
hasn't announced just how many people have registered so
far, but considering that Yahoo! BB had 530,000 subscribers as of
April, BB phone has a lot to gain.

A growing number of Japanese are now turning to cost-effective ways
to make phone calls. Fusion Communications, the first company to
start the service in April 2001,is a bit more expensive, but has over
one million subscribers. Its service is even simpler; all you
have to do is register (this can be done through the Net) and
there is no need for a modem. Subscribers may have to dial 0038 in
front of the number they want to dial, but if they register Fusion
Communications with the Myline service, this step becomes
unnecessary.

Corporations are also looking at IP phone technology to cut
costs. Shinsei Bank, for example, in April announced that the company
installed a large unified communication system by incorporating
Cisco Systems' IP phone technologies on Microsoft platforms. The bank
estimates that the company will cover the cost of installation within
10 months, and will save 900 million yen over the next five years.
Shinko Securities will also replace its telephones at its head and
branch offices nationwide with IP phone applications from Cisco
Systems by the end of March 2003. The company says it will cut costs
by more than 10 percent, and the 2.5 billion yen initial cost will be
covered quickly.

Things are happening. VoIP may eventually overtake PSTNs.

-- Sumie Kawakami

=======================Sponsor of the Month==========================

Yukari Takahashi is Director of Amici International Preschool for
children age 18 months to 5 years (http://www.amicischool.com). The
school is conveniently located in the Yoyogi Uehara/Shoto area
backing onto beautiful Komaba Park. Yukari tells J@pan Inc of the
current expansion underway at the school, which just opened at the
end of last year, and why parents should get in quick so as not to
miss out on this fantastic opening for their children.

JI: When and why did you start your preschool?

YT: Amici started off small in September last year to help fill a gap
for quality preschool facilities in Tokyo. We are very proud of what
we can offer parents and their children and are delighted to be able
to offer more vacancies now at our international preschool. Total
student numbers will be capped at 36 to ensure the high standard of
education and quality child care is maintained.

JI: What do you believe makes Amici stand out above other preschools
in Tokyo?

YT: Where do I start? Amici provides a friendly, relaxed and secure
environment for children to learn and develop. It is situated in a
quiet neighbourhood right next to Komaba Park, with a convenient drop
off/pick up area directly in front of the preschool entrance. The
sunny, spacious classrooms open out onto Amici痴 own private garden
where children can play and discover in a safe and natural setting.
Furthermore we have a full-time health counselor on our staff for
parents・piece of mind.

JI: What is your teacher/child ratio?

YT: At Amici we believe that having a low ratio is essential for
quality preschool education. This is 1:6 for 3-5yrs and 4:1 for
18months-3yrs - one of the lowest ratios in Tokyo!

JI: Can you tell us briefly about your international preschool痴
curriculum?

YT: Amici痴 curriculum promotes holistic development by focusing on
five learning components combining English and Japanese language.
These are essential daily life skills, self-expression, multicultural
awareness, basic learning skills and nature.

JI: What is unique in the services provided?

YT: We offer a variety of flexible timetables to suit parents・busy
schedules. Half day classes run from 9am-12pm, with full day classes
until 2pm. We also offer extended day programmes providing additional
after school care if required. Furthermore, we run holiday
programmes, and summer school classes will be running through until
the beginning of August.

Now expanding! Places available now! Get in quick!

To learn more, visit the Web site at http://amicischool.com or to
discuss your individual requirements, please contact Yukari Takahashi
at info@amicischool.com or phone +81-3-5454-9066.

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++ NOTEWORTHY NEWS
(Long URLs may break across two lines, so copy to your browser.)

** Morgan Stanley Accused of Evading Tax on Profits of 18 Billion Yen

Extract: American investing giant Morgan Stanley group evaded taxes
on some 18 billion yen in profits from transactions related to
Japanese bad loans in 1999 and 2000, according to Kyodo News. The
real estate investment fund funneled profits through paper
companies in the Netherlands whose revenues are not subject to
Japanese tax. The Tokyo Regional Taxation Bureau has ordered the
U.S.-based fund to pay nearly 7 billion yen in unpaid tax and
penalties.

Source: Kyodo News, May 29, 2002
http://home.kyodo.co.jp/all/display.jsp?an=20020529029

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** Usen Broad to Launch Net Access Service That's Cheaper than ADSL

Extract: Usen Broad Networks is planning to launch a new Internet access
service by the end of 2002 that will use coaxial cables constructed for
cable TV services and will be capable of transmitting at 30Mbps downstream
and 1.5-10Mbps upstream. The monthly fee will be set at a competitive level
against ADSL services, the company said.

ADSL has grown rapidly in Japan mostly due to a cutthroat price war over
the past year. According to the Ministry of Public Management, Home Affairs,
and Posts and Telecommunications, there are over 2.69 million ADSL subscribers,
almost three times higher than the number half a year ago.

Usen Broad has been offering an Internet connection service on an optical fiber
network since February 2001. But this service needs optical fiber cable to be
hooked into each user's premises, making it difficult for the service to expand,
according to reports in AsiaBiztech. As of the end of April 2002, the number of
the company's optical service subscribers was 8,572.

Usen Broad's new service will use coaxial cables, which cover 97 percent of all
cities and towns in Japan. Coaxial cables are already present in many user sites
or can be easily installed, Asia Biztech reports. But optical fiber cables will
still be needed here and there, according to Usen Broad.

Source:
http://www.nikkeibp.asiabiztech.com/wcs/leaf?CID=onair/asabt/moren/187541

ADSL statistics (in Japanese)
http://www.soumu.go.jp/joho_tsusin/whatsnew/dsl/

===========================ADVERTISEMENT=============================
J@pan Inc magazine -- the premier journal of business, technology and
people in Japan -- invites you to participate in a special ISP/ASP/
DATA CENTERS ad section scheduled for the August 2002 issue.

The August 2002 special ad section will feature companies that are
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** Japan Telecom Transfers ADSL Network Operations to eAccess

Extract: EAccess and Japan Telecom announced that Japan Telecom will
transfer its consumer ADSL network operations to eAccess. This will
form the largest DSL competitive local exchange carrier (CLEC) in
Japan in terms of the number of ADSL subscribers.

Japan Telecom President Bill Morrow said, "The transaction will
enable Japan Telecom to reduce its cost base and improve efficiency
without impacting the quality of service offered to its ADSL
customers." The company is going through a massive restructuring plan
called Project V to improve its financial performance.

Source: Japan Telecom, May 28, 2002
http://www.japan-telecom.co.jp/english/newsrelease/nr020528e_b_fs.html

Link:
"Cost-Cutter or Profit-Maker? Japan Telecom's Morrow Chooses the Latter"
from JIN 177
http://www.japaninc.com/newsletters/index.html?list=jin&issue=177

=============================EVENTS==================================
Carriers World Japan 2002
Tokyo, Japan
10-11 July 2002

With telecom deregulation throwing its doors open to international
players, Japan is experiencing tremendous interest from global
carriers trying to get a foothold in this once monopolized telecom
market. Recognizing the revenue and competitive potential of the
Japan market, CARRIERS WORLD JAPAN 2002 returns, for the 3rd time, as
the only event that addresses the state and dynamics of the carrier
marketplace in Japan.

The event will present road maps to help you navigate your way
confidently against the competitive market challenges of the future.

For more information, visit us at:
http://www.carriersworld.com/carriersworldJapan2002/

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STAFF
Written by Sumie Kawakami(sumie@japaninc.com)
Edited by Bruce Rutledge (bruce@japaninc.com)

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