Broadband services

NTT DoCoMo Takes on Retail Broadband

Hard-pressed Japanese mobile operator NTT DoCoMo has waded into the retail broadband business.

It today unveiled its docomo Hikari service, which will bundle 1Gbit/s fiber and ISP services with mobile, offering discounts to compete with rival operator KDDI Corp. .

The new service will be available from March 1. Many of the service bundles will be sold in the same way as DoCoMo's mobile data offerings, giving families the ability to pool their data packages and benefit from monthly savings of up to 3,200 yen ($27).

NTT DoCoMo Inc. (NYSE: DCM) announced the new service as it reported an 11.2% decline in net income during the nine months ending December 2014, compared with the same part of 2013. The company attributed this to the continued impact of its move to a discounted price structure early last year, which resulted in flat revenue of 3.3 trillion yen ($28.2 billion) over the same period.

CEO Kaoru Kato said the company would not be offering rebates as generous as those it had provided last year to attract customers, acknowledging the firm had "learnt our lesson."

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The announcement, which had been expected for some weeks, is also a strategic move by NTT Group (NYSE: NTT) to shift some of its broadband business to DoCoMo. The mobile operator, 59.3% owned by NTT Corp, is the strongest brand in the group.

Kato said he hoped to attract the 18 million customers of the NTT fiber service FLET's to docomo Hikari "as quickly as possible."

He said DoCoMo had set a "near-term benchmark" of 1 million customers but that it "had not developed a detailed plan" for take-up targets beyond that.

As well as the discount prices, DoCoMo's other pitch is simplifying the complexity of ordering broadband. In Japan, retail customers are required to buy the fiber or VDSL connection separately from the ISP service, and are billed separately. Kato said DoCoMo's retail outlets are now a "one-stop shop" for the fiber connection and ISP and mobile services.

— Robert Clark, contributing editor, special to Light Reading

R Clark 1/29/2015 | 8:47:33 PM
Data pooling This service will be an interesting test for the power of data pooling, eg, for $198 a month you get 30GB mobile data to share plus 1Gbps broadband; for $104 you get 10GB shared + 1Gbps fibre.   

DoCoMo had some success with these in its mobile business, and its differentation against KDDI is mostly around these shared plans.

MarkC73 1/29/2015 | 3:28:00 PM
Re: Mobile, Fiber pairing I wasn't pulling an average, I was pulling off my own specific experience in building out FTTP, the point is that I've never seen anything that wasn't something over 3 years.  Access hardware is usually where the equipment cost is make or break as the core routers can get cost allocated quite a ways.  What's the last FTTP/GPON system cost that you've put in (fiber and labor included) that you could make your money back in 3 years charging 20 bucks a sub, or whatever you think investors want an ROI for their money.

The trend for bit costs are going down but the usage is going up which means I doubt your monthly bill will get cheaper.
jabailo 1/29/2015 | 3:14:18 PM
Re: Mobile, Fiber pairing I don't see how you can put an average ROI on something ilke that, or if you did, it would squash down the numbers so much as to be unreadable!

For example, you would have a different situation for dense areas of apartments, and spread out rural areas.  On the one hand you'd have more customers, on the other hand more wires in an apartment area.   In a rural area you'd have long runs of fiber, but fewer last mile customers.   You might have more breaks in the country if you run overhead lines, but if you ran underground, I would expect a fiber optical cable to degrade...well, almost never!

There's the routers and other equipment, but as readers of The New IP know, that hardware is constantly getting cheaper and simpler as it gets more software based.

MarkC73 1/29/2015 | 2:21:18 PM
Re: Mobile, Fiber pairing ROI for installing fiber (sorry, I forget the take rate percentage) assuming Internet and TV services, was about 7 years.  Monitoring and maintaining a fiber network is easier than a copper one, but you still have to build it.

Granted it would also depend on the density of the populations, more subs per mile lower ROI.
jabailo 1/29/2015 | 1:32:45 PM
Re: Mobile, Fiber pairing  

Hard to make money on residential fiber?   The cost of adding a new user is probably near zero, so each new customer is a guaranteed income stream.   They should be happy with even $20 a month per user for monitoring lines that may never ever need fixing.  Maytag repairmen stuff.

MarkC73 1/29/2015 | 1:25:02 PM
Re: Mobile, Fiber pairing I think you answered your own question :), without the incentive, not too many would bolt on the service.  It's unfortunate but sometimes it's about making money rather than saving you money.  One could argue that they would make more making packages that consumers really want, but too much discounting causes price wars.  Residential Internet is already pretty rough on the margins, so they need something with a higher margin to make that back.  Just went to the CenturyLink site and looks like they are reselling VzW not even MVNO, so I would be the margins are pretty slim there too.
jabailo 1/29/2015 | 11:36:24 AM
Mobile, Fiber pairing I like the mobile/fiber pairing.  Here in WA State the main fiber provider is CenturyLink, and while they have some reasonable prices, you only get the steep discounts if you bundle in home Internet phone service (at a hefty add on fee).   My question is...why?  Which heavy Internet user doesn't have a mobile phone as their primary phone?
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