NTT cuts FTTH Prices: LTE Competition to Blame

Japan's NTT is finding consumers are shifting demand from fixed networks to Long Term Evolution mobile networks, which is a real world test of whether LTE 4G networks really can compete with fixed network high speed Internet access.  

As  a result, NTT has cut fixed network broadband access prices by 34 percent, from JPY5,460 (USD67) to JPY3,600, TeleGeography says. 

So there is now serious evidence that Long Term Evolution is viewed as a suitable replacement for fixed network service, with the greatest danger emerging where you would expect, with younger users. .

NTT East and NTT West’s "fiber to the home" subscriber growth has significantly slowed down.

National FTTH household penetration was about 46 percent in the second quarter of 2012.

Net subscriber additions for the year ending June 2012 falling to 1.2 million, down from 1.7 million in the year to end-June 2011 and from two million in the year to June 2010.

Executives at NTT East and NTT West say the biggest, single reason for the slowdown in FTTH subscriber growth is the fact that many young subscribers now prefer to have their own personal LTE-based high speed broadband service, rather than paying for a FTTH service. 

That also seems especially true when those customers have to pay for a mobile broadband connection anyhow. Some might question the long-term viability of that approach, if users start to watch lots of longer form streaming video. 

As usual, consumers are rational. Users in Japan who have abandoned fiber to the home seem to be watching short form video, but avoiding streaming or downloading long form video that would put pressure on their mobile data plans. 

Once again, we see that consumers are smart, and will alter their behavior and spending plans to gain the optimal value from the range of services available to them, deliberately choosing not to watch long form streaming video if it means saving money. 

Although there were only nine million LTE subscribers worldwide in late 2011 compared to 220 million FTTx subscribers (88 million for FTTH/B and VDSL alone), momentum is rapidly growing in favor of mobile, according to IDATE. 

In 2016, IDATE predicts that the number of LTE subscribers will exceed 900 million, compared to nearly 230 million for fixed ultrafast-broadband (FTTH/B and VDSL).