Shunzo Yamaguchi is director and general manager, Engineering Division, and president of J:COM Technology in Japan.

Telephony has continued to drive growth at J:COM, with a 22 percent net annual increase in subscribers. What explains your success?

Compared to other basic services, J:COM PHONE has service discounts that allow subscribers to call for much more reasonable prices than for non-J:COM subscribers. The basic fee is 1,330 yen, which is a good deal for Japanese consumers. J:COM has been very successful in this area due to our expertise in bundling—by combining other TV and Internet services, package discounts can be used that lower competitive fees even more, and we have high product take-rates among our subscribers because of our bundling strategy. Reasonable and affordable pricing are important, and combined with the convenience of having one provider offer a stellar bundled package, that leads to customers who are very satisfied with our services.

How has this growth impacted technical operations?

The demand to develop lifeline services has increased our technical operations workload in many ways. In addition to expanding services, we are also diligent in stabilizing and constantly improving the quality of the network to serve all of J:COM’s subscribers. It has been challenging, but we had added staff and infrastructure to keep up with the demand and the high standards that J:COM has in place. Since last year’s VoIP system was brought in to improve the network, we’ve experienced major changes. Though the change from our legacy system to a VoIP system was not the main factor for the growth we’re seeing, it did contribute. Beginning later this year, we are planning to change all the systems to VoIP. J:COM is dedicated to developing the entire network system, which no other company has endeavored to do before.

Could you share any results from the fixed-mobile convergence trial you launched in September?

Though we announced the trial in September, we just started the FMC trial in mid-October. We are still in the process of collecting early results and don’t have much to report at this stage. After all the trials have run their course, we will consider the results carefully before determining if J:COM will take this to a wider, commercial rollout.

Do you have any other telephony-related initiatives in the works?

Though we have many plans (including looking at a multi-channel video service over the mobile platform), we are carefully evaluating the market to decide which to pursue and eventually commercialize. Our first priority is meeting our customers’ expectations. There are many possible technical operations to tackle and directions to go in; however, that doesn’t mean it suits the society and the market that we serve.

How is your work on DOCSIS 3.0 with Motorola progressing? Does demand for greater throughput continue to rise?

In Japan, 100 Mbps high-speed Internet service is popular, and throughput expansion is still an ongoing challenge. By using Arris and Motorola DOCSIS 3.0 channel bonding systems, it is possible to implement 160 Mbps downstream speed. We have been carrying out field trials in J:COM Sapporo and J:COM Tokyo, and we’re aiming to commercialize it by next year.

Have you begun to realize the promise of high-definition? (And how is the JDS relationship going as far as HD content?)

We completed the switchover of the multi-channel image transmission path to the JDS network at the end of 2005. Since then, we’ve launched “Discovery HD” and “FOXLife HD” and also “Movie Plus HD,” which was launched this past August. The HD programs provided via these services can only be enjoyed over cable TV in Japan, since it is difficult to transmit HD from a satellite platform. J:COM can provide HD programs to our customers because we have the right system to transmit images through JDS by HFC to each of our operating systems. In short, we’ve begun to realize the promise of HD, and we look forward to continuing to expand our offerings in this area because it is an excellent competitive advantage that we, as the leading cable provider in Japan, can provide to our customers at very high quality levels.

How else has J:COM differentiated itself from the competition?

One of our most distinct strengths is in how we approach customer sales and service in each local community, literally using a consulting-type approach with sales staff working closely with community members—in their environment, not ours. By putting our priority in the local marketplace, we have an automatic focus on customer satisfaction that others in our space do not have and cannot equal. We have also been very active introducing new services and developing technical models and scalability options as well, which differentiates J:COM even further.

Is fiber-to-the-home beginning to emerge as a threat?

At this moment, there aren’t any advantages that only FTTH could offer. Cable TV networks can provide the same quality with lower costs and better efficiency. Considering the buzz around FTTH, there remain many strong attributes for cable high-speed Internet as a competing, advantageous technology. We are not in this game to lose. Subscriber numbers have been consistently growing at J:COM, so while we are tracking FTTH closely, we do not foresee it as an immediate threat.

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