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Local government broadband policies for areas with limited Internet access

An analysis based on survey data from Japan
Yoshio Arai, Sae Naganuma et Yasukazu Satake
p. 251-274

Résumés

En dépit de leur large diffusion dans les pays développés, les services haut débit sont encore limités dans les zones où leur distribution n’est pas rentable pour les opérateurs télécom privés. Pour suppléer à cela, de nombreuses administrations territoriales au Japon ont mis en œuvre des projets de déploiement subventionnés par le gouvernement national. Nous abordons dans cet article les politiques locales pour le haut débit sur la base de données d’enquête recueillies auprès de municipalités à travers le pays. Avec l’appui de politiques nationales de promotion, les services à haut débit ont rapidement été introduits dans la plupart des collectivités au Japon dans les années 2000. Ces politiques de déploiement ont contribué à réduire le nombre de régions n’ayant pas accès au haut débit. Un modèle d’affaires basé sur un contrat de droit imprescriptible d’utilisation (IRU) entre un opérateur privé et un gouvernement local a été développé au cours des dernières années. Même les autorités locales sans capacité technique pour exploiter le haut débit, peut introduire des services sur le territoire en utilisant le modèle d’affaires IRU.

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This study was funded by Grants-in-Aid for Scientific Research from the Japan Society for the Promotion of Science (No. 21520790 and No. 24320166).

Introduction

1In this paper we will discuss local governments’ broadband access policies in less favoured areas, based on the data collected through the questionnaire survey on broadband access improvement projects in less favoured areas of Japan.

  • 1 The concept of the universal service was established to ensure that communication services were ava (...)

2Limited Internet access in less favoured regions was not apparent when narrowband access using existing telephone networks was common, because “universal telephone services” are practically obligatory for telecom incumbents.1 However, geographical gaps in Internet access increased after broadband services became widely available in developed countries in the 2000s. Unlike basic telephone voice services, the provision of universal broadband services has not yet become obligatory in most countries (Picot and Wernick, 2007); although the availability of broadband services depends on the social and economic conditions of potential users (Graham, 2002), geographical conditions for broadband deployment are often the determining factor in whether or not services are provided.

3As Downes and Greenstein (2007) pointed out, the deployment of broadband networks requires a larger investment than that of “dial-up” services. It is less profitable for telecom carriers to provide broadband services in rural areas, where population density is lower than in urban or suburban areas. The major difficulty in the deployment of broadband services in rural areas has been characterized as the “last mile” problem, which refers to the inefficiency of connections between subscribers and the nearest access points. The conditions for broadband deployment in less favoured regions, such as mountainous areas or small remote islands, are particularly severe because of their small populations.

4The geographical gaps in broadband access, the so-called “geographical digital divide”, have attracted scholars’ attention (Greenstein and Prince, 2007). Studies by Gillett and Lehr (1999) and Gable and Kwan (2000) are early examples of empirical analyses of the nationwide diffusion of broadband services in the U.S. and in all of North America, respectively. Vicente and López (2011) conducted a comparative analysis of the regional digital divide in the 27 countries of the European Union based on a set of information and communication technology (ICT) indicators extracted from Eurostat statistics. As Kellerman (2010; 2012) pointed out, recent development of mobile services has impacted the conditions of broadband accessibility. Although Japan and Korea are leading countries in the adaption of mobile broadband services as well as fixed broadband line services (Kellerman, 2006; 2010; 2012), some geographical gaps can be found. Yuguchi (2008) discussed the regional gaps for mobile services in Japan in conjunction with population distribution.

5In addition, several case studies have been conducted in selected regions. In the U.S., Grubesic and Murray (2002) examined broadband diffusion in Ohio, and Wood (2007) did the same in Pennsylvania. Based on an empirical analysis, Wood (2007) demonstrated that mountainous areas and small remote islands are difficult to reach with broadband services for both technological and economic reasons. In a subsequent study, Wood (2008) found that corporate policies for the deployment of broadband in rural areas differ greatly between types of broadband providers. However, Lorentzon (2010), who examined the availability of broadband in a selected area of Sweden, pointed out that availability is often limited by users’ poor telecom equipment as well as by the profitability for providers.

  • 2 In the latter half of the 2000s, the U.S. government began to stress the role of the government in (...)
  • 3 In contrast to approaches focusing on the institutional aspects of broadband policy, LaRose et al. (...)

6Scholars and policy makers have presented a number of arguments concerning public policies used to address the deepening geographical digital divide in broadband access. Although providing universal broadband service is not obligatory for private telecom incumbents, broadband networks are often considered a public good because of their potential benefits in many countries (Picot and Wernick, 2007). Since the privatization and liberalization of the telecoms industry in most countries in the last decades of the 20th century, the question of how to balance marketplace competition with the public interest in telecom services has frequently been debated (Crandall and Alleman, 2003). The ideal extent of government intervention into broadband deployment has also been discussed. Picot and Wernick (2007) compared the broadband policies of the European Union, Korea and the U.S. They concluded that the Korean government plays the most active role in fostering access to broadband services, whereas U.S. national broadband policy tends toward competition, although a great deal of money is spent on universal services2. They also pointed out that the European Union member states have used diverse measures to facilitate broadband adoption. Cava-Ferreruela and Alabau-Muñoz (2006) divided the political strategies for broadband expansion into three types: soft-intervention strategies, medium-intervention strategies and hard-intervention strategies. Based on an empirical analysis of broadband penetration in 30 OECD countries, they concluded that medium-intervention strategies, which stress that public funding of infrastructure in less favoured regions is suitable for achieving balanced broadband coverage across the whole territory, can be effective3.

7Scholars have recently become interested in the use of public–private partnerships (PPPs) in broadband deployment. Even in countries where the national telecommunications market has been privatized, government money is invested in telecommunications services for various purposes. Falch and Henten (2010) compared government investments for broadband deployment in Australia, Korea, the U.S. and the European Union. They pointed out that recent government investments in broadband have tended to be for infrastructure extension and the promotion of universal services. Nucciarelli and et al. (2010) examined joint public–private activities focusing on local broadband initiatives in several municipal/regional areas in the Netherlands and Italy. They analyzed the involvement of public institutions in broadband deployment, and they stressed that the bundling of risks and long-term contracting between stakeholders is core issue in broadband PPPs.

  • 4 According the classification of broadband policies by Cava-Ferreruela and Alabau-Muñoz (2006), the (...)

8Since 2000, and as in many other developed countries, the Japanese government has actively favoured the complete national diffusion of broadband services. For example, in the “Ubiquitous Japan (u-Japan) Policy Package,” the government set a target of ensuring that the entire population had access to broadband Internet services no later than in 2010 (Ministry of Internal Affairs and Communications, 2008a). Although the Japanese telecom industry has been privatized, the government established manifold promotional programs to achieve this goal.4 Many local governments use the national subsidies, typical of these programs, to implement broadband access.

  • 5 Nucciarelli and et al. (2010) discussed the broadband policies of local governments. However they f (...)

9Local governments are expected to play more significant roles in the deployment of broadband infrastructures in rural areas than in urbanized areas of the countries where the telecom industries have been privatized. Particularly in less favoured areas, where telecom businesses are quite unprofitable due to sparse population, the active involvement of local governments is indispensable. However, few studies focusing local governments’ broadband policies can be found.5 Therefore, we will focus on the involvement of broadband deployment by local governments in less favoured areas.

10We have previously reported on several case studies in certain, selected, less favoured areas in Japan (Arai and Naganuma, 2010). After that report was published, we conducted a questionnaire survey on broadband-access improvement projects by local governments in less favoured regions throughout the country. In this paper, we use data from the survey to analyze local governments’ broadband-access policies.

11In the following sections, first both broadband diffusion in Japan and the outline of the questionnaire survey will be briefly summarized. Second, the conditions of broadband access in the local municipalities in less favoured areas in Japan will be examined, based on the data collected through the questionnaire survey. Third, the relation between the broadband deployment projects by local governments and the Japanese government’s broadband policy will be analyzed, and the effectiveness of the broadband deployment projects will be discussed. Fourth, a new business model in broadband provision, which is called the Indefeasible Right of Use (IRU), will be focused on. Finally, some implications of the experiences of Japan will be briefly discussed.

Background and the survey

Recent diffusion of broadband services in Japan

12By 2010, the number of subscribers to broadband services per 100 inhabitants in Japan had risen to 26.3, up from 23.6 in 2008. This is slightly higher than the average for OECD countries (OECD, 2012).

13The number of fiber-to-the-home (FTTH) broadband service subscribers is increasing and, after a peak in 2006, the number of data-signal-line (DSL) subscribers is decreasing. FTTH subscribers overtook DSL subscribers in 2009. There are relatively few cable-based (data transmission service via cable modem) subscribers, but their numbers are gradually growing (Fig. 1). From a regional perspective, the penetration rate of broadband services in peripheral regions of the country is lower than in core regions. The deepest penetration areas in the country are found in the central parts of the Tokyo and Osaka metropolitan regions (Fig. 2) (Ministry of Internal Affairs and Communications, 2010).

Figure 1. Diffusion of Broadband in Japan (2001-2010)

Figure 1. Diffusion of Broadband in Japan (2001-2010)

Data source: Ministry of Internal Affairs and Communications (2010) et al.

Figure 2. Geographical differences of broadband services

Figure 2. Geographical differences of broadband services

Data sources: Ministry of Internal Affairs and Communications (2010) and Population Census (2010)

The survey

  • 6 For details of the questionnaire survey, see Arai et al. (2012).

14The purpose of the survey was to gather detailed information about broadband access and the broadband deployment policies of local governments in less favored regions. We sent questionnaires to all municipalities (Shi-Cho-Son or cities, towns and villages) in the country, except for the three largest metropolitan regions, Tokyo, Osaka and Nagoya. The designated cities (Seirei Shitei Shi) were also excluded. The questionnaires were mailed in November 2009 and June 2010. Of the 1,326 municipalities targeted, 453 responded by post or email, giving a 34.2% response rate.6

Broadband access in Japan

15In the “u-Japan Policy Package,” the Japanese government called for universal broadband access no later than 2010, as mentioned above. Has this occurred? More than half of the municipalities that responded to our questionnaires indicated that they had provided at least some broadband services throughout their territories. For 71.2% of the municipalities, less than 1% of residents have no broadband access. Overall, therefore, most municipalities in Japan have broadband access to some extent.

16However, more than a quarter of the municipalities report that more than 10% of their residents do not have any broadband service. In 3.1% of the municipalities, less than half of the residents have broadband access.

17A comparison of broadband access by size of municipality shows that access tends to be lower in the smaller municipalities. In 85.5% of municipalities with more than 100,000 residents, less than 1% of the population has no broadband access, whereas only 60% of municipalities with fewer than 5,000 residents can make the same claim. This suggests that the low demand for broadband services in small municipalities hinders the deployment of broadband (Fig. 3).

Figure 3. Percentage of residents with no broadband access by population size of municipality

Figure 3. Percentage of residents with no broadband access by population size of municipality

Significant at 1% level by a chisquare test

Data source: The Questionnaire Survey by the Authors

18The difficulties caused by low demand are evident in the limited broadband access for “scarcely populated municipalities (Kaso Chiiki Shi-cho-son).” A scarcely populated municipality is designated by the Scarcely-Populated Region Act (Kaso Ho) as a municipality with a high rate of population decline. As might be expected, most scarcely populated municipalities are small villages in mountainous areas or on small islands. The percentage of residents with no broadband access in scarcely populated municipalities is significantly higher than in other municipalities. In over 40% of scarcely populated municipalities, more than 10% of residents have no broadband services, whereas the corresponding figure is only 18.8% in other municipalities (Fig. 4).

Figure 4. Broadband access in the scarcely populated municipalities

Figure 4. Broadband access in the scarcely populated municipalities

Significant at 1% level by a chisquare test

Data sources: The Questionnaire Survey by the Authors

19As noted in our previous report, limited broadband access is typically found in mountainous areas (Arai and Naganuma, 2010). The responses to the questionnaire reveal that 80.0% of the areas with no broadband access are mountainous. Scattered settlements along winding roads in mountainous areas need longer communication lines than those in low-lying areas, and the small size of populations in mountainous areas reduces profitability for communications businesses. Islands, where services also tend to be limited, constitute 6.2% of the areas with no broadband access. In the case of islands, technical and economic barriers to making telecom connections to the mainland contribute to the limited broadband access.

20Broadband access differs across broadband platforms too. DSL services are widely diffused in most municipalities. More than 90% of residents can use DSL services in 60.1% of municipalities, and more than three-quarters of residents have FTTH access in 78.8% of municipalities. The percentage of residents with FTTH access varies between municipalities. Because of the high construction cost of FTTH networks, private telecom incumbents are hesitant to expand FTTH services in areas with a scattered population. The halfhearted attitude of private telecom incumbents in this regard limits FTTH access in many municipalities.

21The diffusion pattern of Internet access through cable modem and cable television networks is peculiar compared with those of other broadband platforms. More than half of the municipalities have no cable modem service, whereas in 20.3% of the municipalities, all residents can access cable modem services. As we discuss below, a number of local governments manage the deployment projects for cable TV networks. In these projects, local governments strive for complete cable TV network coverage in their territories. This will make their broadband service coverage complete as well. For this same reason, the partial provision of cable TV services occurs in few municipalities (Fig. 5).

Figure 5. Access conditions by broadband platform

Figure 5. Access conditions by broadband platform

Significant at 1% level by a chisquare test

Data sources: The Questionnaire Survey by the Authors

22The year of introduction also varies between broadband platforms. DSL services were introduced earlier than the other platforms, with the peak occurring in 2003. The introduction of FTTH services lags behind that of other services. The introduction of cable modem services shows a bimodal pattern, with one peak in 2003 and the other in 2009. This peculiar pattern was affected by the evolution of national broadband policies, as discussed below (Fig. 6).

Figure 6. Year of introduction by broadband platform

Figure 6. Year of introduction by broadband platform

Significant at 1% level by a chisquare test

Data sources: The Questionnaire Survey by the Authors

Broadband deployment projects by local governments

The Japanese government’s broadband deployment policy

  • 7 The Japanese government defines telecommunication rates greater than 144 kbps as broadband and rate (...)
  • 8 The Japanese government claimed in 2008 that 98.3% of all households in the country had broadband s (...)

23Since 2000, the Japanese government has had a policy of national broadband diffusion. For example, in the strategy known as the “e-Japan Policy Package,” the government set a goal of providing broadband access to more than 30 million households by 2005, and of bringing high-speed broadband7 services to more than 10 million households in the same timeframe. In the following strategy, called “u-Japan Policy Package,” the government’s goal was extended to provide universal broadband access no later than in 2010 (Ministry of Internal Affairs and Communications, 2008a)8. The Japanese government then established a new program called “Program for the Complete Dissolution of Geographical Digital Divide Areas (Burodobando Zero Chiiki Kaisho Jigyo),” which aims to ensure that no areas are without broadband services. The program seeks to use new broadband technologies in dense mountainous areas and small remote islands. Several high-speed wireless technologies, such as WiMax and satellite connections, are being tested and the government is developing a policy to subsidize the installation of these technologies in relevant areas (Ministry of Internal Affairs and Communications, 2008a).

24With these policies, the Japanese government has established manifold programs to foster the deployment of broadband throughout the country. The principal means for promoting broadband diffusion is national subsidies. The “New Age Cable Television System Deployment Program (Shinsedai Chiiki Keburu Terebi Shisetsu Seibi Jigyo)” and the “Regional Telecommunication Infrastructure Deployment Grants (Chiiki Joho Tsushin Kiban Seibi Sokushin Kofukin)” are examples of such government subsidy programs (Ministry of Internal Affairs and Communications, 2008a).

25The New Age Cable Television System Deployment (New CATV) Program subsidized up to one-third of the total expense of the deployment of digital cable TV systems from fiscal 1994 to 2005. Although this program aimed to promote the deployment of cable TV systems, these networks can also be used for broadband Internet services and Internet protocol (IP) telephone services. As we pointed out previously, the operating incomes from Internet services in fact contribute considerably to the profitability of cable TV businesses (Arai and Naganuma, 2010).

26The Regional Telecommunication Infrastructure Deployment Grants (RTIDG) is a successor to the New CATV Program. RTIDG targets not only digital TV systems but also FTTH networks, DSL facilities, fixed wireless access (FWA) networks and the like. The RTIDG subsidizes up to one-third of the total expense of the deployment of these networks.

27The New CATV Program subsidized nearly 16.7% of the broadband projects carried out by the local governments in our survey, and 36.6% were subsidized by RTIDG. Although the Japanese government has many other subsidy programs, the New CATV Program and the RTIDG are the most widely used subsidies and they have contributed to the rapid expansion of broadband services throughout the country.

28Nearly 43.9% of cable TV networks were deployed under the New CATV Program, from the end of the 1990s to the first half of the 2000s. Cable TV systems supported by the New CATV Program contributed considerably to the early diffusion of broadband in Japan. On the other hand, more than 63.2% of FTTH network projects used the RTIDG. The fact that the number of projects subsidized by the RTIDG has greatly increased in the past few years suggests that the RTIDG program has facilitated the recent expansion of FTTH services described earlier (Fig. 7).

29In contrast to cable TV systems and FTTH networks, these programs have supported few DSL facilities. More than 47.5% of DSL facilities were implemented with subsidies from prefectures or municipalities. Most of these DSL facilities expanded private telecom carriers’ DSL services to scarcely populated areas, where the DSL business is unprofitable. Because relatively little investment is needed to improve DSL services compared with cable TV systems and FTTH networks, many prefectures and municipalities have their own promotion programs.

Figure 7. Year of implementation broadband deployment projects

Figure 7. Year of implementation broadband deployment projects

Significant at 1% level by a chisquare test
RTIDG : The regional Telecommunication Infrastructure Deployment Grants
New CATV : The New Age Cable Television System Deployment Program

Data sources: The Questionnaire Survey by the Authors

The effectiveness of broadband-access deployment projects

30Did the local government projects improve broadband access? The percentage of residents with no broadband access in municipalities that had deployment projects tends to be lower than in municipalities with no projects. This indicates that the deployment projects contributed significantly toward the improvement of broadband access. In municipalities that had deployment projects, 75.3% have non-access rates lower than 1%, versus 65.3% for municipalities without projects. Similarly, only 24.6% of municipalities with deployment projects had a non-access rate greater than 10%, whereas 34.7% of municipalities without projects had non-access rates that high (Fig. 8).

Figure 8. Percentage of residents with no broadband access in municipalities with the broadband deployment projects

Figure 8. Percentage of residents with no broadband access in municipalities with the broadband deployment projects

Significant at 10% level by a chisquare test

Data sources: The Questionnaire Survey by the Authors

31Improvements in broadband access made via government subsidy programs have facilitated Internet-based regional promotion activities. More municipalities with broadband deployment projects saw organizations starting regional promotional websites than municipalities without deployment projects. These promotions provide both retail and tourist information. Agricultural and marine products from agricultural/fishing cooperatives are particularly prosperous. Because many of the municipalities with broadband deployment projects are located in less-favored agriculture- and fishery-oriented regions, Internet retailing of agricultural and marine products has been especially helpful for the regional economies. In addition, the broadband deployment projects triggered the opening of regional SNS services (Fig. 9).

Figure 9. Effects of broadband deployment projects on regional promotion web sites

Figure 9. Effects of broadband deployment projects on regional promotion web sites

Data sources: The Questionnaire Survey by the Authors

Broadband deployment based on the indefeasible right of use (IRU) business model

The IRU business model in broadband services

32The provision of broadband services using IRU contracts has attracted the attention of ICT staff in many municipalities as a new business model for telecommunications in less favored regions. The Japanese government regulates firms without proper telecom facilities via the Telecommunications Business Act (Denki Tsushin Jigyo Ho). The law permits telecom firms without proper facilities to operate based on “Indefeasible Right of Use (IRU)” contracts when the proprietor of a telecom facility and the operator of telecoms services have signed a 10-year (or longer) lease contract (Ministry of Internal Affairs and Communications, 2004). Using IRU contracts, broadband services can be provided even in areas where it would be unprofitable for a stand-alone private telecom carrier. Under the IRU business model, a municipality or a public organization in a less favored region can deploy a broadband network and lease it to a private telecom carrier. In many cases, optical fiber is selected as the communications platform, despite the great expense of deployment.

  • 9 These roles correspond to “layer 1” and “layer 2a” in the research framework of Nucciarelli et al. (...)
  • 10 Nucciarelli et al. (2 010) classified these roles as “maintenance and access (layer 2b)” and “conte (...)

33The IRU business model can be seen as one of a wide variety of PPP business models for broadband deployment. Nucciarelli et al. (2010) classified PPP models into four types: full public control, community-owned wholesale, hybrids with no open network, and managed services models. The characteristics of the IRU business model almost match those of the hybrid model in this classification scheme. In both models, the network (including communications equipment)9 is completely or partly owned by the public entity, and the operation and management of network services10 are handled by one or more private partners chosen in advance. In the hybrid model, public funding is usually accompanied by private funding to share the risk of initial investment. In the IRU model, initial funding is solely public; the private partner need not worry about project financing.

Diffusion of the IRU business model

34Among the broadband deployment projects from 1998 to 2010 reported in the survey, 36.8% used IRU contracts. Before the mid-2000s, national/local government broadband deployment projects were conducted in two main ways. One way involved giving national subsidies to private or semi-private telecom carriers. Many of these telecom carriers also received equity investments from local governments. In the other scenario, a local government operates the telecom business by itself. Although most governmental businesses are cable TV services, they can provide broadband services (in addition to digital television services) using cable modems.

35In the latter half of the 2000s, however, the percentage of projects with IRU contracts grew rapidly. Almost all of the projects in the past two years have used the IRU business model. Obviously, the IRU business model has become the standard for broadband deployment (Fig. 10).

Figure 10. Percentage of broadband deployment projects by business model

Figure 10. Percentage of broadband deployment projects by business model

Data sources: The Questionnaire Survey by the Authors

36Why has the use of IRU contracts increased so much in the past few years? An analysis of the relationship between the geographical conditions of the municipalities and the business model of broadband deployment projects offers some useful suggestions.

  • 11 Governmental carriers can be considered a “full public control model” in the Nucciarelli et al. (20 (...)

37Governmental carriers11 are typical for scarcely populated municipalities, whereas direct subsidies to private carriers are typical in the other municipalities (Fig. 11a). The reason for this difference is clear. The conditions for a broadband business are difficult in scarcely populated municipalities because of the limited demand for broadband services. For a private carrier (and even for semi-private carriers), the telecoms business is often unprofitable in sparsely populated municipalities. The fact that there are fewer projects by subsidized private carriers in smaller municipalities supports this reasoning (Fig. 11b). The characteristics of projects with IRU contracts are nearer to those of a governmental carrier than those of subsidized private carriers. The IRU business model is obviously effective for broadband deployment in less favoured regions.

Figure 11. Relation between the geographical conditions and the business model of broadband deployment projects

Figure 11. Relation between the geographical conditions and the business model of broadband deployment projects

Significant at 1% level by a chisquare test

Data source: The Questionnaire Survey by the Authors

38In the early stages of broadband deployment in less favoured regions, local governments had no option but to start up their own telecom business to improve the broadband access. After the IRU business model was developed, many local governments in less favoured regions were able to deploy broadband networks without their own technical know-how. Because the IRU business model has some natural advantages for broadband deployment regardless of the size or location of a municipality, almost all broadband deployment projects now use the IRU business model.

39For the IRU business model to work, municipalities must find a private carrier willing to sign an IRU contract. In many cases, NTT East-Japan and NTT West-Japan (which are the descendants of the former Nippon Telegraph and Telephone Corporation [NTT], a monopolized telecom incumbent in Japan,) are the carriers in such IRU business deals. The NTTs participate in 69.6% of the projects with IRU contracts. The NTTs have a corporate policy of not investing in broadband networks in less favoured regions, but they will act as operators when the network is deployed using public funding.

Case study

  • 12 For details of this case, see Arai et al. (2012).

40To better understand the characteristics of the NTT’s IRU business policy, we here present a case of optical-fiber network deployment using the IRU business model.12 The town of Ohsaki-Kamishima is on an island in Setonai-Kai, the largest inland sea in Japan, approximately 3 km from the mainland. As of 2010, the town had 8,636 residents living in 4,330 households. During 2002–2005, the town deployed an optical-fiber network covering the entire island. The total cost was 1,590 million Yen (ca. 13 million Euros), and about 80% of the cost was borne by the Japanese government. The network has 37 km of fiber cables, and as of August 2010, 1,064 families subscribed (24.6 subscribers per 100 households).

41At the start of project planning, the town asked NTT West-Japan to participate in the project. However, NTT West-Japan refused because the cost was too high. Generally for islands, a new undersea communications line connecting to the mainland Internet backbone is needed. The cost of submarine fiber cables thus often creates a bottleneck for island network deployment projects. NTT West-Japan was reluctant to invest in expensive submarine cables. Fortunately for the town, Energia Communications Inc., a subsidiary of the Chugoku Electric Power Co. Inc., the monopoly electricity company in the region, agreed to participate in the project. Energia Communications could use the existing over-sea fiber line along the power line from the power plant on the island. Ohsaki-Kamishima and Energia Communications signed a 20-year IRU contract.

42The case of Ohsaki-Kamishima shows the limitations of the IRU business model. When large investments are required beyond what is provided by national subsidies, it becomes difficult to get private telecom operators to participate. The Japanese Government subsidizes the construction of a local network within a municipality to improve broadband access. However, in general no subsidy is provided to deploy a new telecom channel connecting the local network to Internet backbone. A private telecom operator must provide its own connection to the backbone when it joins the IRU contract with a local government in order to participate in the broadband service. It may not be so difficult on land, even in mountainous areas. In many cases of small islands, however, an over-sea connection to the mainland is quite costly and unprofitable for a private telecoms business. The IRU business model cannot overcome this difficulty unless it can get a subsidy to construct a new telecoms channel connecting the backbone access point in the mainland. For this reason NTT West-Japan was compelled to give up the telecoms business in Ohsaki-Kamishima. Energia Communications had an advantage in this respect, because it already owned a private optical network suitable for this purpose. This fact suggests that the IRU business model cannot cover the shortage of public expenditure for the deployment. When the subsidy scheme of national government does not fit the local conditions, the local government can scarcely fill the gaps between the national scheme and the local conditions. Thus, the IRU business model is not a perfect solution for the improvement of broadband services in less favoured regions.

Conclusion

43In this paper, we have used survey data to examine national and local government broadband policies for areas with limited Internet access. The results of the analysis can be summarized as follows.

44Broadband access in Japan spread rapidly in the 2000s, supported by the national government’s promotion policies, such as the “u-Japan Policy Package.” However, there are still areas with no broadband service, especially in regions with small, sparsely populated municipalities.

45National subsidies for broadband deployment projects have played a key role in the improvement of broadband access. The “New Age Cable Television System Deployment Program” in the first half of the 2000s and the “Regional Telecommunication Infrastructure Deployment Grants” at the end of the 2000s are typical of these national subsidy schemes. Local government broadband deployment projects, subsidized by the national government, have helped to reduce the number of areas without broadband services.

46Improvements in broadband access supported by these deployment projects have facilitated Internet-based regional promotional activities in the fields of tourist information and retailing. The effect of broadband deployment on regional promotions is particularly significant in the retailing of agricultural and marine products in less favoured regions.

47The entry of private telecom carriers using IRU contracts has rapidly increased in the past few years, during which time the IRU business model has become the standard for broadband deployment. The IRU business model facilitates broadband access in less favoured regions where private broadband businesses are unprofitable and local governments are unable to operate a broadband business on their own.

48In Japan’s experience, we can find some implications that can be applied generally outside Japan. First, the initiative of the national government is quite effective in promoting the complete penetration of broadband into the country. The Japanese government has been very positive about diffusing broadband throughout the country and been actively involved in broadband deployment policy. The fact that most municipalities have achieved conditions nearing complete broadband access under the Japanese government’s “u-Japan Policy Package” indicates the significance of the national government’s role.

49Second, the collaboration between national and local governments is needed to resolve the “geographical digital divide”. Local governments are indispensable actors for broadband deployment in less favoured areas; however, small local governments in less favoured areas do not have enough financial resources. Even in less favoured areas, active national policy can boost the positive actions of local governments to launch broadband services in their territories. The fact that the subsidy policies of Japanese government caused the booms of local governments’ broadband deployment projects proves the effectiveness of the collaboration between national and local governments.

50Third, the joint schemes between local governments and private telecom firms should be taken into account in the areas where telecom businesses are essentially unprofitable. As shown by Nucciarelli and et al. (2010), various joint public-private activities have been attempted in broadband deployment. Close partnership is considerably useful in less favoured areas because small local governments have less ability to construct/operate information networks. Numerous recent broadband projects using the IRU business model in Japan are successful examples of broadband joint provisions.

51The results of this study show some further research targets. First, the case study of the deployment project with IRU contracts between the local government and the private telecom company suggests the limitation of the IRU business model. The difficulty in constructing the over-sea connection between the local network on a small island and the Internet backbone on the mainland remains under the IRU business model. Despite the difficulty of the over-sea connection, broadband networks have been deployed in almost all Japan’s inhabited islands in the latter half of the 2000s. Detailed investigations into these deployment projects will provide some useful lessons for completing the provision of universal broadband services not only in Japan but also in many other countries of the world.

52Second, the government’s policy of bridging the geographical digital divide is entering its final stage in Japan. Improved broadband access is expected to help vitalize social and economic activities in less favoured regions. However, there are a number of challenges to fully realizing the Internet’s potential. Some of these challenges are due to the social structure in less favoured regions. For example, population ageing is a severe social challenge in less favoured regions. The difference in Internet adaptation between young people and the elderly may expand the social divide in the region. On the other hand, new services utilizing the Internet may improve the way of life of the elderly in rural areas; E-commerce may be a good example in this respect. Of course, it takes a long time for a society to adapt to new technologies; continuous research into social adaptation to the Internet following broadband deployment will be needed.

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Bibliographie

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Notes

1 The concept of the universal service was established to ensure that communication services were available to all people even “in rural, insular and high cost areas, by ensuring that rates remain affordable” (Kruger and Gilroy, 2011: 13) in the early period of telephone services. In the U.S., where telephone services were introduced earlier than anywhere else, the concept was introduced via the Communications Act of 1934.

2 In the latter half of the 2000s, the U.S. government began to stress the role of the government in the deployment of broadband in rural areas. The Rural Utilities Service (RUS) of the U.S. Department of Agriculture, which was established by the Roosevelt Administration in 1935 to provide credit assistance for the development of rural electric systems, implemented programs to assist broadband deployment in rural areas (e.g., the Rural Broadband Access Loan and Loan Guarantee Program and Community Connect Broadband Grants). The 2009 American Recovery and Reinvestment Act (ARRA) provides $2.5 billion in grants and loans through RUS broadband programs. The ARRA specifies that at least 75% of the area served by these programs must be in rural areas without sufficient broadband access (Kruger and Gilroy, 2011).

3 In contrast to approaches focusing on the institutional aspects of broadband policy, LaRose et al. (2007) used social cognitive theory to conduct an empirical analysis that stressed the importance of cognitive aspects of broadband use in rural areas.

4 According the classification of broadband policies by Cava-Ferreruela and Alabau-Muñoz (2006), the Japanese government’s broadband policy is a medium-intervention strategy.

5 Nucciarelli and et al. (2010) discussed the broadband policies of local governments. However they focused on cities in European countries.

6 For details of the questionnaire survey, see Arai et al. (2012).

7 The Japanese government defines telecommunication rates greater than 144 kbps as broadband and rates over 30 Mbps as high-speed broadband.

8 The Japanese government claimed in 2008 that 98.3% of all households in the country had broadband services, and 86.5% had access to high-speed broadband, mainly using FTTH (Ministry of Internal Affairs and Communications, 2008b).

9 These roles correspond to “layer 1” and “layer 2a” in the research framework of Nucciarelli et al. (2010).

10 Nucciarelli et al. (2 010) classified these roles as “maintenance and access (layer 2b)” and “content and services (layer 3)”.

11 Governmental carriers can be considered a “full public control model” in the Nucciarelli et al. (2010) categorization scheme.

12 For details of this case, see Arai et al. (2012).

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Table des illustrations

Titre Figure 1. Diffusion of Broadband in Japan (2001-2010)
Crédits Data source: Ministry of Internal Affairs and Communications (2010) et al.
URL http://netcom.revues.org/docannexe/image/1091/img-1.jpg
Fichier image/jpeg, 152k
Titre Figure 2. Geographical differences of broadband services
Crédits Data sources: Ministry of Internal Affairs and Communications (2010) and Population Census (2010)
URL http://netcom.revues.org/docannexe/image/1091/img-2.jpg
Fichier image/jpeg, 172k
Titre Figure 3. Percentage of residents with no broadband access by population size of municipality
Légende Significant at 1% level by a chisquare test
Crédits Data source: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-3.jpg
Fichier image/jpeg, 164k
Titre Figure 4. Broadband access in the scarcely populated municipalities
Légende Significant at 1% level by a chisquare test
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-4.jpg
Fichier image/jpeg, 164k
Titre Figure 5. Access conditions by broadband platform
Légende Significant at 1% level by a chisquare test
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-5.jpg
Fichier image/jpeg, 172k
Titre Figure 6. Year of introduction by broadband platform
Légende Significant at 1% level by a chisquare test
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-6.jpg
Fichier image/jpeg, 168k
Titre Figure 7. Year of implementation broadband deployment projects
Légende Significant at 1% level by a chisquare testRTIDG : The regional Telecommunication Infrastructure Deployment GrantsNew CATV : The New Age Cable Television System Deployment Program
URL http://netcom.revues.org/docannexe/image/1091/img-7.jpg
Fichier image/jpeg, 148k
Titre Figure 8. Percentage of residents with no broadband access in municipalities with the broadband deployment projects
Légende Significant at 10% level by a chisquare test
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-8.jpg
Fichier image/jpeg, 92k
Titre Figure 9. Effects of broadband deployment projects on regional promotion web sites
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-9.jpg
Fichier image/jpeg, 252k
Titre Figure 10. Percentage of broadband deployment projects by business model
Crédits Data sources: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-10.jpg
Fichier image/jpeg, 240k
Titre Figure 11. Relation between the geographical conditions and the business model of broadband deployment projects
Légende Significant at 1% level by a chisquare test
Crédits Data source: The Questionnaire Survey by the Authors
URL http://netcom.revues.org/docannexe/image/1091/img-11.jpg
Fichier image/jpeg, 243k
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Pour citer cet article

Référence papier

Yoshio Arai, Sae Naganuma et Yasukazu Satake, « Local government broadband policies for areas with limited Internet access », Netcom, 26-3/4 | 2012, 251-274.

Référence électronique

Yoshio Arai, Sae Naganuma et Yasukazu Satake, « Local government broadband policies for areas with limited Internet access », Netcom [En ligne], 26-3/4 | 2012, mis en ligne le 12 mars 2014, consulté le 26 juin 2017. URL : http://netcom.revues.org/1091 ; DOI : 10.4000/netcom.1091

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Auteurs

Yoshio Arai

Prof. Yoshio Arai, Department of Human Geography, School of Arts and Sciences, the University of Tokyo, 3-8-1, Komaba, Meguro-ku, Tokyo, 153-8902, Japan. E-mail: yarai@humgeo.c.u-tokyo.ac.jp

Articles du même auteur

Sae Naganuma

Dr. Sae Naganuma, Postdoctoral Fellow, Department of Human Geography, School of Arts and Sciences, the University of Tokyo, E-mail: naganuma@humgeo.c.u-tokyo.ac.jp

Articles du même auteur

Yasukazu Satake

Yasukazu Satake, Graduate Student, Department of Human Geography, School of Arts and Sciences, the University of Tokyo, E-mail: satake@humgeo.c.u-tokyo.ac.jp

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