NTT has partnered with SKY Perfect communications to create a new company called OptiCast (.pdf link) that will focus on delivering Video over the fiber NTT is rapidly installing throughout Japan. OptiCast will be a joint venture between NTT East/NTT West and SKY Perfect, a CATV company with about 4MM subscribers.
The public objective is to drive demand for FTTH deployment, though things are going so well there it isn’t clear why that needs a big catalyst. You read it here first that NTT FTTH subscriber additions were outstripping DSL additions. It’s also a good way for NTT to squeeze more revenue out of their existing infrastructure. Unlike Verizon or SBC who are building a parallel broadcast video infrastructure not radically different than the incumbent cable companies, NTT has partnered with a cable company. Our suspicion is that there is not overlap between SKY’s existing subscriber base and the NTT FTTH deployment, and this is a way for SKY to get access to some more subscriber infrastructure. NTT gets to offer 20th century broadcast cable service while full-blown IPTV takes shape. It would be a lot like Verizon partnering with Cablevision or Comcast in Time Warner’s turf.
We learned earlier that NTT was taking a different technical approach than Verizon for deploying Video. Like Verizon, NTT is using two separate wavelengths to carry video and data, except it plans to have two separate ONUs at the customer premises to handle the two services. We are not deeply familiar with Japanese telecom regulations, we assume this is because NTT is discouraged/prevented from offering video services- so they create an optical port for a third party to use. OptiCast provides the Video ONU and head end and NTT receives high margin incremental revenue and stays out of the video business. Best of all, NTT could theoretically partner with other cable companies and the consumer could select whose video ONU to use. The long term view at NTT is new services and content models including IPTV will eventually full up the broadband connection but this is a clever technical and regulatory hack to clear the ‘triple-play’ bar.
This is also creating a rather lucrative market for triplexers, optical receivers, etc as new Video ONU boxes get built.
We really like this approach- it is in-line with the ‘cheap is beautiful’ approach of GE-PON. It allows the per unit cost of data-only ONU’s to be cheaper and gives subscribers that want video flexibility. Triplexers, the most expensive component in an ONU, are only deployed where needed. It would not surprise us to see the same model deployed in other countries, particularly China.
Anyone know of a good source of regulatory information on Asian PTT’s? I’d like to learn more about how regulation will impact what these carriers can do.