Internet Service over Power Lines in Japan: Costs and Policy Implications by Atsumasa Sakai Bachelor of Engineering, Electrical

Engineering University of Tokyo, Japan, 1993 Master of Engineering, Electronic Engineering University of Tokyo, Japan, 1995 Submitted to the Engineering Systems Division in Partial Fulfillment of the Requirements for the Degree of Master of Science in Technology and Policy at the Massachusetts Institute of Technology June 2003 2003 Massachusetts Institute of Technology All rights reserved.

Signature of Author. Technology and Policy Program, Engineering Systems Division May 19, 2003

Certified by. Sharon Eisner Gillett Research Associate, Center for Technology, Policy and Industrial Development Thesis Supervisor

Certified by. Dr. Chathan M. Cooke Principal Research Engineer, Laboratory for Electromagnetic and Electronic Systems Thesis Reader

Accepted by Daniel Hastings Professor of Aeronautics and Astronautics and Engineering Systems Director, Technology and Policy Program Chairman, Committee for Graduate Students

Internet Service over Power Lines in Japan: Costs and Policy Implications by Atsumasa Sakai Submitted to the Engineering Systems Division on May 19, 2003 in Partial Fulfillment of the Requirements for the Degree of Master of Science in Technology and Policy ABSTRACT Thanks to high demand for broad band Internet service at a lower charge in Japan, it is expected that Internet service over power lines (IPL) will be launched in the near future. The problem, however, is whether the Japanese government should regulate IPL because of its potential antitrust issue. First, because of their stable financial base, electrical power companies might be able to offer bundled IPL service at a small charge to their electrical customers. Secondly, since an electrical power company has a so-called last one mile medium, a power line, which connects with every customers in its area, it might be possible for an electrical power company to capture most of the market share in the broad band Internet access service. The first part of this thesis analyzes the question of whether electric power suppliers have a cost advantage over the other broadband Internet data access providers such as telephone companies and cable television companies in providing the IPL service. After the analysis of the cost advantage, the thesis analyzes the potential antitrust issue of electrical power companies. First half of this part analyzes electric power company's steps to be a potential monopoly in the broadband Internet industry. Second half analyzes the same issue but in electrical power industry. IPL service bundled with power supply service might also result in unfair competition in the deregulated electric power industry because the incumbent utility company could use lowvoltage power line network, which entrants do not have. The results show that IPL would not have a cost advantage over the other broadband Internet services under the current situation in Japan. The sensitivity analyses advise how IPL can be more cost-effective in the future. Based on the findings, the policy chapter recommends that the Japanese government should not impose strict regulation on power companies with the IPL service, including unbundling network equipment policy (UNE-P). Thesis Supervisor: Sharon E. Gillett Title: Research Associate, Center for Technology, Policy and Industrial Development

Acknowledgments
First and foremost, I would like to express my profound gratitude to Tokyo Electric Power Company Inc. (TEPCO) for granting me support to pursue my graduate studies at Massachusetts Institute of Technology. The support has given me opportunities to be exposed to higher education abroad, to work on a project I am interested in, and to prepare myself to better serve my company and society.

There are three people whom I would like to acknowledge individually. First, I am deeply grateful to Professor Gillett, my thesis supervisor, for her much-appreciated encouragement, and careful and wise guidance of my study. This thesis could not have been completed without her plentiful advice and insightful comments, which have enriched my thesis. Secondly, I would like to offer my sincere thanks to Dr. Cooke, my thesis reader, for his insightful and critical comments and suggestions on the technical aspects. Third, I owe a great deal to Mr. Abe of TEPCO, whose advice has helped my study substantially.

I would like to thank all the staffs and my friends in Technology and Policy Program, specifically those who shared joy in intramural sports games as well as hard times in and out of the class room with a myriad of projects during these precious two years.

Last, but never least, I thank my wife, Kaoru, for everything, specifically sharing this exciting time here in Boston.

Atsumasa Sakai May 19, 2003

to my wife, Kaoru, and my parents

Table of Contents Table of Contents List of Figures List of Tables Chapter 1. Introduction
1.1. Motivation for the study 1.2. IPL industry 1.2.1. The history and current situation of IPL 1.2.2. The map of IPL industry 1.3. Perspective 1.3.1. Engineering cost models 1.3.2. IPL technology 1.3.3. Unbundled network elements (UNE) policy 1.3.4. IPL industry research 1.4. This thesis

7 10 12 13
14 14 14 16 17 17 18 18 19 20

Chapter 2. IPL Technology

2.1. Electrical power distribution networks 2.1.1. Topology of existing systems 2.2. Internet access over power lines (IPL) 2.2.1. Outline of IPL technology 2.2.2. Transmission of digital data: physical layer 2.2.3. MAC technology for IPL: data link layer 2.3. Network architectures 2.3.1. Fiber & low- voltage (LV) line network architecture 2.3.2. Medium- voltage (MV) & LV line network architecture (pure IPL network) 2.3.3. MV& wireless network architecture 2.3.4 Fiber to the Home (FTTH) 2.4. Implications of IPL plant evolution 2.4.1. Subscriber equipment 2.5. Evaluation of IPL LAN as Internet access network 2.5.1. Speed 2.5.2. Full- time connections 2.5.3. Security and network integrity 2.5.4. Availability 2.6. Market Overview 2.6.1. The perspective of future price 2.6.2. The emergence of FTTH 2.6.3. The market window for IPL in Japan 2.7. Technical Issues 2.7.1. Emission of electromagnetic waves

21
21 21 23 23 25 27 28 29 31 32 33 34 34 36 36 36 36 36 37 39 41 41 42 42

2.7.2. Standardization 2.7.3. Noise 2.7.4. Bypassing a transformer

44 45 45

Chapter 3. Cost Model

3.1. Basic idea of the model 3.2. Assumptions 3.2.1. Business model: wholesaler of access networks 3.2.2. Network architecture and facilities 3.2.3. Type of customers and networks 3.2.4. LAN size 3.3. Input cost elements: technology reference model 3.3.1. Costs shared by customers per cell 3.3.2. Costs shared by customers per LAN 3.3.3. Cost paid by one customer 3.4. Output cost elements

46
46 47 47 48 49 50 51 53 55 59 61

Chapter 4. Results
4.1. Result variables 4.2. Initial results 4.2.1. Cost per home passed 4.2.2. Cost per subscriber 4.2.3. Other findings: Cost structure 4.3. Reality in Japan 4.3.1. Definition of N (number of homes passed per LAN) 4.3.2. The cost per home passed with Japanese reality 4.3.3. The cost per subscriber with Japanese reality 4.3.4. Sensitivity analysis: Market window for IPL 4.4. Profitability of IPL 4.4.1. Modem sale 4.4.2. The number of homes passed per LAN 4.4.3. The reduction of the equipment cost per LAN 4.5. Conclusion

62
62 62 62 64 66 67 69 69 71 72 73 73 74 76 76

Chapter 5. Policy Implications

5.1. Japanese antitrust policy 5.1.1. The antitrust policy in telecommunications market 5.1.2. The antitrust policy in the electricity market 5.2. Antitrust issues in IPL 5.2.1. Broadband Internet market 5.2.2. Electricity market 5.3. Other policy issues 5.3.1. Asset allocation 5.3.2. Rights of way (pole and conduit) 5.3.3. Interference with radio waves

77
77 78 82 84 84 85 86 86 88 89

5.3.4. Use of customer information obtained by an electricity business 5.4. Policy recommendations

91 92

Chapter 6. Conclusions
6.1. Summary of key findings 6.1.1. Key findings from the cost analyses 6.1.2. Key findings from the policy analyses 6.2. Suggestions for further research 6.3. Policy recommendations

93
93 93 94 96 96

Endnotes Bibliographies

98 99

List of figures
Fig. 2.1.1. Outline of electrical power network Fig. 2.1.2. Outline of distribution network (overhead) Fig. 2.1.3. Logical bus architecture of LV network Fig. 2.2.1. Communications over power lines Fig. 2.2.2. Sample IPL spectrum map on an electrical wire Fig. 2.2.3. Internet over power lines Fig. 2.2.4. OFDM spectrum Fig. 2.3.1. Interoffice transmission network Fig. 2.3.2. IPL LAN Fig. 2.3.3. The image of Fiber and LV line network architecture Fig. 2.3.4. The image of MV&LV lines network architecture Fig. 2.3.5. The image of MV & wireless network architecture Fig. 2.3.6. The image of FTTH network architecture Fig. 2.6.1. The penetration of Broadband Access Fig. 2.6.2. The price of ADSL Fig. 2.6.3. The prediction of ADSL price Fig. 2.6.4. The price of FTTH in Japan Fig. 2.7.1. The differentiation mode and the common mode Fig. 2.7.2. Dipole and Monopole Fig. 3.1.1. The image of the cost model Fig. 3.2.1. The coverage of the model Fig. 3.3.1. The image of Fiber and LV lines network architecture Fig. 3.3.2. The image of equipment at a substation Fig. 3.3.3. The image of equipment at a pole Fig. 4.2.1. Monthly IPL cost per home passed per LAN (modem rental) Fig. 4.2.2. Monthly IPL cost per subscriber per LAN (modem rental) Fig. 4.2.3. Monthly IPL cost per subscriber per LAN with various numbers of homes passed per LAN(modem rental) Fig. 4.2.4. The necessary number of homes per LAN (modem rental) Fig. 4.2.5. The cost structure of total cost 10

Fig. 4.3.1. The current market size for IPL in Japan Fig. 4.3.2. The market window for IPL in Japan Fig. 4.3.3. Monthly IPL cost per home passed with Japanese reality (modem rental) Fig. 4.3.4. Monthly IPL cost per subscriber with Japanese reality (modem rental) Fig. 4.3.5. Monthly IPL cost per subscriber with various market windows in Japan (modem rental) Fig. 4.4.1. Monthly IPL cost per home passed per LAN with Japanese reality (modem sale) Fig. 4.4.2. Monthly IPL cost per subscriber per LAN with Japanese reality (modem rental) Fig. 4.4.3. The necessary number of homes per LAN with Japanese reality (modem rental) Fig. 5.1.1. The relationship between MPHPT and JFTC Fig. 5.1.2. The organizations in charge of the telecommunications policy Fig. 5.1.3. The organizations in charge of the electricity policy Fig. 5.1.4. The difference between the two cases Fig. 5.3.1. The spectrum map ranging from 1 to 30 MHz in Japan

11

List of tables
Table 2.1.1. Protocol layers of Internet access over power lines Table 2.3.1. The summary of the network architectures Table 2.5.1. The comparison of broadband access technology in Japan Table 2.6.1. The number of subscribers of broadband Internet in Japan Table 3.2.1. Japanese power companies business model of FTTH Table 3.2.2. The number of customers Table 3.3.1. The cost shared by customers per cell Table 3.3.2. The cost shared by customers per LAN: onetime cost Table 3.3.3. The cost shared by customers per LAN: ongoing cost Table 3.3.4. The cost paid by one customer Table 4.3.1. The retail prices of other broadband Internet methods

12

Introduction

21

Chapter 1. Introduction
The Japanese government stated in its e-Japan project in the summer of 2001 that the Internet service over power lines (IPL) was one of the promised access methods to promote the broadband Internet in Japan. The problem, however, is whether the Japanese government should regulate IPL strictly because of its potential antitrust issue. Power companies could offer the low-priced Internet service because of the economy of, scope utilizing power lines. This fact is advantageous to power companies, considering tha t the Japanese giant telephone company, Nippon Telegraph and Telephone Corporation (NTT), is regulated by the unbundled network elements (UNE) policy. A simple view might conclude that the power companies should also be regulated by the UNE policy. Meanwhile, the Japanese retail power market has been liberalized partially since March 2000, aiming that the competition would result in the price decrease of the electricity service, which was relatively more expensive than those of other countries. The problem, however, is whether the IPL service by the incumbent power companies might hinder this progress. The electricity customers would be happy to stay intact if they are offered the bundled IPL service with the electricity service, specifically at a discounted rate. Because the electricity entrants have no way to offer the IPL services, such a bundled service would be regarded as an anticompetitive tactics. The Japanese government analyzes the potential antitrust issues using the degree of influence to society to measure such market power described above. The weakness of the measurement is that the degree of influence to society does not show the quantitative analysis. Therefore, this thesis proposes to use the engineering cost model, which complements the degree of influence to society measurement. This thesis investigates the hypothesis that the power companies distribution network enables them to provide more cost-effective Internet access than the other existing broadband Internet access technologies such as ADSL and cable modem Internet. To derive conclusions, I used the engineering cost model methodology for the analysis of IPL costs. Because IPL technology is still in its early stages and there are few market available products, I estimated the costs by assuming three scenarios: best, worst and intermediate. As for the business model, I assumed that power companies would directly serve as wholesalers of Introduction 13

access networks to the Internet service providers (ISPs), as many ADSL access providers do. Observing the business model, which Japanese power companies apply to their Fiber to the Home (FTTH) service, I found that two companies offered the service by themselves and three companies did through their affiliates. Considering the efficient maintenance of electrical wires, however, I assumed that power companies would operate the IPL network directly. Finally, I tested variations in the input parameter values as sensitivity analyses of the model. The results show different conclusions from the hypothesis. IPL would not be as costeffective as existing broadband access methods under the assumption I made. The cost structure of IPL also gives insight into what follows naturally from the technology. For example, the results show that the cost of devices per low-voltage (LV) distribution network occupies the significant component of the cost per subscriber. If IPL technology could expand the number of subscribers under one LV network in future, it would be more cost effective. The rest of this chapter discusses the hypothesis stated above in more detail. It concludes providing a framework for the rest of the document.

1.1. Motivation for the study According to the Telecommunications Council (TC), the degree of influence to society is one of the most significant criteria to determine whether to regulate or not (76, 77). The weakness, however, is that there has not been quantitative measure to show the degree of influence to society. To make it worse, the estimate of the entrants market power in the broadband market is even tougher for the Japanese government than the estimate in the telephone market, where only Nippon Telegraph and Telephone Corporation (NTT) had a dominant market power. Under the current situation in Japan, I believe that this thesis quantitative approach to measure the market power of the entrants will help the regulator to implement more effective policies. Specifically, because it is uncertain how dominant a market power would IPL have in the broadband Internet market in Japan, I believe that the cost comparison would give the clear chart to measure the market power of power companies.

1.2. IPL industry 1.2.1. The history and current situation of IPL

14

Chapter One

The history of IPL has not been without difficulties. In Japan, IPL was regarded as one of the promised access methods of broadband Internet in e-Japan project in the summer of 2001 (IT Strategy Headquarters Part II. Ch.1. sec.4.). The eJapan project is the government project, whose goal is to make Japan the top IT nation within 5 years since 2001. The implementation of IPL, however, was postponed in the summer of 2002 because the government research found that IPL might emit unintended radio waves which bother existing broadcast service and amateur radio. In other countries, there have been several technical and regulatory obstacles which make the commercial IPL service difficult.

99 Nor.Web, a venture between Nortel of Canada and United Utilities of Great Britain, discontinued its IPL service in Great Britain (*1). 02 Sept. RWE AG, a German utility, discontinued its one year commercial IPL service with Ascom, a Switss vendor, in Germany (*2). (Sources: *1: Libby; *2: F.A.Z.-Institut) According to the Yankee Group, while the reasons of Nor.Webs decision are not clear, the followings might be the reasons: the emission issue, the expensive cost of the devices, fast deployment of other broadband access such as ADSL and cable modem Internet, and the management decision to redirect their focus (Libby 9). Despite these terminations, several companies have started the commercial IPL service.

01 July VYPE, a joint venture between a municipal power company, MVV (Mannheim VerkehrsVerein), and a vendor, Power Plus Communications, launched the commercial IPL service in Germany (*3). 02 Dec. Hutchison Global Communications (HGC) started the commercial IPL service in Hong Kong (*4). 03 Feb. Scottish Hydro-Electric launched the trial IPL service in Scotland (*5). (Sources:*3: Power Plus Communications; *4: Kwok; *5: Minto) The unique challenge of IPL in Japan is that the number of homes covered by a distribution transformer is small, around 10 to 20, while that of Europe is up to around 350 (Libby 10). This difference is derived from the voltage which a country uses. While Japan or

Introduction

15

other countries, including the U.S, use 100/120V to 120/240 V distribution networks, European countries use 220/380 to 240/415 V. In fact, commercial IPL services have been done only nations which use 220 to 240 V systems, as seen above. This fact leads to the higher cost per subscriber in Japan than that in Europe, and this is the main reason why the IPL activity has been more popular in Europe than in Japan.

1.2.2. The map of IPL industry There are several IPL organizations in the world. The key players are as follows: PLC Forum (Power Line Communications Forum): PLC Forum was founded in March 2000. The members of this organization are from worldwide. <http://www.plcforum.org/> UPLC (the United Power Line Council): UPLC was founded in late 2001 in the U.S. The main members are vendors. <http://www.uplc.utc.org/> PLCA (the Power Line Communications Association): PLCA was founded in December 2001 in the U.S. The main members are utilities. <http://www.plca.net/>

These three organizations cooperate together. Several Japanese power companies participate in one or two of these organizations, though there is no organization like them in Japan. The related organizations are shown below. The Columbia Institute for Tele-Information (CITI): a telecommunications research center at Columbia University. CITI has been monitoring the development of Power Line Communication (PLC) [] for more than a year. (CITI). http://www.citi.columbia.edu/ HomePlug Powerline Alliance (HPA): although they aim at the home networking using electrical wires, their basic technology is the same as those used by some IPL vendors. HPA was founded in April 2000. <http://www.homeplug.org/ > Echonet: this Japanese organization aims at the home networking using electrical wires as well as wireless technology, founded in 1997. 16 Chapter One

<http://www.echonet.gr.jp/index.htm> CISPR: The International Special Committee on Radio Interference (CISPR) was established in 1934 by a group of international organizations to address radio interference. CISPR is a non- governmental group composed of National Committees of the International Electrotechnical Commission (IEC), as well as numerous international organizations. Many national spectrum regulators are represented (Office of Spectrum Management, 1). <http://www.iec.ch/cgibin/procgi.pl/www/iecwww.p?wwwlang=E&wwwprog=dirdet.p& committee=SC&number=cispr> IEEE Power Engineering Society Power System Communications Committee (PSCC): Power Line Carrier Subcommittee (SC-3) is in charge of power line communications. <http://www.ewh.ieee.org/soc/pes/pscc/> As described, the emission issue is one of the challenges of IPL implementation. Because regulations on frequency differ among nations, the IPL industry has tried to establish a unified international standard, which would result in IPL cost decrease in the long run.

1.3. Perspective The main purpose of this study is to analyze the potential antitrust issues of implementing IPL in Japan quantitatively. The results could lead to strict regulations like unbundling distribution power network elements to telecommunications carriers. Many previous studies deal with the open access policies about cable networks in the U.S. Although their arguments focus only on cable networks in the U.S., there are several similarities between their arguments and the IPL argument. This study tries to argue the UNE policy over power networks combining the arguments about these cable networks with Japanese power networks uniqueness. The rest of this section introduces previous studies related to this thesis.

1.3.1. Engineering cost models This thesis analyzes the cost of connecting homes to the Internet through electricity infrastructure and discusses the technology and policy issues involved. It uses the engineering cost model methodology, which was used in (Reed, 1993), (Reed, 1992), (Johnson and Reed,

Introduction

17

1990), (Sirbu, Reed and Ferrante, 1989), (Gillett, 1995), and (Fryxell, Sirbu and Wanichkorn, 1999). The first four works deal with the question of integration: are there economies of scope or scale for either cable or telephone companies to provide multiple services over a single Integrated Broadband Network? (Reed, 1992). The fifth work answers the specific question of which is more cost-effective, the Internet over telephone networks or the Internet over cable networks (Gillett, 1995). This thesis adds one more element to this question: which is more costeffective, the Internet over power lines (IPL) or the existing other methods. For this analysis, first, the thesis takes existing infrastructure costs as given, except for capital investments specifically needed to support the Internet access application. Second, the cost models developed in this thesis use 2002 cost data gathered mainly from the Internet websites. Third, the thesis considers only access providers capital costs. Pricing is not discussed.

1.3.2. IPL technology There are many academic papers dealing with the technology of power line communications (PLC). Their purposes vary from the power companies internal use like the automated-meter-reading (Ramseier, Arzberger, and Hause) to the home- networking (Matsumoto), and the broadband Internet access (Sanderson, 2000). Dosterts Powerline Communicatins refers not only to technical aspects but also to regulatory aspects (Dostert). As for the transformer bypass issue, one of the IPLs technical challenges, Sanderson suggests one solution in his U.S. Patent (Sanderson, 1999). This thesis refers to literature like those above for the IPL technology.

1.3.3. Unbundled network elements (UNE) policy Many studies on this topic examine cable modem Internets open policy issues, and the opinions vary. Hazlett objects to the UNE policy. He proposes that vertical integration of the Internet service providers (ISPs) by not only cable companies but also telephone companies would bring benefits like the improvement of information quality (Hazlett). Meanwhile, Lemley and Lessig strongly support the open access policy. They warn that such vertical controls would slow the future innovation, and that the asymmetric regulation brings about confusion. In fact, regarding the cable modem service as Information service confused power companies, 18 Chapter One

resulting in power companies attempts to charge different rates of pole attachment fees on the cables which are labeled as Information service use (APPA, 5). Among those, Noll proposes an analytical framework to examine this issue quantitatively (Noll 42). He calculates the benefits and costs of imposing the open access policy on cable companies using the framework. This thesis applies these previous ideas to the IPL case, and discusses the costs and the benefits of the UNE policy over IPL.

1.3.4. IPL industry research In the summer of 2002, the Japanese government announced that they would postpone the IPL implementation in Japan, based on their research result (MPHPT, 9 Aug. 2002). Their research team examined field tests to see the effect when the government expands the spectrum bandwidth of PLC to higher ranges than now. Because the result showed that the expansion of PLC spectrum bandwidth would disturb existing wireless services, the government reached the conclusion above. In the U.S., UPLC researches on the IPL implementation in the U.S. Its reports deal with the overview of PLC development, the technical issues, and the regulatory issues (Gray). CITI has had a semi-annual conference, organizing the U.S. PLC industry, since 2002. The Federal Communications Commission (FCC) recently announced that it would collect information and comments regarding IPL implementation from public (FCC). In Europe, EnerSearch AB, an industrial research and development consortium, reported about the IPL implementation in Europe in their Powerline as an Alternative Local AccesS (PALAS) project, a two-year project from January 2000 to December 2001 (EnerSearch AB). The project examines more details of the commercial IPL implementation, such as the simulation of IPL technology and the deployment tactics. Their reports showed the possibility as well as the challenges of the IPL commercialization in Europe. These studies, however, have not examined or publicized actual cost analyses of IPL. This thesis contributes to these studies by showing the actual cost analyses and suggesting some policy recommendations.

Introduction

19

As can be seen above, no study provides any quantitative analysis of IPL implementation. Therefore, the present thesis reports on the cost analyses and provides policy recommendations of IPL implementation based on the obtained results.

1.4. This thesis This thesis investigates the hypothesis that the power companies distribution network enables them to provide more cost-effective Internet access than the other existing broadband Internet access technologies such as ADSL and cable modem Internet. Chapter 2 provides background on the multiple technologies involved in providing Internet access over power lines. Chapter 2 describes electricity infrastructure and how the Internet access can be provided over it. The methodology employed for this research begins with the construction of an engineering cost model for IPL. These spreadsheet-style models are based on capital cost data collected from the current information technology market. Chapter 3 describes the details of the cost model. While Chapter 2 discusses technology issues at a general level, Chapter 3 describes the specific implementations used in a certain type of network architecture. The cost model yields two types of results: quantitative cost comparisons and their implications for public policy. Chapter 4 shows the quantitative results. It compares the cost of IPL under initial values with the costs of other technologies, and then inspects how far these results are affected by the changes in these values. Chapter 5 discusses the policy implications in Japan based on these result. Chapter 6 concludes with a set of policy recommendations and suggestions for further research.

20

Chapter One

Chapter 2. IPL Technology

This chapter reviews the present state of electrical power distribution network infrastructure. It then discusses how this infrastructure can be used to provide Internet access, and shows that IPL can be a substitute for existing broadband Internet technology such as ADSL and cable modems. It concludes with a qualitative evaluation of the advantages and disadvantages of IPL.

2.1. Electrical power distribution networks 2.1.1. Topology of existing systems Electrical power netwo rks are composed of several different parts: power plants, transmission networks, substations, distribution networks, and customers (Fig. 2.1.1.). Distribution networks are divided into two parts: medium voltage (MV) networks and low voltage (LV) networks (Fig. 2.1.2). MV lines start from a substation, connected with LV lines via a distribution transformer. LV lines finally reach customers. LV networks consist of LV feeder lines, drop lines, Watt-Hour Meters (WHMs), circuit breakers, and electrical outlets. This thesis focuses particularly on LV distribution networks. As seen in Fig. 2.1.2, a typical network topology of LV networks is a tree-and-branch topology. The topology is similar to that of cable TV networks. Therefore, the LV network is used as a shared medium when it is used as communication media (Fig. 2.1.3.).

Powerplants (Thermal, Hydro, Nuclear)

Transmission Network 500kV-66kV (High voltage)

Substations

Distribution Network 6kV/200,100V (Medium/Low voltage)

Customers

Fig. 2.1.1. Outline of electrical power network

IPL Technology

23

Medium-voltage Low-voltage distribution netowrks distribution networks

Feeder Trunk Distribution substation Distribution transformer Drop Customer

Fig. 2.1.2. Outline of distribution network (overhead)

Distribution transformer

Customer

Fig. 2.1.3. Logical bus architecture of LV network

Furthermore, the topology of LV networks depends on several factors: Location (urban vs. rural, residential vs. industrial vs. business area) Customer density The type of house (detached houses, small apartments, multiple dwelling units (MDUs))

24

Chapter Two

2.2. Internet access over power lines (IPL) 2.2.1. Outline of IPL technology Electrical power companies have used both transmission and distribution networks as media to transmit not only electricity but also data signals that are necessary to supervise networks. For the purpose of supervising electrical networks, the network itself is a suitable as well as economical medium to communicate these operational and maintenance data because power companies do not have to use expensive leased lines and because the network connects to all nodes such as substations and relay switches, which are to be monitored (Fig. 2.2.1). Power companies have achieved such transmission over power lines by using data signals with higher frequencies, 10 to 450 kHz, than that of ordinary electricity, 50 or 60 Hz (JEAC 314). The basic idea of IPL is similar to this practice. The difference is that IPL uses much higher frequencies than such operational use, typically varying from 1.7 MHz to 30 MHz (Gray, 2001), in order to achieve high speed transmission rates (Fig. 2.2.2). Due to such high frequencies, IPL signals hardly pass through a distribution transformer, which bridges a MV network and a LV network. According to Dostert (32), signals with frequencies over 20 kHz rarely go through a distribution transformer.

Fig. 2.2.1. Communications over power lines

IPL Technology

25

Electricity

IPL

50/60 Hz

1.7MHz

30MHz

Fig. 2.2.2. Sample IPL spectrum map on an electrical wire

Fig. 2.2.3 illustrates IPL. The data channel is mixed into and separated from electrical wires via a coupler inside of an IPL modem, featuring a high-band pass filter function. The extracted data signals at a substation enter an IP router and are transmitted to the Internet via the power companys optical fiber based backbone networks. As for ordinary electrical appliances, according to HomePlug Alliance (HPA), their experiments show that it is unnecessary for IPL users to add a blocking filter to each electrical outlet to protect the appliances from the data signals with high frequency through electrical wires (Mader). Although their technology is limited to the inside home application, similar things could be assumed for IPL access technology.

26

Chapter Two

Backbone network/ Internet

Electricity(50/60Hz) Data (LAN) channel Router Data (LAN) channel

IPL Modem

IPL Modem

Fig. 2.2.3. Internet over power lines

IPL uses several technologies depending on protocol layers. Popular technologies are Orthogonal Frequency Division Multiplexing (OFDM) and Spread Spectrum (SS) for the physical layer, CSMA-CA for the MAC sub- layer of data link layer (Table 2.1.1). The next section describes each technology. Table 2.1.1. Protocol layers of Internet access over power lines Application layer Transport layer Network layer Data link layer LLC MAC Physical layer Same as any other technology LLC CSMA-CA OFDM SS

2.2.2. Transmission of digital data: physical layer As will be discussed in more details later, distribution networks are subject to various types of noise. If a noise bigger than a data signal is input into the network, the signal might be lost. Therefore, ordinary single carrier modulation such as FSK or PSK is not appropriate for

IPL Technology

27

IPL. So far, two technologies are widely used for IPL to transmit signal over power lines. One is OFDM, and the other is SS. Because OFDM makes use of a spectrum more efficiently than SS, OFDM has become more popular than SS recently. 1) Orthogonal frequency division multiplexing (OFDM) OFDM has been applied to not only IPL but also to digital audio broadcast and ADSL. The UTCs 2001 report explains OFDM as follows:
OFDM is a data communications technique for providing highly reliable data throughput in a noisy environment. The concept calls for dividing the available spectrum into small sub-carriers that are overlapped and orthogonally spaced (i.e., perpendicular to each other). This technique obviously allows for a significantly greater number of sub-carriers than would be possible in there were no overlapping. Although each sub-carrier has a low data rate, the total (of all the sub-carriers) represents a very high data rate and provides for very efficient use of the spectrum. It is also noteworthy to mention that given the spurious nature of noise inside the home, having a system that only loses small amounts of data during an unexpected blast of noise is obviously beneficial. That is, OFDM is the most promising of the various PLT modulation techniques due to its inherent advantages in a noisy environment. (73)

In summary, the strengths of OFDM are: Robustness against noisy environment: The data are transmitted by several parallel carriers. Each carrier can be modulated in several formats such as DQPSK and 16QAM. Therefore, while some portions of the data might be lost due to noise, most parts of the data could be transmitted. Efficient use of a spectrum: While the spectrum of modulated signals of a single carrier tends to spread like a rounded hill, that of OFDM looks rectangular in shape (Fig. 2.2.4.). Therefore, OFDM achieves more efficient use of the spectrum bandwidth than a modulation by a single carrier.

28

Chapter Two

#1
Fig. 2.2.4. OFDM spectrum 2) Spread-spectrum modulation (SS)

#N

Frequency

SS utilizes a wide spectrum bandwidth but with low spectral power density. Because of this low density, SS achieves several strengths: Low possibility of interference with other wireless telecommunications Robustness against noise High security

SS is popular in wireless telecommunications, specifically for military purposes. There are two types of SS: Direct Sequence (DS) and Frequency Hopping (FH). Because OFDM achieves more efficient use of a spectrum than SS, SS is less popular than OFDM in the IPL market.

2.2.3. MAC technology for IPL: data link layer The purpose of media access control (MAC) is to transmit data between the physical layer and the logical link control sublayer (LLC). Because distribution network is shared among customers, an access organization by MAC is necessary (Hines 28). Because IPL technology is still in early stage, there is no standardized MAC protocol for IPL. HomePlug Powerline Alliance, who creates an industry standard for high speed home networking using power lines, suggests to use Carrier Sense Multiple Access/ Collision Avoidance (CSMA/CA) as the MAC protocol (Gardner, par. 18). Although their standard is targeting electrical network inside home, because the character of sharing medium is the same as that of distribution network, same protocol can be used in IPL. CSMA/CA is the MAC protocol also used in mobile networks. Because the electrical networks are subject to noise more heavily IPL Technology 29

than Ethernet type networks, it might be better for IPL to adopt Collision Avoidance protocol than Collision Detection (CD), which assumes that each node can listen to all other nodes. Some IPL modem chip-vendors develop their own MAC protocols. For example, DS2, a German vendor, develops own MAC protocol, whose idea is similar to that of DOCSISs cable modems (Alfonso).

2.3. Network architectures This section introduces several IPL network architectures. While some power companies have ample fiber infrastructure enough to lay FTTP network, others are not. Therefore, power companies would choose appropriate network architecture for implementing IPL depending on its fiber infrastructure. As a business model of power companies, this paper assume s that power companies would be wholesalers of Internet access of so called last one mile because this business model tends to be dominant as those of Fiber to the Home (FTTH) service by power companies mostly have adopted this wholesale of access infrastructure model (Yamazaki). That is, Internet service providers (ISPs) like AOL would rent the infrastructure so that they could offer their Internet service to their customers via power lines. Therefore, the power companies themselves do not connect with Internet point of presence (IPOP), but with ISPs via their central stations (Fig. 2.3.1). To aggregate data signals communicated under one substation, power companies utilize their own optical fiber based network, which were installed for other purposes like operation use and rental fiber business use (Fig. 2.3.2.).

30

Chapter Two

Service coverage by a power company ISP ISP ISP Central Station

Backbone network/ Internet

Fig. 2.3.1. Interoffice transmission network

To: high-voltage power transmission networks Electricity

Substation

MV and LV distribution networks

To: Interoffice Transmission Fiber networks

Terminals Signal Router

Fig. 2.3.2. IPL LAN

2.3.1. Fiber & low-voltage (LV) line network architecture The image is shown in Fig. 2.3.3. The circled part represents the location of the main cost of this architecture. Some electrical power companies own fibers stretching from their substations to poles for their utility operation as well as business use like rental fibers. I call such fibers as Fiber to the Poles (FTTP) here. Therefore, it may be possible for power companies to offer IPL making use of such fiber infrastructure. The cost model of this thesis assumes this network architecture because this case is more likely; most electrical power companies offer a kind of fiber business such as FTTH and rental fibers (see the web sites of power companies listed at the end of this thesis). This architecture is similar to a Hybrid Fiber Coax (HFC) Network by cable TV companies.

IPL Technology

31

a. Advantage s Fiber cables provide ample bandwidth. It can use power companys existing facility. Fiber cables are more reliable telecommunications media than medium- voltage power lines as transmission medium. Using fiber cables instead of electrical wires reduces the influence of radiated radio waves. b. Disadvantages It would be economically inefficient. That is, the cost per subscriber is sensitive to the number of subscribers under one distribution transformer. As for fiber cables, power companies do not have to install fiber cables newly for IPL purpose. The LV lines are connected with a fiber cable via an optical-electrical converter (O/E converter), which would be installed at the same pole where a distribution transformer is set. The problem, however, is that the number of customers under one distribution transformer is usually about less than twenty. Compared with Europe whose number is between 200 and 500 (Gray, 1999, 14), Japanese case sounds economically inefficient. The bandwidth is limited. IPL users might not expect higher-speed Internet than the cable modem Internet. This is because the bandwidth capacity of the electrical wire is less than that of the coaxial cable used by cable TV companies.

32

Chapter Two

Tr

Backbone network/ Internet

O/E

Fig. 2.3.3. The image of Fiber and LV line network architecture

2.3.2. Medium-voltage (MV) & LV line network architecture (pure IPL network) This architecture utilizes whole distribution networks including MV and LV networks (Fig. 2.3.4.). The circled part represents the main cost of this architecture. A signal will be transmitted from a customer to a distribution substation via a LV network, a bypass-transformer device, and a MV network. At the station, the signal would be separated from the power lines and would be transmitted to Internet through power companies backbone network. The main issue of this architecture comes from a distribution transformer. The transformer obstructs signals, which try to communicate between MV and LV networks. Since the distribution transformer is designed to transmit 50 or 60 Hz electricity, data signals with 2 to 30 MHz cannot be transmitted. a. Advantage Power companies without ample fiber infrastructure could offer IPL.

b. Disadvantage The bypass transformer device is said to be costly. According to UTC, the estimated cost of the bypass equipment is 100s of dollars (Gray, 1999, 17). Main.net, an IPL vendor, announced that their technology found big spaces in a spectrum so that IPL signals can go through a distribution transformer without any bypass device, though its detail is not disclosed (Helman, par. 15). The radiation influence will be the largest among all network architectures because the whole lines are composed of electrical cables. IPL Technology 33

Bypass

Tr

Backbone network/ Internet

Fig. 2.3.4. Network architecture of MV&LV lines.

2.3.3. MV& wireless network architecture This architecture uses radio waves to connect with customers instead of LV lines (2003, Amperion). This network architecture expects to use distribution network as a substitute of optical fiber network whose installation cost is expensive. Fig 2.3.5 shows the image of this architecture. The circled part represents the main cost of this architecture. a. Advantage MV network is affected by fewer disturbances than LV networks. MV networks are more robust than LV networks. This is because MV networks have fewer nodes than LV networks. b. Disadvantages The cost of antenna installation The bandwidth limit Amperion, a Boston based IPL vendor, estimates the capacity as 45 Mbps (Amperion). Although 45 Mbps sounds enough as a bandwidth, the bandwidth per subscriber might not be enough for the broadband Internet. This is mainly because the number of subscribers connected to one MV network could be far more than 20 because the network is connected to several LV networks. Therefore, the capacity would not be able to satisfy so many subscribers.

34

Chapter Two

Tr

Backbone network/ Internet

Fig. 2.3.5. The image of MV & wireless network architecture

2.3.4. Fiber to the Home (FTTH) This is a reference to the fiber-LV architecture. Two power companies in Japan have offered FTTH service by themselves: Tokyo Electric Power Company and Chubu Electric Power Company (see their websites listed at the end of this thesis ). Fig. 2.3.6 shows the image of this architecture. The circled part represents the main cost of this architecture. a. Advantages Its wider bandwidth than any other Internet access technology NTT EAST offers the FTTH service with the peak rate of 100 Mbps (NTT EAST, 2003). Robustness of the transmission media

b. Disadvantages The cost of installing fiber cables Recent research shows that the installation cost of FTTH in U.S. is estimated to be $1,000 per subscriber (G. Johnson par.20)

IPL Technology

35

Tr

Backbone network/ Internet

Fig. 2.3.6. The image of FTTH network architecture

Table 2.3.1 shows the summary of the network architectures. Table 2.3.1. The summary of the network architectures Architecture 1. Fiber & LV Vendors Kyushu Electric Power Co. Inc., (Japanese power company.) 2. MV & LV Powerline Technologies (U.S.) 3. MV & Wireless Amperion (U.S.) 4. FTTH 100 Mbps (NTT EAST) Fiber cables 6 Mbps (Amperion) Wireless antennas 2.5 Mbps (Gray, 2001, 20) The device to bypass a Transformer Estimated peak bandwidth Main invest required 3 Mbps (Kyushu, 2000) The O/E device at a pole

2.4. Implications of IPL plant evolution 2.4.1. Subscriber equipment In this thesis, I assume that typical IPL in Japan would adopt fiber-LV lines network architecture because many power companies in Japan have ample FTTP infrastructures which enable them offer FTTH services. Like the FTTH service by telephone companies, which utilize the telephone lines inside a building, it is more economical to make use of existing wires

36

Chapter Two

connecting with customer than to install additional fiber cables. Necessary devices are as follows:

a. Devices at a substation The devices are as follows: i. Terminal equipments to connect with IPL LANs. ii. IP routers and transmission facilities to connect with backbone networks In this thesis, I assume that power companies would utilize the facilities used for their FTTH service. Because IP routers and transmission facilities for backbone networks are installed for the FTTH service, power companies need to install only LAN cards of an IP router to implement the IPL service.

b. Devices at a pole The device which is put at a pole needs to perform the following functions: i. A coupler with a high band pass filter to divide and combine data signals with an electrical wire. The coupler should also perform as a surge absorber. ii. An IPL modem to communicate with users modems. iii. A bridge function to connect IPL LAN with the point-to-point fiber to the substation. iv. An O/E conversion to convert electrical signals from and to optical signals. Power companies utilize their own fiber cables between a substation and a pole, which is equipped with a distribution transformer.

c. A device at a customer The customer premise equipment (CPE) is an IPL modem. The modem should have following functions: i. A coupler with a high band pass filter to divide and combine data signals with an electrical wire. The coupler should also perform as a surge absorber. ii. An IPL modem function, which supports the IPL LANs media access protocol. iii. A protocol converter, which translates the IPL protocol and Ethernet protocol. According to HomePlug Alliance (HPA), line filters at other electrical outlets for the other electrical appliances are not necessary (Mader).

IPL Technology

37

2.5. Evaluation of IPL LAN as Internet access networks This section analyzes whether IPL can be a substitute for existing high-speed Internet access technology such as ADSL and cable modem. FTTH is not included in this evaluation because of its extremely wider bandwidth than any other technology.

2.5.1. Speed The typical burst rate of IPL is said to be 2 to 10 Mbps (Gray, 2001, 48). The rate would depend on the selection of a network architecture and transmission technology. This rate is competitive with existing technology because typical ADSL and cable modems offer 1.5 to 12 Mb/s burst rate. Although the variable bandwidth per subscriber might be smaller, resulting from the fact that an IPL network is shared by users like cable Internet, this concern could be mitigated by future expansion of burst rate. The theoretical capacity of IPL bandwidth is estimated to be as large as 250 Mbps (Dostert 273). Therefore, the rate in practice might become larger than the current one, close to 100 Mbps in the future. In fact, the burst rate of ADSL has increased from 1.5 Mbps to 12 Mbps, and the development of even faster ADSL chip has been kept.

2.5.2. Full-time connections IPL achieves full-time connections because it needs no dial- up.

2.5.3. Security and network integrity Because IPL uses shared medium, users information could be easily obtained by others. To protect privacy of users, encryption technology could be provided at the MAC layer. In fact, the use of 56-bit data encryption standard (DES) is applied to HomePlug standard (Gardner, par. 47)

2.5.4. Availability While other broadband technologies have a certain limitation in availability, IPL does not have such a severe limitation. For examples, subscribers of ADSL have to live within 2 to 3

38

Chapter Two

miles from the central office. The penetration of cable television in Japan is around 30 %. People who want to subscribe FTTH have to install a fiber cable to their homes. On the other hand, power lines are almost everywhere, and IPL subscribers do not have to install cables.

From those analyses, I conclude that the IPL can be a substitute for existing high-speed Internet access technology such as ADSL and cable Internet. I summarized the character in Table 2.5.1 Table 2.5.1. The comparison of broadband access technology in Japan IPL Speed (Mbps)/ Medium 2-10/ Unshielded twist copper pair cable with 2-5mm diameter(*) Full- time Connection Security OK (Shared medium) OK OK (Shared medium) Availability OK Distance limitation Smaller Penetration (30%) Need to install fiber cables (*Source: IEEJ, 311) OK OK ADSL 1.5-12/ Shielded twisted copper pair cable with .4-.9mm diameter OK OK OK Cable 1.5-8/ Coaxial cable FTTH 10-100/ Optical fiber cable

2.6. Market Overview According to the Prime Minister of Japan and His Cabinet, the broadband penetration in Japan is 15% in October, 2002 (The penetration of Internet in total is 44.0% in population and 60.5% in household.). The detail is shown in Table 2.6.1. The smaller penetration of cable Internet than that of DSL may come from the relatively small penetration of cable television in Japan, around 30%, compared with that of U.S., 60 % in 2001 (the Prime Minister of Japan and His Cabinet).

IPL Technology

39

Table 2.6.1. The number of subscribers of broadband Internet in Japan Type of access Number of subscribers (million) Market share of each method (%) Annual Growth rate (%) DSL 4.6 70.7 667.6 Cable 1.8 27.7 52.6 FTTH 0.1 1.5 725.0

(Source: the Prime Minister of Japan and His Cabinet)

The number increased from 6% in December, 2000 (Fig. 2.6.1.). The main reasons of this rapid growth are the decrease of the price of ADSL service after the summer in 2001 and the emergence of wider bandwidth service, 8Mbps, compared with traditional 1.5Mbps (Fig 2.6.2.). After the price of ADSL has become around 3,000 yen/mo, the growth rate of ADSL has increased rapidly. Therefore, 3,000 yen/mo may be the criteria for potential customers to start the broadband Internet.

The penetration of Broadband Access

The number of subscribers (million) 450.0 400.0 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0
M ar -0 0 Ju n00 Se p00 De c-0 0 M ar -0 1 Ju n01 Se p01 De c-0 1 M ar -0 2

Cable DSL FTTH Wireless/FWA Total

Time

Fig. 2.6.1. The penetration of Broadband Access (Source: MPHPT, White Paper)

40

Chapter Two

The Price history of ADSL

6,000 5,100 5,000 Retail price (yen) 4,000 3,000 2,000 1,000 Dec-99 Feb-01 Jul-01 Oct-01 Dec-01 Dec-02 Time 187 173 200 800 4,050 1000

Yahoo! BB in August 2001, 2,453yen/mo

3,800 3,100

600 2,900 2,600 400

Wholesale price (yen)

800

'Retail price (NTT-East) 'Wholesale price (NTT-East)

Fig. 2.6.2. The price of ADSL (Source: MPHPT, White Paper)

2.6.1 The perspective of future price As can be seen in Fig 2.6.2, there were two big price decreases, by around 1,000 yen per month, in the past. NTT EAST explains the reasons in their press release as follows:

Feb. 01 NTT began to offer ADSL services which require customers to purchase an ADSL modem (NTT EAST, Jan., 2001); Oct. 01 NTT dropped the price to response to the customers requirement (NTT EAST, Sept., 2001). In my opinion, the price decrease in October was brought by two events. First, the wholesale price of ADSL networks decreased from 800 yen per month per line to 187 yen per month per line (NTT EAST, 2000). Secondly, the entry by Yahoo! BB with 2,200 yen per month stimulated the competition among ADSL access providers. Yahoo! BBs price was half as low as the typical ADSL price then. The reason of Yahoo! BBs low price in the summer 2001 is reported that Yahoo has adopted Annex. A, which is so widely used in the world that the costs of the equipments could be lowered than the costs of those by Annex.C, which has been created

IPL Technology

41

specifically for Japanese environment (Serizawa). Besides this, I also believe that the reduction of the wholesale fee in the winter 2001 also enabled Yahoo! BB offer such a low retail price. Because it is not likely that the above type of events would happen in the near future, there will not be a huge price decrease of ADSL service. Instead, the retail price would decrease eventually reflecting the economy of scale. After the summer in 2001, the decrease of NTTs retail ADSL price looks like being brought purely by the increase of subscribers. In fact, the retail price has decreased, though there is neither significant wholesale fee change nor technological innovation during this period. Furthermore, although NTT announced a 30 % decrease of wholesale price for backbone optical fiber networks in December 2002, this did not affect the retail ADSL price much. For these reasons, it can be predicted that the price could still decline but slowly as the number of subscribers increases until the number reaches the maximum capacity of 35 million subscribers provided by NTT (the Prime minister of Japan and His Cabinet). The prediction is shown in Fig. 2.6.3.

The prediction of ADSL Price

6,000 Price (yen per month) 5,000 4,000 3,000 2,000 1,000 De cAp 99 r Au -01 gDe 01 cAp 01 rAu 02 gDe 02 cAp 02 r Au -03 g De -03 c-0 3

7000 6000 5000 4000 3000 2000 1000 0 Number of subscribers (unit: 1,000)

Retail price Subscribers

Time

Fig. 2.6.3. The prediction of ADSL price

42

Chapter Two

2.6.2. The emergence of FTTH The ministry also predicts that the number of FTTH subscribers will overtake that of ADSL subscribers at the end of year 2005 because the price of FTTH decreases eventually from around 5,000 yen per month to the potential criterion, 3,000 yen per month (Fig 2.6.4.), (MPHPT).

32,000
15,000
Price (yen/mo)

Price history of FTTH

13,000

12,000 9,000 6,000 3,000 0

9,000 Decmber, 2000 5,000 3,800 3,800 Apr, 2002

High-value

Basic Service menu

MDUs

Fig. 2.6.4. The price of FTTH in Japan (Source: MPHPT, White Paper) In the figure, the dashed line represents the potential criterion price, 3,000 yen per month. The meaning of each service menu in the figure is as follows: High-value: The service aiming at customers living in a detached house. A customer can occupy a single fiber. Basic: The service aiming at customers living in a detached house. Several customers share a single fiber via optical couplers. MDUs: The service aiming at customers living in MDUs. Several customers share a single fiber. (Source: NTT EAST, Service menu) As can be seen from Fig. 2.6.4., the price of MDUs type may reach 3,000 yen per month soon. However, because IPL will not target residents of MDUs, this will not affect the deployment of IPL in the future.

2.6.3. The market window for IPL in Japan For those reasons, if IPL could achieve the low price below 3,000 yen per month

IPL Technology

43

immediately, there is a possibility that IPL could capture the significant share of the rest of broadband Internet market. The problem, however, is that the higher Internet service, FTTH might achieve the price in a couple of years despite of the downturn economy in Japan. Because IPL and other broadband access methods are no more than the substitute of FTTH in terms of the speed, IPL would miss the market unless its implementation would be done in a couple of years, or its speed would increase to competitive level like 100 Mbps.

2.7. Technical Issues 2.7.1. Emission of electromagnetic waves Unfortunately, because the unintended emitted electromagnetic waves by IPL interfere with existing telecommunications such as amateur radio and HF-broadcasting in Japan, Japanese government announced last summer that IPL service should be postponed until this issue is solved. This issue is said to have affected the deployment of commercial IPL services, i.e., Nor.Web in Britain (Libby 9). Because IPL uses high frequency carrier, ranging from 1.7MHz to 30MHz, the electrical wire, functioning like radio wave antenna, emits electromagnetic waves. Therefore the waves interfere with existing wireless communication system, which use the same range of frequencies. Similar issue is also found in xDSL in Japan (NTT EAST, 2002). Several solutions are proposed as follows:

a. Underground networks Power companies can avoid the emission issue by implementing the IPL service only in underground distribution networks because electric power cables used for underground are typically shielded, which prevent electromagnetic waves from emitting. The problem, however, is that most of the residential houses, which are IPLs main target, receive electricity through overhead wires in Japan. This solution is also costly.

b. Elimination of common- mode This solution is technically feasible and used widely as a solution of interference problems.

44

Chapter Two

Fig. 2.7.1. The differentiation mode (left) and the common mode (right)

As can be seen in Fig. 2.7.1., electric current on each electrical wire goes toward the same direction in the common mode case. The common mode is unusual, but this will emit more power of radio waves than that of the differentiation mode. The emission power of each mode is as follows (Fig. 2.7.2): Differentia tion mode: proportional to 1/r^4. An electrical cable act like a dipole antenna * . Common mode: proportional to 1/r^2. An electrical cable act like a monopole antenna. Here, r means the distance from the center of an electrical wire. Therefore, if one succeeds in suppressing the common mode, one will achieve significant emission reduction. One popular practical solution is to insert a common-mode filter, which is a market-available less expensive product, at both sides of the line.
*

: In the case of the differentiation mode, other factors such as d, the distance between a

pair wire, and D, the distance between wires and ground, also affects the radiation power. However, because d is usually small enough, only D and r should be taken account of.

Fig. 2.7.2. Dipole (left) and Monopole (right)

IPL Technology

45

c. Shielded cables If one wants to suppress the emission of differentiation mode, one effective solution might be to shield the power cable. Because overhead electrical cables are usually unshielded, this measure means the replacement of existing cables with shielded cables, which will result in huge investment in IPL business. Therefore, power companies should check the radiation is small enough if they succeed in eliminating the common- mode issue.

d. Twisted pair cables This will make quadrangular pole. The radiation is much smaller than dipole and monopole cases. If power companies have to replace existing electrical cables with more twisted pair cables, it would not be impractical for the same reason as that of shielded cables.

e. Reduction of the transmission power Another solution might be to reduce the transmission power of IPL modems. However, this would shorten the transmission distance as well as make data signal less robust against noise in distribution networks.

In summary, the feasible solution so far is to eliminate the common- mode because other solutions are neither economically feasible nor technically feasible.

2.7.2. Standardization While standardization has not taken place yet, there are several organizations dealing with IPL, such as PLC-Forum, UPLC, and PLCA. A PLCA executive told me that they wanted to build the IPL standard within a year (Schaar). Besides these organizations, it might be another option to cooperate with HomePlug Powerline Alliance (HPA), which released a standard for inhome powerline networking. This issue is important in predicting the prices of IPL modem and its service. Because multiple standards would create several separate markets, the number of a certain type of IPL equipments would be small, resulting in high cost. That is, the market size determines the manufacturing cost. Therefore, it is hopeful for IPL providers to have fewer standards. As seen in the Market Overview section, 2.6, Yahoo! BB achieved lower ADSL prices than others

46

Chapter Two

because Yahoo! BB has adopted world standard of ADSL, Annex-A, while others had adopted Japanese-only standard, Annex-C. Because the market of Japan is smaller than that of the sum of U.S. and other nations, the cost of Annex-C type equipments could be higher than that of Annex-A type. For these reasons, the above IPL organizations should try to coordinate one standard so that they could achieve low cost. So far there are two important challenges. One is about the difference of voltage system. Because there are two main streams in the world, 100V systems and 200 V systems, the standard might be divided into two sub-standards accordance with the voltage system. The other is the difference of regulation in emission issues. Because the permitted levels of radiated radio waves differ among nations, IPL users cannot use a modem, which is allowed to use in some country, in another country. As for the emission issue, PLC Forum and the European Committee for Electrotechnical Standardization (CELENEC) cooperate with the International Special Committee on Radio Interference (CISPR), which addresses radio interference internationally (Newbury).

2.7.3. Noise Although few data are shown about SNR (signal to noise ratio), distribution network suffers from various noise such as those caused by electrical appliances (Gray, 2001, 65). Fortunately, the noise caused by electrical appliances, i.e., impulse noise, mainly affects signals in low frequency band, while IPL typically use high frequency band. Furthermore, as stated above, because OFDM has mitigated this influence, the noise issue is not so severe now.

2.7.4. Bypassing a transformer The weakness of IPL is that IPL cannot make most use of its distribution network due to the signal block by a distribution transformer, which separate MV networks from LV networks. Because of this limitation, IPL has to install an additional device, which detours the transformer to link MV and LV networks. Some vendors like PowerComm created such devices, though they are said to be costly (Gray, 1999, 17). Main.net, an IPL vendor, announced that their technology does not need any device to let IPL signals go through the distribution transformer, though its detail is not disclosed (Helman par. 15).

IPL Technology

47

Chapter 3. Cost Model

3.1. Basic idea of the model I have built a cost model to provide residential Internet service over power lines (IPL). This chapter explains the assumptions and the cost elements in the model. The model aims to be applied to Japanese electric power companies with ample Fiber to the Pole (FTTP) infrastructure, whose service area includes metropolitan areas or smaller areas. The model looks only at the marginal cost of providing Internet connections (Fig. 3.1.1.). That is, the model does not include the costs of providing traditional electricity service. Also, the model does not include technology investments that are used for Internet service but are being made for other purposes. For example, before offering IPL service, some power companies built FTTP infrastructure to offer rental fiber and Fiber to the Home (FTTH) services primarily. Only the portions of the infrastructure that were specifically required to support IPL service are included in the model. The cost figures used in the model reflect what it would cost a power company as an Internet access wholesaler to purchase equipment that is currently available from vendors.

(INPUT) - # of subscribers - costs of elements ? [ MODEL ] ?

(OUTPUT) - cost/subscriber vs. penetration

- cost/home passed vs. # of homes/LAN

Fig. 3.1.1. The image of the cost model It is difficult to specify and obtain exact cost data of IPL because the technology is still in its early stages and the commercial products are not available in todays market. Therefore, this thesis sets a price range as the substitute for the actual cost. The price range is composed of prices of market-available products whose functions are similar to those of each IPL product. To make the cost ana lysis result more realistic, this thesis investigates sensitivity analyses using variables, whose actual costs are unknown. Original prices are collected from price lists available from vendors websites. Since the market for networking equipment is extremely competitive and digital technology continues to advance rapidly, cheaper and more capable

48

Chapter Three

products are constantly appearing. Incidental costs (under $100), such as cables and connectors needed at the substation, are not included in the model. I used 130 yen per dollar and 110 yen per Euro as the currency rates in this thesis. This chapter details the models inputs and variables, discussing first the assumption of this model. The results are described in Chapter 4.

3.2. Assumptions To build a cost model for IPL, I set several assumptions: wholesaling to Internet service providers (ISPs); providing last- mile access; using fiber and LV network architecture. The main reason for these assumptions is that the assumed situation is likely to occur in Japan.

3.2.1. Business model: wholesaler of access networks First, this thesis assumes that power companies would be wholesalers of the Internet access service to ISPs. They will not operate ISPs by themselves. This assumption is based on the observatio n of Japanese power companies analogous business models of FTTH (Table 3.2.1.): while only Chubu Electric Power Company (Chubu) offers the service directly to its Internet users, four other power companies such as Tokyo Electric Power Company (TEPCO) and Kansai Electric Power Company (KEPCO), offer their optical fiber infrastructure to several ISPs or to their telecommunications affiliates (Yamazaki). As seen, no power company except Chubu, runs its own ISPs, either. For those reasons, I assume that the same thing could happen to IPL service in Japan because IPL offers an access medium to customers, which is the same idea as FTTH service.

Cost Model

49

Table 3.2.1. Japanese power companies business model of FTTH Power company 1. Hokkaido Electric Power Co., 2. Tohoku Electric Power Co., 3. Tokyo Electric Power Co., (TEPCO) 4. Chubu Electric Power Co., 5. Hokuriku Electric Power Co., 6. Kansai Electric Power Co., 7. Chugoku Electric Power Co., 8. Shikoku Electric Power Co., 9. Kyushu Electric Power Co., 10. Okinawa Electric Power Co., FTTH (Planning) Wholesale Retail Wholesale (affiliate) Wholesale (affiliate) Wholesale (affiliate) (Planning) (Sources: see the list at the end in bibliography1 ) Second, this thesis assumes that power companies would offer so called last-one- mile-access networks, not backbone networks (Fig. 3.2.1.). Although some IPL vendor proposes to use medium- voltage networks as a backbone instead of fiber networks (Amperion), this thesis assumes that power companies would use low- voltage networks as last-one- mile networks as ADSL and cable modem Internet do.

ISP
Backbone/ Internet

ISP ISP

Central Station

Fig. 3.2.1. The coverage of the model

3.2.2. Network architecture and facilities First, this thesis assumes that the network architecture of IPL would be Fiber and LV line network architecture, as described in Section 2.3.1. Nowadays, seven power companies out of

50

Chapter Three

ten have started or are planning FTTH service in Japan (Yamazaki). This means that there are enough FTTP infrastructures to achieve this network architecture. Therefore, it is likely that the assuming situation will happen. One might wonder why power companies do not complete their Internet service with FTTH alone instead of combining IPL. The reasons are twofold: first, installatio n of FTTP needs less effort than that of FTTH in terms of the amount of cables to be installed, and consequently the construction cost. The second reason is that the installation cost of FTTH may be larger than that of IPL because FTTH needs to install fiber cables, while IPL does not. Therefore, implementing IPL parallel to FTTH will probably be economically reasonable. Secondly, this thesis assumes that IPL service utilizes a power companys fiber network backbone, which links substations together. Because such a backbone has been built for a power companys operational use, the construction cost is not taken into account for this model.

3.2.3. Type of customers and networks 1) Detached houses or multiple dwelling units (MDUs) This thesis assumes that the types of houses are detached houses and apartments that are one or two stories. There are two reasons for this. First, targeting MDU residents would raise cost. Apartments that are more than two stories like MDUs usually connect to medium- voltage network directly because of the large amount of electricity that they consume. This means that a power company needs to install a fiber cable into the MDU building to be connected with LV networks inside of the building. This situation would happen because the cost model assumes the Fiber and LV line network architecture. The installation, however, would be costly because the power company might have to dig the ground for this purpose in addition to simple cable installation. Secondly, the market size is still large enough to support IPL economically. For example, about fifty percent of dwelling buildings in Tokyos 23 wards are detached houses or apartments that are one or two stories (Tokyo Metropolitan Government). These detached houses and apartments that are one or two stories are typically provided with LV networks.

Cost Model

51

2) Overhead or underground LV networks This thesis assumes that IPL focuses on overhead LV networks. First, the targeted customers, residents, usually receive electricity through ove rhead networks. As for the market size, for example, 56.7 % of distribution networks in Tokyo s 23 wards are overhead networks (TEPCO Illustrated 56). The rest, underground networks, usually serve commercial buildings, whose building density is so high that costly underground networks can be efficiently developed. The percentage of overhead networks rises to 91.1 % in their total service area (TEPCO Illustrated 56). Second, implementing IPL to underground networks would be more costly than to overhead networks because power companies would have to dig the ground to install an O/E converter near a distribution transformer. Although there is an issue of interference by emitted electromagnetic waves specifically for overhead networks, this thesis assumes that the issue could be solved in the near future because the standard of such emitted radio waves is under review world-wide (CISPR) and also because the IPL vendors have made efforts to build an IPL modem, which limits such emissions.

For those reasons, this thesis assumes as follows: the type of customers would be residents of detached house and apartments that are one or two stories; power companies would implement IPL only to overhead LV networks. As for the market size, residents of detached house and apartments that are one or two stories usually receive electricity through overhead LV networks. Therefore, for example, IPL would target residents of about fifty percent of dwelling buildings in Tokyos 23 wards.

3.2.4. LAN size This thesis defines a LAN as one LV network under one distribution transformer. The model assumes two related figures, as shown in Table 3.2.2.

52

Chapter Three

Table 3.2.2. The number of customers 1) Per substation 10,000 2) Per LAN 20

The reasons are as follows: first, the total number of substations in Tokyo is 511, and the number of household customers is estimated as 6,300,000 households (TEPCO Illustrated, 4, 56). Therefore, the number of customers covered by a substation in Tokyo is estimated as follows: 6,300,000/511 = 12,328.8 Therefore, the assumption 1) in Table 3.2.2. is reasonable. Second, the capacity of a distribution transformer varies from 3kVA to 100kVA (IEEJ 316). This thesis chose 50kVA because this was the average value of the capacity and most likely in Japan. The average ampere of residential customers is around 30A (TEPCO Illustrated, 17). Therefore, the number of customers covered by a distribution transformer is calculated as follows: 50kVA / (30A * 100V) = 16.7 Because it is not likely that all the customers use the peak electricity simultaneously, the number can be more than 16.7, and actually, the transformer capacity is designed in the same manner, too. Therefore, the assumption 2) in Table 3.2.2. is reasonable.

3.3. Input cost elements: technology reference model Fig. 3.3.1. shows the image of the necessary elements of the cost model.

Cost Model

53

a. 10,000 customers (cell of 500 LAN) b. 20 customers (LAN) c. 1 customer

Backbone network/ Internet

O/E

IPL-modem

Distribution substation

Optical fiber networks

LV network

Customer

Fig. 3.3.1. The image of Fiber and LV line network architecture A LAN in this context is the group of residences served by a single fiber and its attached LV network. Therefore, many LANs converge in a distribution substation. To distinguish the aggregated LANs from a LAN, this thesis calls them a cell. In the following, I categorize input elements according to the network where they belong: a cell, a LAN, a customer. Within these categories, cost elements are further classified as onetime cost or ongoing cost. Because of the difficulties of specifying and obtaining the real cost of some elements from publicly available sources, this thesis sets a cost range for such elements depending on three scenarios: Best, Worst, and Intermediate or Realistic. In the best case scenario, all cost elements would end up costing the value at the low end of the estimated range. Similarly, in the worst case, all cost elements would end up costing the value at the high end of the estimated range. Intermediate or Realistic scenario assumes that everything works moderately and more realistically than other scenarios for implementing IPL in terms of cost. These scenarios are reasonable because there are no tradeoffs among the cost elements. In the following sections, I use two types of capital costs: those incurred upfront (onetime) and those incurred on an ongoing basis.. Both costs are capital costs. Operating expenses (OPEXs), such as the costs of supporting ISP retailers, equipment powering and maintenance, are outside the scope of this thesis.

54

Chapter Three

3.3.1. Costs shared by customers per cell Most of the facilities in a substation are shared by customers under one substation. Such facilities include optical transmission equipment, routers, and network management servers. This thesis assumes that IPL utilizes in-use FTTH facilities because some potential FTTH customers might choose IPL instead of FTTH because of its lower price. In fact, this type of choice has been offered in Japan. Nippon Telegraph and Telephone EAST Corporation (NTT EAST), a Japanese telecommunications giant, offers its MDU customers a similar choice in their FTTH menu: Type1 (Combined FTTH): install fiber cable to the entrance of the building, and connect the cable with its existing telephone network inside of the building; Type 2 (Pure FTTH): install fiber cable to the customer through the building (NTT EAST, Service menu). This assumption means that the costs of most facilities in a substation have been already invested for FTTH purposes. The only cost which IPL will incur is the costs of a terminal system and additional LAN cards, which would integrate an IPL LAN into FTTH networks.

1) Onetime cost According to le Tanneur, the average bandwidth per customer during peak time is estimated to be 50 kbps (le Tanneur 102). Because this thesis adopts the number, the total capacity of a LAN is 1 Mbps. Consequently, that of a cell of 500 LANs is 0.5 Gbps. Therefore, the number of the necessary items is derived from this capacity analysis. There are several ways to build a terminal system of IPL (Kyushu Electric Power Co., 2000). In this thesis, I assume that Japanese power companies would build the terminal system using publicly available devices, such as IP-based facilities because that is cost-effective. The optical fiber cables which are used for the IPL purpose are assumed to be installed already, and will be connected with the terminal system. Fig 3.3.2 shows the image of the terminal system at the substation.

Cost Model

55

Backbone network/ Internet

E/O

E/O

E/O

E/O

Fig. 3.3.2. The image of equipment at a substation

In the figure, the assumed protocol between Router and Hub (1) is 1000BASE-T. The protocol between Hub (1) and Hub (2) is 10/100BASE-T. The protocol between Hub (2) and O/E converter is 10/100BASE-T. Hub (1) has 24 ports plus 1 1000BASE-T port. Hub (2) has 16 ports. First, the actual LAN card configuration can be derived from the options offered by router vendors like NEC: the price of a LAN card is 88,000 yen (NEC). The card is a gigabit interface connection card (GBIC), which can receive 1000BASE-T. Second, I cite the prices of those hubs from Fujitsu. Hub (1) has one 1000BASE-T port and 24 10/100BASE-TX ports. The price is 432,000 yen (Fujitsu 48). Hub (2) has 16 10/100BASE-TX ports. Its price is 29,800 yen (Fujitsu 50). Third, I cite the price of an O/E converter from a media converter, which transforms 10/100 BASE-TX into 100BASE-FX (single mode), and vice versa. The price is 62,000 yen (Allied-telesis). The costs of the facilities at the substation are fixed here regardless of scenarios (Table 3.3.1.).

56

Chapter Three

Table 3.3.1. The cost shared by customers per cell Cost (unit: yen/cell) Element Best Worst Intermediate A LAN card A terminal system Hub (1) Hub (2) O/E converter Total 176,000 32,877,200 (864,000) (1,013,200) (31,000,000) 33,053,200 432,000*2 298,000*17*2 62,000*(33*15+5) 88,000*2

(Sources: NEC for a LAN card; Fujitsu for Hub (1) and (2); Allied-telesis for an O/E converter)

3.3.2. Costs shared by customers per LAN Each LAN can be upgraded separately. This upgrade has two components: adding an O/E device, which links a fiber cable and an LV network, and utilizing a fiber cable of FTTP infrastructure (Fig. 3.3.3).
LAN

Tr

IPL-modem

LV wire
O/E Converter

Optical fiber cable

Special IPL Modem

Surge Absorber

IPL-modem

O/E device
IPL-modem

Fig. 3.3.3. The image of equipment at a pole

1) Onetime cost

Cost Model

57

This cost includes expenditure needed to invest one time, usually up front. The cost elements are the cost of an O/E device and the labor cost of installing the device. Because no O/E device is available in the market now, I substitute the aggregated prices of products, each of which has the same functions necessary to the O/E device, for the cost. As stated in Chapter 2, the O/E device is essentially composed of three products: an O/E converter, an IPL modem with the function similar to a hub (special IPL modem), and a surge absorber.

First, the price of an O/E converter ranges between 55,000 yen and 62,000 yen. In the best case scenario, I cite the price from that of an optical node unit (ONU) used in Fiber to the Curb (FTTC) because the function is the same as the assumed O/E converter. The price is 55,000 yen (NTT EAST, CN-100). In the worst case scenario, I cite the price from that of a media converter which transforms 10/100 BASE-TX into 100BASE-FX (single mode), and vice versa. This specification is reasonable because the capacity limit of IPL would be less than 100 Mbps, and the IPLs MAC would be similar to that of Ethernet. The price of an O/E converter is fixed here. The price I cite is 62,000 yen (Allied-telesis). In the intermediate case scenario, this thesis uses 55,000 because this is more realistic.

Secondly, the cost of the special IPL modem varies from 24,000 yen to 78,300 yen. I divide the cost of the special modem into two parts: an ordinary IPL mode and a bridge or a hub. Observing wireless LANs products, I assume that the special modem is similar to the access point antenna of the wireless LAN because both aggregate signals of a sub- network and convert own protocols to and from Ethernet protocol (Fig. 3.3.3). I assume that the aggregation function is similar to that of a bridge and the conversion function is similar to that of an ordinary IPL modem. The cost of a hub varies depending on the scenario. In the best case scenario, I cite the market price from a Fujitsus hub, which can afford 10 BASE-T. This assumption is reasonable because the peak rate of IPL is typic ally 10 Mbps. The price is 12,300 yen in 2002 (Fujitsu 86). In the worst case scenario, I cite the price from a Fujitsu hub, which can afford 10/100 BASETX. This assumption is reasonable when the peak rate of IPL might expand to 100 Mbps in the near future. The price was 39,300 yen in 2002 (Fujitsu 86). In the intermediate case scenario, I choose the same price as that of the worst scenario. This assumption can be reasonable because

58

Chapter Three

an IPL vendor announced that their IPL modem had achieved 45Mbps (Amperion). In summary, the cost ranges from 12,300 yen to 39,300 yen. The cost of an IPL modem varies depending on the scenario. The reasons will be described later in section 3.3.3. The price range of an IPL modem is between 11,700 yen and 39,000 yen.

Third, the price of the absorber ranges between 1,800 yen and 15,000 yen. I choose an ADSL splitter with a surge absorber as the substitute for the surge absorber in the best scenario. Its market price is 1,800 yen (DTI). Although the splitter is designed to be used inside a house, the assumed surge absorber should be designed like this splitter. That is, the absorber should protect an IPL modem from an electrical surge like one caused by lightning outside of a house. In the worst case scenario, I choose a high-speed response type surge absorber as the substitute. Its market price is 15,000 yen (MTT Corporation, 508). This value sounds reasonable because this product is designed to be used outside of buildings. In the intermediate case scenario, I also choose the same absorber as the one in the worst case scenario because the O/E device is designed to be placed outside, and the surge absorber used in the device would be as strong as the one used in this high-speed response type absorber.

Fourth, as for the labor cost of installing an O/E device, I assume that the cost is similar to the price of the FTTH installation service fee in the best case scenario. The reasons are the following: the work of installing an O/E device has several elements: to attach an O/E device on a pole, to connect the O/E device with a fiber cable and electrical wires respectively, and to test the communication between an IPL model at the users home and the power companys management server. Likewise, the work of FTTH installation has the elements following: to attach an optical distribution box to a pole, to connect a feeder fiber cable with a drop fiber cable, to install the cable in the users house, and to test the communication between an FTTHs ONU and the FTTH providers management server. According to NTT EAST, the installation fee is 27,100 yen (NTT EAST, Installation fee) for an attached house user. Such a price does not necessarily reflect the whole installation cost from my experience as an engineer, which is why I use it as a lower bound defining the best case scenario. In the worst case scenario, I assume that the cost is similar to the cost estimation of FTTH installation reported in Public Power magazine.

Cost Model

59

The reason is almost the same as that in the best case scenario, but rather prudent. According to Public Power magazine, the installation cost of FTTH per home passed is estimated to be $1,000, which means 130,000 yen (G. Johnson par.20). Because the work of installing an O/E device would not include the cost of installing fiber cables, this cost could be the worst case cost. In the intermediate case scenario, I assume that the cost is midway between those of the best and the worst case scenarios. Therefore, the cost is 80,000 yen. Because the cost of the best case scenario does not seem to reflect the whole installation cost, this value may be closer to the real installation cost. In summary, the cost of installing an O/E device varies between 27,100 yen and 130,000 yen.

2) Ongoing cost This cost includes expenditure needed continuously, usually monthly. The cost element is the opportunity cost of an optical fiber cable. I cite the cost from NTTs rental fiber business. This is partly because power companies in Japan do not publicly disclose their price lists of the rental fiber business, and partly because the power companies may offer the prices similar to that of NTT because they compete with NTT in the rental fiber business. According to NTT EAST, the price of rental fiber for access networks is 5,231 yen/core/month (NTT EAST, July 2001). The opportunity cost of an optical fiber cable is fixed regardless of scenarios because this assumption seems reasonably certain.

In summary, Table 3.3.2. and 3.3.3. show the onetime and ongoing cost respectively.

60

Chapter Three

Table 3.3.2. The cost shared by customers per LAN: onetime cost Element Scenario (unit: yen/ LAN) Best O/E device (O/E converter) (Hub) (IPL modem) (Surge absorber) O/E- labor (installation) Total cost 80,800 Worst 155,300 Intermediate 132,300 (55,000) (39,300) (23,000) (15,000) 80,000 212,300

(55,000) (62,000) (12,300) (39,300) (11,700) (39,000) (1,800) (15,000) 27,100 107,900 130,000 285,300

Table 3.3.3. The cost shared by customers per LAN: ongoing cost Element Scenario (unit: yen/LAN/mo) Best Rental fiber Total Worst Intermediate

5,231 5,231

3.3.3. Cost paid by one customer The only cost element here is the cost of customer premise equipment (CPE). Filters at other electrical outlets to prevent the Internet signals from entering other electrical appliances are not necessary according to HomePlug Alliance (HPA) (Mader). The cost is a onetime cost and must be incurred by each customer who subscribes to the service. For a subscriber to connect to the IPL LAN, the equipment is needed to perform the following functions: Provide a physical interface to the subscribers computer Provide a physical interface to the electrical wire, including IPL modem functionality Support the IPL LANs media access protocol. Separate data signal and electricity

While this collection of functions could be implemented in a variety of ways, this thesis assumes that an IPL modem is equipped with all the above functions.

Cost Model

61

1) Onetime cost I estimate that the cost of IPL modem is almost as low as the price of a power line carrier (PLC) modem certified by HPA, 11,700 yen in the best case scenario (Microcenter). While the PLC modems are designed to be used inside a house rather than the access use outside a house, they basically use the same physical and MAC technology as those of IPL modems. In fact, an IPL modem vendor says that its IPL modem is compatible with the PLC modem (Turner). Therefore, I estimate this price as the one in the best scenario. In the worst case scenario, I cite the cost from that of a cable modem before its function was standardized. The cost of the cable modem in 1998 was $300 in the U.S., which can be translated as 39,000 yen (Data Over Cable Service Interface Specification (DOCSIS) Team, 8). There is no standard of IPL modem technology, though the related organizations are trying to make a standard. Therefore, I choose the cost of a cable modem before standardization for the worst case scenario. Actually, after DOCSIS 1.0, the cost has decreased to less than $50 according to the DOCSIS Team. In the intermediate case scenario, I estimate that the cost is almost the same as the price of ADSL modem in its first year end because IPL will probably follow the same path as ADSL followed: establish a standard suitable for Japanese environment. The IPL standard might be Japanese specific because the voltage is 100 V while the voltage of Europe and other countries is around 240 V. The price of an ADSL modem was 23,000 yen in January 2001 in Japan (NTT EAST, Jan. 2001). Furthermore, because the technology of IPL is also similar to that of ADSL, i.e., the discrete frequency mode, both types of modem might have common cost elements. For those reasons, I choose this price as the cost of an IPL modem in the intermediate case scenario. Actually, the price of an IPL modem, which is commercially offered in Germany, is 119 Euro (Vype). The value is translated as 13,000 yen. Because the modem is provided by Vype, the service provider, that provider might subsidize the cost of the modem. Therefore, the true cost could be more, say around 20,000 yen. Therefore, the estimated cost, cited from the price of an ADSL modem, 23,000 yen, seems more realistic. In summary, the price range of an IPL modem is between 11,700 yen and 39,000 yen (Table 3.3.4.).

62

Chapter Three

Table 3.3.4. The cost paid by one customer Element Best Scenario (unit: yen) Worst Intermediate 23,000

IPL modem (CPE) 13,000 39,000

3.4. Output cost elements Output cost elements consist of cost per home passed and cost per subscriber The results are shown in Chapter 4.

Cost Model

63

Endnote:
1

Hokkaido Electric Power Company Inc. See <http://www.hepco.co.jp/>

Tohoku Electric Power Company Inc. See <http://www.tohoku-epco.co.jp/> Tokyo Electric Power Company Inc. (TEPCO) See <http://www.tepco.ne.jp/> Chubu Electric Power Company Inc. See <http://www.commufa.jp/> Hokuriku Electric Power Company Inc. See <http://www.rikuden.co.jp/> Kansai Electric Power Company Inc. (KEPCO) See <http://www.kepco.co.jp/> Chugoku Electric Power Company Inc. See <http://www.energia.co.jp/> Shikoku Electric Power Company Inc. See <http://yonden.co.jp> Kyushu Electric Power Company Inc. See <http://www.kyuden.co.jp/> Okinawa Electric Power Company, Inc. (O EPC) See <http://www.okiden.co.jp/>

64

Chapter Three

Chapter 4. Results
This chapter shows the results of the IPL cost model analyses discussed in Chapter 3. First, it defines the models cost result variables. Then it shows the set of graphs based on an original set of input parameter values as well as those of sensitivity analyses that explore the effect of changes in each of the different input parameter values. Third, it takes account of the reality in Japan, including the penetration of personal computers as well as those of other broadband access methods. The chapter concludes with a comparison of the IPL costs with the costs of other broadband Internet access methods and a few suggestions to make IPL more costeffective.

4.1. Result variables As described in the previous chapter, the outputs of the model consist of two elements: the cost per home passed and the cost per subscriber. Cost per home passed (C hp ): average cost divided by all homes reachable with IPL system; Cost per subscriber (C sub ): average cost divided by all subscribers reachable with IPL system; each element consists of two sub-elements: onetime cost and ongoing cost; Onetime cost (C one): expenditure needed to invest onetime, usually up front; Ongoing cost (C on ): expenditure needed continuously, usually monthly.

Three cost outcomes, which are defined in Chapter 3 as cost shared per cell, LAN, and customer, are composed of the above two sub-elements. The analyses begins with an examination of the cost per home passed resulting from the original parameter settings.

4.2. Initial results 4.2.1. Cost per home passed The cost per home passed of IPL (C hp ) is calculated in the following manner: first, calculate Cone and Con using the cost outcomes obtained from Chapter 3. Results 65

i) Onetime cost: Cone

Cone = ( LAN _ card + TS ) (O / E + O / E _ labor ) + + CPE 500 N N

- (4.2.1) [yen/home passed]

ii) On going cost: Con

Con = Fiber _ rental _ cos t N

- (4.2.2) [yen/mo/home passed]

Here, TS means a terminal system; CPE means an IPL modem; O/E means an O/E device at a pole; N means the numb er of homes per LAN. In Chapter 3, N was set at 20, which is maximal. Second, amortize Cone at 6 % for the discount rate and 3 years for the period. The reason for this is that these numbers are the usual case with telecommunications business. Finally, obtain Chp by adding Con to Cone . Repeat these steps for each scenario. The initial result is shown in Fig. 4.2.1. Monthly IPL cost per home passed per LAN

Cost (yen/mo/home passed)

6000 5000 4000 3000 2000 1000 0 0 2 4 6 8 10 12 14 16 18 20 Number of home passed per LAN Worst ` Intermediate Best

Fig. 4.2.1. Monthly IPL cost per home passed per LAN (modem rental)

The result in Fig. 4.2.1. assumes that power companies provide IPL modems. The key finding here is that as the number of homes passed per LAN increases, the cost converges at between 1,000 and 2,000 yen per month, depending on the scenario.

66

Chapter Four

4.2.2. Cost per subscriber The cost per subscriber (C sub) is calculated in the similar way as that of Chp . The only difference is that the cost outputs are calculated based on the penetration of IPL, not the number of homes. I set the penetration as P in this thesis. Therefore, N is replaced by N*P in the equation 4.2.1 and 4.2.2. I set N at 20 as a sample, and calculated Csub. The result is shown in Fig. 4.2.2. Fig. 4.2.2. shows the result when power companies are assumed to provide the modems. The same trend is seen here as that seen in Fig. 4.2.1.

Monthly IPL cost per subscriber per LAN: N = 20 Cost (yen/mo/subscriber) 6000 5000 4000 3000 2000 1000 0
0% 20 % 40 % 60 % 80 % 10 0%

Worst Intermediate Best

Penetration (%) Fig. 4.2.2. Monthly IPL cost per subscriber per LAN (modem rental)

Next, I tried sensitivity analyses for the cost per subscriber. I chose two variables, N: the number of homes passed in one LAN, and Y: the period of IPLs market window. I tried several values for N in the intermediate case scenario. The result is shown in Fig 4.2.3. The result assumes the intermediate case scenario and that power companies provide modems to their users. As can be seen, first, the prices converge on 1,000 yen per month for most of Ns. Second, the cost rises rapidly as N becomes small.

Results

67

Monthly IPL cost per subscriber per LAN: Intermediate

Cost (yen/mo/subscriber) 6000 5000 4000 3000 2000 1000 0
10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 10 0% 0%

N=10 N=20 N=40 N=60 N=80 N=100

Penetration (%)

Fig. 4.2.3. Cost per subscriber per LAN with various numbers of home passed per LAN (modem rental)

Fig 4.2.4. shows the same result in another format. As will be described in Section 4.3., the IPL cost per subscriber may have to range from 1,000 yen per month to 3,000 yen per month, observing the todays retail prices of other broadband methods in Japan. The necessary number of homes passed per LAN: Intermediate
Number of homes passed per LAN 120 100 80 60 40 20 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1.000 yen/mo 2,000 yen/mo 3,000 yen/mo

Penetration (%)

Fig. 4.2.4. The necessary number of homes per LAN (modem rental)

As seen in Fig. 4.2.3., when N equals 20, the cost will be below 2,000 yen per month over 60 % 68 Chapter Four

of the penetration. However, such a penetration is not likely, considering that the penetration of the broadband Internet in Japan is 15 % after the first commercial ADSL service started three years ago. Meanwhile, when N equals 80 or 100, the cost will be below 2,000 yen per month over 15 % of the penetration. These values of N, however, are not realistic in the current Japanese electric distribution networks, using 100/200 V systems.

4.2.3. Other findings: Cost structure This section investigates the cost structure of IPL, and specifies the cost elements, which raise the cost of implementing IPL. I assume that N equals 20, and the penetration is 100 %.

1) Onetime cost per home passed a. Substation level (500*N = 10,000) According to Table 3.3.1., the cost elements are shown below. The cost per home passed is derived by dividing the total cost by the total number of customers under a cell, 10,000. The cost per home passed here is 3,305 yen. LAN card: 176,000/10,000

Terminal system for IPL: 32,877,200/10,000 33,053,200/10,000 = 3,305 yen

Total

b. LAN level (N=20) According to Table 3.3.2., the cost per home passed of LAN level equipment ranges between 5,390 to 14,265 yen. O/E device: 80,800 155,300 /20 O/E labor: 27,000 130,000 /20 107,800 285,300 /20 = 5,390 14,265 yen

Total

c. Customer level (1) According to Table 3.3.4., the cost varies from 13,000 to 39,000 yen. IPL modem: 13,000 39,000 yen

Results

69

From the above calculations, the total onetime cost per home passed varies from 21,695 to 56,570 yen.

2) Ongoing cost b. LAN level (N=20) According to Table 3.3.3., the ongoing cost per home passed is 261.6 yen per month. rental fiber: 5,231 /20 = 261.6 yen/mo

The total ongoing cost is 262 yen per month. I amortized the total onetime cost obtained above into three years in a row, and compared it with the ongoing cost. Fig. 4.2.5. shows the cost structure of total cost per home passed in the intermediate case scenario. The cost structure of IPL: per home passed (Total =1,438 yen/mo)

262 , 19%

103 , 7% cell/10,000 331 , 23% LAN/20 customer/1 Ongoing

717 , 51%

Fig. 4.2.5. The cost structure of total cost (unit: yen/month) From Figure 4.2.5, the significant reduction of the total cost could be achieved by reducing onetime cost, specifically pushing the cost of a modem to consumers. This effect will be discussed later in Section 4.4.

4.3. Reality in Japan In the previous analyses, I assumed that 100 % of homes passed are potential customers for IPL. The reality, however, is different. First, according to the Economic and Social Research Institute (ESRI), the penetration of personal computers (Ppc) is on the average 63.3 % in March 2003 in Japan (sec.4). Secondly, the broadband market penetration (P bb) is 15 % in October 2002 in Japan (MPHP T, 2003). This

70

Chapter Four

paper assumes that other broadband users would not switch to IPL because the speeds are almost the same and the previous analyses show that the retail price of IPL will not be likely further lower than those of other broadband methods. The actual market left for IPL is only 48 % of total households, as seen in Fig. 4.3.1. Furthermore, while the growth rate of Ppc is around 12 % a year (ESRI), that of P bb is 115 % a year (MPHPT, 2003). Because Pbb is growing much faster than Ppc, the IPL target share is shrinking fast (Fig. 4.3.2). That is, the later the IPL service is launched, the fewer the target for IPL is left.

The current market size of broadband for IPL

Penetration of Broadband 15% No PC 37%

Target of IPL 48%

Fig. 4.3.1. The current market size for IPL in Japan

Results

71

The market window for IPL

80% 70%
Penetration (%)

Prediction

60% 50% 40% 30% 20% 10% 0% Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar- Mar97 98 99 00 01 02 03 04 05 Time Other broadband IPL window

Fig. 4.3.2. The market window for IPL in Japan

4.3.1. Definition of N (number of home s passed per LAN) For this reality in Japan, the valid number of homes passed per LAN is calculated in the following manner. Nmax : The actual maximal number per LV LAN. The average is 20, as described in Section 3.2.4. Nunserved: The number considering the reality in Japan, such as the PC penetration and broadband market share. Nunserved is calculated as follows: Nunserved = N max * (Ppc Pbb ) = 0.48 Nmax - (4.3.1)

Nunserved-p : The number considering the penetration of IPL, Pipl, which ranges from 0 to 100 %. Nunserved-p = Nunserved * Pipl = 0.48 Nmax * Pipl - (4.3.2)

4.3.2. The cost per home passed with Japanese reality Taking account of this reality, the revised result is shown in Fig. 4.3.3. Compared with Fig. 4.2.1., the cost rises by 500 to 1,000 yen per month in general.

72

Chapter Four

Monthly IPL cost per home passed

6000 Cost per home passed (yen/mo/home) 5000 4000 3000 2000 1000 0 0 2 4 6 8 10 12 14 16 18 20 Number of homes passed per LAN Worst Intermediate Best

Fig. 4.3.3. Monthly IPL cost per home passed with Japanese reality (modem rental)

The dashed lines in the figure represent the retail price range of other broadband methods, such as ADSL and cable modem. The retail prices in Japan range from 3,000 to 5,000 yen per month when the customers rent the modems (Table 4.3.1). Because the operational cost is usually from 2,000 to 3,000 yen per month, the costs can be estimated to be less then 3,000 yen per month (Black, par. 17). Likewise, when the customers purchase the modems, the costs can be estimated to be 2,500 yen per month because the retail prices range from 2,500 to 4,500 yen per month. From these estimates, the best case scenario or the intermediate case scenario might be able to be more cost-effective than the existing other broadband methods. However, these analyses assume that the IPL penetration is 100 %, which is not likely.

Results

73

Table 4.3.1. The retail prices of other broadband Internet methods (unit: yen per month) Modem rental Modem sale ADSL Yahoo! BB NTT EAST 3,318 3,030 3,140 eAcess 3,153+ 3,953 Cable modem J COM iTS.COM 5,200 2,900 3,200 4,650 8 Mbps, Cable market share: 26% 2,200 512 kbps, the low-priced service. 2,500 8 Mbps (Sources: see the list in Bibliography at the end) 2,448 8 Mbps, ADSL market share: 24% 2,600 1.5 Mbps, ADSL market share: 22% 2,650 8 M bps 3,153 1.5 Mbps, ADSL market share: 15% 3,453 8 Mbps

4.3.3. The cost per subscriber with Japanese reality Fig. 4.3.4. shows the cost per subscriber with Japanese reality when N equals 20. Compared with the results without Japanese reality, which are expressed as -theory in the figure, the costs rise by 500 to 1,500 yen per month. IPL could be as cost-effective as other broadband methods over 60 % of the IPL penetration in the targeted market. That is, if the penetration of IPL exceeds 29 % of total Japanese households, it could be as cost-effective as other broadband methods. Although such a penetration might be eventually possible, that is not realistic at first, as discussed in Section 4.2.2. Therefore, I conclude that IPL in Japan would not have a cost advantage over the other broadband methods.

74

Chapter Four

Monthly IPL cost per subscriber in Japan: Nmax = 20

6000 Cost (yen/mo/subscriber) 5000 4000 3000

`
2000 1000 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Worst-real Worst-theory Best-real Best-theory

Penetration (%)

Fig. 4.3.4. Monthly IPL cost per subscriber with Japanese reality (modem rental)

4.3.4. Sensitivity analysis: Market window for IPL The market window for IPL could be shorter than three years, which I assumed in the previous analyses, due to the accelerated broadband subscriber growth as seen at the beginning of this section. Furthermore, the Japanese government predicts that the number of FTTH subscribers would overcome that of ADSL by the end of the fiscal year 2005 (MPHPT, White Paper). Once the superior FTTH becomes popular, there will be no room for IPL to enter the broadband Internet market. Unless IPL modem vendors could find any technical solution to the emission issues, or the government changes the emission regulation, the IPLs market window would shorten more, say less than one year. Fig. 4.3.5. shows the result when the market window for IPL is 2 and 3 years. As seen, the costs rise by 500 to 1,000 yen per month when the market window is 2 years. IPL could be as cost-effective as other broadband Internet methods only if the best case scenario occurs and the IPL penetration is over 80 %, which are not realistic.

Results

75

Monthly IPL cost per subscriber in Japan: Nmax=20

Cost (yen/mo/subscriber) 6000 5000 4000 3000 ` 2000 1000 0
0% 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % 10 0%

Worst-2year Worst-3year Best-2year Best-3year

Penetration (%)

Fig. 4.3.5. Monthly IPL cost per subscriber with various market windows in Japan (modem rental)

4.4. Profitability of IPL This section tries to analyze how IPL would be profitable in Japan based on the results above.

4.4.1. Modem sale As predicted in Section 4.2.3., the significant cost reduction can be expected if the IPL customers purchase the IPL modems. In this section, I analyze how much the cost will be reduced when the IPL customers purchase the IPL modems. The result is shown in Fig 4.4.1. The dashed line in the figure represents the price range of other broadband methods, varying from 2,500 to 4,500 yen per month. Indeed, the cost of IPL decreases by 500 to 1,000 yen per month compared with when power companies provide the customers with IPL modems, but the other broadband methods retail prices also decrease by 500 yen per month on average. Therefore, IPL will not become as cost-effective as other broadband methods, even if the IPL customers purchase the IPL modems.

76

Chapter Four

Monthly IPL cost per home passed: (modem sale)

6000

Cost per home passed (yen/mo/home)

5000 4000 3000 2000 1000 0 0 2 4 6 8 10 12 14 16 18 20 Number of homes passed per LAN Worst Intermediate Best

Fig. 4.4.1. Monthly IPL cost per home passed (modem sale)

4.4.2. The number of homes passed per LAN Then, I analyzed what would occur if the number of homes passed per LAN increased. Fig 4.4.2. shows the revised result of Fig. 4.2.3, reflecting the reality in Japan. The result assumes that power companies provide customers with the IPL modems. Monthly IPL cost per subscriber per LAN: Intermediate
6,000 Cost (yen/mo/subscriber) 5,000 4,000 3,000 2,000 1,000 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% N=10 N=20 N=40 N=60 N=80 N=100

Penetration (%)

Fig. 4.4.2. Monthly IPL cost per subscriber per LAN (modem rental) When Nmax equals 20, the cost will be below the rivals low-end prices over 60 % of the

Results

77

penetration. However, such a penetration is not realistic, as described in Section 4.2.2. However, if Nmax is equal to or more than 80, the cost will be below the rivals low-end prices over 20 % of the penetration. Fig 4.4.3. shows the same result in another format. From these findings, I conclude that IPL would not have a cost advantage over the other broadband methods unless the technolo gy, which would increase the number of homes passed per LAN, is developed in the future. The necessary number of homes passed per LAN: Intermediate
Number of homes passed per LAN 120 100 80 60 40 20 0 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 1,100 yen/mo 2,000 yen/mo 3,000 yen/mo

Penetration (%)

Fig. 4.4.3. The necessary number of homes per LAN (modem rental)

78

Chapter Four

4.4.3. The reduction of the equipment cost per LAN Finally, I analyzed how much the equipment cost per LAN should be reduced to make IPL cost-effective. As predicted in Section 4.2.3., the significant cost reduction next to the case of selling modems can be expected by reducing the equipment cost per LAN. I calculated the equipment cost if the monthly IPL cost was 1,000 yen per month under the condition that Nmax equaled 20 and the IPL penetration in the targeted market was 100 %, which meant 48 % of the total Japanese houhold. I assumed the intermediate case scenario. Furthermore, I assumed that all equipment costs except the one per LAN are fixed. The result showed as follows: first, the IPL modems should be purchased by customers. Otherwise, the equipment cost per LAN will be zero. Second, the equipment cost per pole is around 86,900 yen. Compared with the original value under the same assumptions is 212,300 yen, it is a challenge to achieve this cost. I also tried another set by changing the IPL penetration in the targeted market to 50 %. The result, however, showed that the equipment cost should be zero. From these analyses, I conclude that it is a challenge to achieve the same cost-effectiveness as that of other broadband methods under the assumption I made, including the current IPL technology.

4.5. Conclusion This chapter analyzed the cost results using the engineering cost model and the input parameters collected in Chapter 3. The key findings are as follows: The IPL would not have more advantageous cost structure than other technologies. It might be cost-effective if IPL could technically increase the number of homes per LAN in the future, i.e., 80 homes per LAN, and It might not improve the cost advantage to let IPL customers purchase the IPL modems. Therefore, IPL will not have an advantageous cost structure under the current situation in Japan. For those reasons, I conclude that the IPL would not have a dominant market power in the broadband Internet market in Japan.

Results

79

Chapter 5. Policy Implications

This chapter discusses the policy issues based on the results of this research.

5.1. Japanese antitrust policy This section reviews Japanese antitrust policy before making a conclusion about the IPL case. The main law which governs antitrust issues in Japan is the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade: Siteki dokusen no kinsi oyobi kosei torihiki no kakuho ni kansuru horitu, the so-called Antimonopoly Act . The entity in charge of the issues is the Japan Fair Trade Commission (JFTC 2 ). According to its website, its role is as follows:
The Japan Fair Trade Commission is positioned as an extra ministerial body of the Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). However, the Japan Fair Trade Commission has the character of being an administrative organization under the council system, consisting of a Chairman and four Commissioners. In implementing the Antimonopoly Act, the Japan Fair Trade Commission independently performs its duties without being directed or supervised by anyone else (2003, sec. 2-1-1).

MPHPT

JFTC

Fig. 5.1.1. The relationship between MPHPT and JFTC As for the telecommunications industry, JFTC cooperates with MPHPT3 , which is in charge of Japanese telecommunications policy. Likewise, as for the electricity industry, JFTC cooperates with the Ministry of Economy, Trade and Industry (METI4 ), whose affiliate, Agency for Natural Resources and Energy (ANRE5 ), is mainly in charge of Japanese electricity policy. If a monopoly status harms the market, i.e., no price decrease in spite of the cost decrease, the Japanese government will advise the market in order to recover a competitive status.

80

Chapter Five

5.1.1. The antitrust policy in telecommunications market The Manual for Market Entry into Japanese Telecommunications Business states that the entry into the telecommunications business should not impede fair competition according to Examination Standards Regarding the Telecommunications Business Laws Chapter II, Permission for Type I Telecommunications Business (MPHPT 81). The Telecommunications Council (TC), an affiliate of MPHPT, is mainly involved in the current telecommunications policy. In their recent publication, The Guideline of the Competition Policy, they propose three main points (TC 12): 1) Promote new entrants as well as secure fair competition, 2) Protect customers from complexity of services, and 3) Revise the regulation to adapt the shift toward IP networks. Among these, the proposal 1) is related to the IPL case. While TC focuses on how to stimulate the telecommunications competition, JFTC encourages the fair competition among the participants.

Organizations

MPHPT

JFTC

TC

Law

Telecommunications Business Law

Antimonopoly Act

Fig. 5.1.2. The organizations in charge of the telecommunications policy

According to the Guidelines of Competition Policy and System Reform of Telecommunications Market, the existence of two rules, the Antimonopoly Act and Telecommunications Business Laws connection rule for NTT facilities, has brought about some confusion among business entities (5). Therefore, they set the following rules over the

Policy Implications

81

supervising entities, JFTC and MPHPT, in the guidelines to avoid such confusion (JFTC&MPHPT, 51). Communicate with each other whenever one or both receives a complaint. Have a liaison for the above purpose. Proceed the complaining based on the following laws: Antimonopoly Act , Chapter 45 and Telecommunications Business Law, Chapter 96. Cooperate and share information smoothly and efficiently. Unfortunately, there has been no quantitative criterion to measure a market power so far, though TC has been trying to develop one. Instead, TC uses the degree of the influence on society, which does not have clear quantitative definitions, either (89). Therefore, the following parts review several cases to have a general image of Japanese antitrust policy in the telecommunications market. The key policy here is the unbundled network equipment (UNE) policy. In order to solve the antitrust issue in the telecommunications market, it is economically and practically appropriate to unbundle the network equipment of an entity, which has a relatively dominant market power in the market, and to lend it to the competitors.

a. Case study (1) Cable modem Internet Cable television companies are exempted from the UNE policy. In terms of the degree of the influence on society, the penetration of cable television subscribers, 27.1 % as of March 2002, is regarded as too small an influence on society to apply the UNE policy to cable television companies (The Dispute Processing Committee, Ch.2, Sec. 3-(4)). In fact, as of October 2002, the IT Strategy Headquarters report that the number of ADSL subscribers is two and a half as many as that of cable modem Internet subscribers (sec. 1-(4)). Because of this less dominant market power, cable companies are even allowed discounted bundled broadcasting service with the Internet service. For example, J-COM Kansai, the biggest multiple system operator (MSO) in Japan, offers a bundled menu at 8,400 yen per month, whose original price is a sum of TV service charge, 3,980 yen per month and the Internet service charge, 5,200 yen per month (JCOM Kansai). As a reference, there are two differences between the U.S. and Japanese policy for the cable modem Internet. First, the Japanese local governments do not have as strong an authority

82

Chapter Five

as the US s local governments have. Therefore, there will not be complex policy issues once national level policies are launched. Second, while the U.S. federal government tries to define cable modem Internet service as Information service to avoid telecommunications regulations like UNE policy, the Japanese government does not.

b. Case study (2) the entry of power companies As for power companies, on the other hand, the Japanese government regards the entry of power companies as a big influence on society. The MPHPTs press release on February 8, 2002 reported that Tokyo Electric Power Company, Inc. (TEPCO) obtained permission to operate Type I Telecommunications Business under the six conditions below (MPHPT, 8 Feb. 2002). (The date was about one month before TEPCO launched the FTTH service.) Fair treatment of poles among TEPCOs telecommunications department and other carriers, Shutdown of information between telecommunications department and others inside the company, Prohibition of utilizing electricity supply service and sales information, Periodic disclosure of pole attachment data, Separate organization and customer information for telecommunications use, and Separate assets in the account book, and public disclosure.

Three more detailed criteria were announced for the account, a half year later by MPHPT (MPHPT, 8 Aug. 2002): Disclosure of the account information Assets and expenditures of telecommunications business Prohibition of mutual support By defining the actual percentage of expense distribution Securing fair treatment of pole attachment By applying the same charge to the cable for telecommunication use as that carriers incur.

Policy Implications

83

Chubu Electric Power Company Inc. (Chubu), the third largest power company in Japan, also faced the same condition when it received the permission of a telecommunications business (MPHPT, Sept. 25, 2002). Both power companies have offered Fiber to the Home (FTTH) service in their electrical service areas by themselves. As seen above, the two power companies are not requested to unbundle their network facilities. Although two power companies in Japan have obtained the permission of the telecommunications business in Japan, neither can offer the IPL service today. Because the Japanese government decided to postpone the implementation of the IPL service due to its technical problem on August 8, 2002, power companies in Japan can neither offer the service nor make active efforts to fix the problem, like field tests.

c. Trends in Japan For the ambitious purpose of making Japan a top IT nation in the world within five years since 2001, the Japanese government founded an IT Strategy Headquarters as an affiliate of Prime Ministry of Japan and His Cabinet. The Headquarters proposed an e-Japan Strategy to implement its purpose. One of the important topics there was to promote the spread of broadband Internet. In fact, the investigation of implementing IPL in Japan was included in the e-Japan Priority Policy Program-2002, announced June 18, 2002 (The Headquarters Part II, 1(4)-2). In order to reflect these changes in telecommunications policy, JFTC proposed that the government should minimize the advance regulation on entrants to lower the hurdle to the entry for potential entrants. JFTC stated that the current system to permit entrants the telecommunications business, so-called TYPE I Telecommunications Business, not only got rid of entrants incentive to enter the market but also tended to reflect someones intention (JFTC, Nov. 2002, 9). JFTC proposed in their report that it is important to balance the regulation before and after entry. For example, entry by utilities to other public industries is expected to bring about competition based on facilities, but abuse of their market power in the new fields is a matter of concern. Therefore, for the regulation before entry, it should be analyzed thoroughly 1) whether it is possible for the entrants to abuse their dominant market power in utilities in the telecommunications field, 2) what kind of harmful effects might be brought about, and 3)

84

Chapter Five

whether advance regulation is sufficient to secure fair competition, if the government determines to put some limits on the entrants activity in order to insure fair competition. Observing these telecommunications policy trends in Japan, this thesis concludes that it is not likely that the government will impose strict regulation on entrants into broadband access business.

d. Summary From these case studies and the results from the cost analyses, I conclude that it is appropriate to apply the same or less strict regulation to the IPL service as discussed in Subsection (b). Although there were some voices saying that IPL needed more strict regulation than FTTH, the cost analyses showed the relatively weaker market power of IPL in the current broadband Internet market.

5.1.2. The antitrust policy in the electricity market According to JFTC and the Ministry of Economy, Trade and Industry (METI), The pricing of electricity far below the cost violates antitrust law (6). However, there has not yet been any regulation that applies to the bundled electricity service with the telecommunications service. The discounted bundled service might entice the electricity customers, resulting in the anticompetitive tactics against the electricity entrants, which do not have LV networks. The following sections review several past cases to provide general image of Japanese antitrust policy on the bundled services.

Organizations

METI

JFTC

ANRE

Law

Electricity Utilities Industry Law

Antimonopoly Act

Fig. 5.1.3. The organizations in charge of the electricity policy

Policy Implications

85

a. Case study: bundled service (1) When NTT started a bundled service which offered the bundled service of the local telephone service and the ADSL service at a discounted rate, its ADSL competitor, eAccess, complained that this competition would not be fair. According to eAccess, the reasons were that it could not offer local phone service and that NTT had a dominant market share in the local phone market, 73% in March 2003 (MYLINE Carriers Association, 2003). The government judgment was, however, for NTT because both local telephone and ADSL markets were under competition and it was hard to anticipate how the bundling service would affect the ADSL market. The government decided to require NTT reporting of data on the correlation between the telephone and ADSL markets, and to monitor the markets for a possible policy revision (The Dispute Processing Committee, Part II, Ch. 3, Sec. 1-8., 149).

b. Case study: bundled service (2) Similar to the previous case, in the U.S. software industry, Microsoft was sued for bundling its Internet browser software, Internet Explorer (IE), with its dominant personal computer (PC) operating system (OS), Windows. After Microsoft bundled IE with Windows, the previous number one browser company, Netscape, lost much of its market share. Although still pending, the judgment so far has been in favor of Microsoft. The point here was that the application software, IE, was regarded as a part of OS functions. Following this logic, power companies can say that a bundled service of electricity and IPL would not violate the antitrust policy if IPL is regarded as a part of the electricity services. Observing that there is no lawsuit related to the Microsofts IE case in Japan, I conclude that the Japanese government follows the U.S. judgment. Consequently, the bundled IPL service might also be possible.

c. Summary Japanese power companies might bundle their electricity service with the IPL service at a discounted rate like those in the above cases. However, the story is slightly different from the cases above. Because the liberalization of the power market has not been done for residents and small businesses, the bundling of service could be tying the monopoly market to a competitive market (Fig. 5.1.4.). As the Telecommunications Business Law, Chapter 31, section 2 mandated

86

Chapter Five

that the price of discounted bundled service, subsidized from monopoly market, should be adjusted (JFTC and MPHPT 29), that activity is prohibited under the current law.

Local phone + ADSL (comp. but dominant) (comp.)

Electricity + IPL (monopoly) (comp.)

Fig. 5.1.4. The difference between the two cases

Furthermore, because cross subsid y by the power companies between their power businesses and telecommunications businesses is prohibited by the government, the discounted bundling of IPL service cannot be attained under the current environment. Consequently, the fair competition in the electricity market will be kept even if the IPL service is launched. The liberalization of the resident-level power market will be on the agenda in April 2007 (EBS 24), though it is not clear whether the liberalization will be implemented or not.

5.2. Antitrust issues in IPL 5.2.1. Broadband Internet market This section discusses the issues related to Japanese power companies as entrants in the broadband Internet market. The main issue here is about unbundling distribution power networks. Considering that NTT, a former natural monopoly of telecommunications business, is regulated by the UNE policy, power companies would also have to provide their distribution power networks to telecommunications competitors if power companies have a dominant market power in the Japanese broadband market, with IPL using the economy of scope. My hypothesis is the opposite of the above prediction. First, the results of cost analyses show that IPL would not be as cost-effective as other technologies such as ADSL and cable modem in the current Japanese environment. In terms of the degree of influence on society, Policy Implications 87

the observation of the recent broadband market shows that the cost is the biggest element to be considered, not the market penetration of the original networks. For example, the number of ADSL subscribers rapidly increased after its price became around 3,000 yen per month. In fact, the U.S. data show that the top reason why people in the U.S. do not subscribe to broadband Internet service is its expensive price, around $50 per month (OTP, 14). Moreover, IPL is at a disadvantage in that it is not a first mover in the broadband Internet market. Third, as for the possibility of cross subsidy from electricity revenue, the current regulation on TEPCO and Chubu prohibits cross subsidy between electricity and telecommunications services. Therefore, while the bundling of service would be possible, the discounted bundled service could not be offered. One potential rationale to reverse the cross-subsidy regulation is the Microsofts IE case, described in Section 5.1.2. For these reasons, I conclude that power companies would not have a dominant market power in the broadband Internet market even if they utilized their electricity networks, whose penetration is superior to any other network. Consequently I recommend that the Japanese government should not regulate power companies that offer IPL service as strictly as local telephone companies are regulated under the UNE policy.

5.2.2. Electricity market This section discusses the issues related to power companies as incumbents in the electricity market. Main issue here is whether IPL would hinder the fair competition in the electricity market.

a. Liberalized markets A part of industrial customer markets is liberalized now. If we can apply the NTT vs. eAccess case in Section 5.1.1. to these markets, power companies could offer discounted bundling service of IPL and electricity. Though electricity service entrants, which do not have distribution networks might complain of this matter, the discounted bundling service could be allowed unless the correlation between two services turns out to be strong. However, in order to achieve this service, the current cross-subsidy regulation on power companies telecommunications business should be loosened.

88

Chapter Five

b. Non- Liberalized markets Ordinary residential customer markets have not been liberalized yet. Therefore, the cross subsidy like a discounted bundled service means leveraging power in the monopoly market, the electricity market, into the competitive market, the broadband market. Observing that NTT faces the UNE policy today, I believe that power companies would receive more strict regulation if they try to bundle the IPL service with the electricity service at a discounted rate.

5.3. Other policy issues There are several policy issues related to IPL besides antitrust issues. This section discusses the issues as follows: Asset allocation (electricity or information), Rights of way (pole, conduit), Interference of radio waves, and Use of customer information achieved by electricity business.

Most of these issues can be solved if IPL is offered by power companies telecommunications, affiliates. Here, however, I try to assume that power companies directly operate IPL because the situation is more likely to happen in todays environment. Many of the answers are shown by the government in the requirement to TEPCO, issued on Feb. 8, 2002 (MPHPT, Feb. 2002).

5.3.1. Asset allocation The use of utility assets for the commercial telecommunications service has complex jurisdictional and regulatory issues. The challenge will be about the distribution electrical wires, while the physically separated devices like an O/E device will be easily classified as a telecommunications asset. It will be argued how power lines would be valued when they are used for IPL service. Power companies could integrate an auto- meter reading service using the IPL service so that the IPL service could be regarded as an extended utility service. In Japan, for example, the asset of FTTH service has been separated from that of electricity service in the power companies account books because of the government requirement. The difficulty of IPL is, however, power lines cannot be divided physically like optical fiber cables because the same medium transmits electricity and data signals

Policy Implications

89

simultaneously. If distribution power lines are regarded as telecommunications asset as well as electricity asset, the power lines might be ruled by more than one regulator, i.e., MPHPT and METI, in the future, which would cause some confusion. This decision might also bring some organizational conflict inside power companies. For example, the maintenance workers of the distribution department in a power company will have to be trained to understand telecommunications technology. This means the extra work for the workers, and some resistance might be expected. As a result, the maintenance workers of the telecommunications department in the company might have to be trained to deal with electrical wires. In this case, the same resistance might be expected, too. As for the ratio of the telecommunication portion, one approach might be to estimate a rental fee of power lines, supposing that an affiliate offers IPL service borrowing the lines from the power company. Power companies could refer to NTTs calculation of ADSL connection fee. The main portion might be the maintenance fee of a line. In summary, the following challenges are needed to be solved for this asset allocation issue. Organizational conflicts Internal conflicts between the distribution dept. vs. the telecommunications dept. External conflicts between MPHPT vs. METI

Legal and regulatory challenge Accounting

Different from that of Japan, this issue could be solved by regarding electrical wires as electricity assets in the U.S., even if they transmit the Internet data. Like the cable modem, IPL might not be regarded as the telecommunications service but the information service. Furthermore, IPL might be regarded as one of the electricity services by integrating value added services like the automated meter reading service. In fact, if the Internet service using electricity wires is approved as one of the electricity services, the bundled service of IPL and electricity would not violate antitrust issues, according to the Microsofts IE case, discussed in Section 5.1.2.

90

Chapter Five

5.3.2. Rights of way (pole and conduit) In Japan, the government requires that utilities provide telecommunications carriers (carriers) and cable television operators (operators) non-discriminatory access to poles, ducts, and rights-of-way for communications purposes. If a utility starts the IPL service, the power lines can be regarded as telecommunications lines, which can be subject to the same attachment fee as the one the carriers and the operators have paid. In fact, the government requires that TEPCO and Chubu charge the attachment fee on their own fibers used for FTTH service. Both power companies must put the fee in their account book of telecommunications business. The problem, however, is that an electrical cable cannot be separated physically as optical fiber cables can be. While each core can be determined as telecommunications use or electricity use in the case of fiber cables, an electrical cable of the low voltage distribution networks usually consist of only two electrical wires which would transmit electricity and the Internet data simultaneously. I try to solve this issue in the following way: first, the purpose of the attachment fee is to prevent the free ride by carriers and operators. Because the poles were built to attach electrical cables, it is strange to require the same amount of attachment fees on the electrical cable s just because the cables are used for the Internet use. Second, however, charging nothing to electrical cables will give IPL a financial advantage over the other broadband carriers. Consequently the competition will not be fair. Third, the cost analysis, however again, shows that IPL will not have a cost advantage over the other carriers even without the attachment fees with the current IPL technology. That is, requiring the attachment fee will make IPL even less cost-effective. For these reasons, I recommend that the government should not require that power companies charge an attachment fee on their electrical cables unless a breakthrough IPL technology, which increases the number of homes per LAN, will be developed. The different approach might be possible using the same logic discussed in Section 5.3.1. That is, it might be possible for power companies to persuade the government that IPL is the electricity service, by offering value-added services like the automated meter reading over IPL. Unfortunately, because the Japanese government does not use the same measure as the U.S. use, I do not think that this solution would be applied to the Japanese IPL case. The situation will not be likely to change in the future, either, observing that the U.S. policy has brought about

Policy Implications

91

some confusion among the players, i.e. power companies attempts to charge different rates on the cables, over which the cable companies offer the cable modem services (APPA). In summary, the following challenges are necessary to be solved for the rights-of-way issues. Legal and regulatory challenge Accounting

5.3.3. Inte rference with radio waves Because the IPL system uses spectrum between 2MHz to 30 MHz as its carrier frequency, the radiated electromagnetic waves sometimes interfere with the waves of existing amateur radio and other uses. While it may be possible to suppress the radiation technically in the near future, it might also be appropriate to investigate the current spectrum use and reallocate the spectrum among users. According to the Rules for Enforcement of the Radio Law Chapter 44, telecommunications over power lines (PLT) are allowed in the frequency bandwidth between 10 kHz to 450 kHz with less than 10W power. In the year of 2002, the Japanese government tested the emission influence of expanding the PLT frequency to the range between 2 MHz to 30 MHz because the IPL implementation was one of the projects to promote the broadband Internet penetration in e-Japan strategy proposed by IT Strategy Headquarters, an affiliate of Prime Ministry of Japan and His Cabinet. The result, however, showed that the emission would heavily affect the existing wireless services such as broadcasting and amateur radio when electrical cables were within 3 meter distance from the target facilities (MPHPT, 9 Aug. 2002). The general use of 2MHz to 30MHz is shown in Fig. 5.3.1.

92

Chapter Five

10

450

3,000

PLT

MF

HF

VHF

[kHz]

[MHz]

HF bandwidth is used mainly by Maritime mobile Amateur radio Aeronautical mobile HF-broadcasting Others (Land mobile, Fixed) Fig. 5.3.1. The spectrum map ranging from 1 to 30 MHz in Japan (Source: MPHPT, The public disclosure of the frequency allocation)

The governments result also showed that the emission could be received even 100 to 400m distance far from the electrical cables. For these reasons, on August 9, 2003, the Japanese government decided to postpone the implementation of IPL in Japan until the emission issue is technically solved. This decision did not affect the permission for the power companies to offer the telecommunications services, which had been given a half year before for TEPCO and two months later for Chubu. Talking of the world movement, because the standard of the radiation regulation differs among nations, a unified standard is planned on worldwide basis through the International Special Committee on Radio Interference (CISPR). It is generally said that the order of the severity is British, German and the U.S. low. In the U.S., the FCCs Spectrum Policy Task Force (SPTF) has been working on this issue, using the interfe rence temperature, which measures the degree of interference of unintended radiated waves (Lyon, 10). In Europe, several organizations, such as the European Telecommunication Standardization Institute (ETSI6 ), the IEEE Power Engineering Society Power System Communications Committee (PSCC7 ), and CISPR are working together to establish the standard of the radiation of the IPL system as well as that of the home-networking over power lines. Although the Japanese government also participates in

Policy Implications

93

CISPR, it looks difficult for the Japanese government to reallocate the existing spectrum map because of the strong resistance from the organizations such as the broadcasting stations and the amateur radio communicators. The technical solutions were shown in Chapter two. In summary, the following challenges are needed to be solved for the emission issue. Organizational resistance Existing frequency users vs. power companies and the Japanese government

Technical challenge Development of the emission suppression

Regula tory challenge Relocation of the existing spectrum map

5.3.4. Use of customer information obtained by an electricity business About the information known as customer proprietary network information (CPNI), the FCC limits the Bell Operating Companies use of customer information obtained from their regulated market for the new market (Gray, 1999, 43). In Japan, the similar rule has also applied to electrical power companies which offer FTTH service recently. However, there has not been appropriate investigation of the power companies market power in new markets like the broadband Internet market. If the market power is far less dominant than that of existing competitors, using CPNI could be justified to achieve perfect competition. In fact, as for MYLINE competition, the competition of local phone market, NTT won the game because it created and offered various price menus, which reflected customers preferences on the telephone. NTTs rich CPNI, which its competitors did not have, enabled it to pursue this strategy. Recently, JFTC proposed that the government should minimize the advance regulation on entrants, including CPNI, because severe regulation on entrants in advance would reduce the entrants motivation. It says that the current permission system of TYPE 1 not only gets rid of entrants motivation but also tends to reflect someones intention, purpose (JFTC, Nov. 2002, 9). Therefore, JFTC proposes that the government should investigate the market only if something wrong occurs there. For exa mple, the entry by utilities in other public industries is expected to bring about competition based on facilities, while the abuse of the market power in the area is concerned. However, it should be analyzed thoroughly 1) whether it is possible for the entrants

94

Chapter Five

to abuse their dominant market power in their area also in telecommunications area, 2) what kind of harmful effects will be brought about, and 3) whether the advance regulation is appropriate to secure fair competition, when the government determines to put some limits on the entrants activity in terms of secure of fair competition. TC has the same opinion (TC, 9). The Final report on how the competition policy in telecommunications should be in order to promote IT revolution reports that the government should investigate how the CPNI in other market influence the telephone or Internet market. In summary, the following challenge is needed to be solved: Regulatory challenge Permission of the use of CPNI

5.4. Policy recommendations From these analyses, I recommend the following policies related to the IPL implementation: Do not impose the UNE policy on power companies because of the little possibilities of violating antitrust issues, Simulate the outcomes of the asset allocation policies thoroughly, specifically about the organizational aspects and the accounting aspects. Do not charge the pole attachment fee on the electrical cables until the breakthrough technology will be developed, i.e., the cost-effective bypass-transformer device. Support the development of the technology to suppress the radio-wave emission. Allow power companies use their customer information obtained from their electricity business unless the obvious problem is found.

Policy Implications

95

Endnote: 2 The Japan Fair Trade Commission (JFTC). See <http://www.jftc.go.jp/e-page/f_home.htm>

3 4

Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). See < http://www.soumu.go.jp/>

Ministry of Economy, Trade and Industry (METI). See < http://www.meti.go.jp/english/index.html > 5 Agency for Natural Resources and Energy (ANRE). See < http://www.enecho.meti.go.jp/english/index.htm > 6 the European Telecommunication Standardization Institute (ETSI). See <http://www.etsi.org/>. 7 the IEEE Power Engineering Society Power System Communications Committee (PSCC). See < http://www.ewh.ieee.org/soc/pes/pscc/>.

96

Chapter Five

Chapter 6. Conclusions
This chapter summarizes the key findings of this study, first. Then it suggests the further research. Finally, it concludes with the policy recommendations.

6.1. Summary of key findings 6.1.1. Key findings from the cost analyses From the cost analyses, the followings are found:

IPL would not have a dominant market power in Japan under the current situation,

The cost analyses show that IPL would not be as cost-effective as other broadband methods such as ADSL and cable modem. For example, the monthly IPL cost will be 4,000 yen per month on the likely condition that the number of home passed is 20, and that the IPL penetration is 20 percent in the intermediate case scenario. Considering that the retail prices of the other broadband methods are around 4,000 yen per month, and that the OPEX is around 2,500 yen per month, it cannot be said that IPL would be as cost-effective as other broadband methods. Furthermore, if the Japanese reality is taken into account, the IPL cost increases to around 6,000 yen per month under the same condition. Because the market window of IPL is also shrinking faster, I conclude that IPL would not have a dominant market power in Japan under the current situation.

It might be cost-effective if IPL could technically increase the number of homes per LAN in the future, i.e., 80 homes per LAN,

One way to increase the number is to adopt the MV & LV line network architecture, discussed in Section 2.3.2. Aggregating four or five LV-LANs will capture the necessary number of homes per LAN. If the cost of the bypass technology decreases to the affordable level and the bandwidth limit of the power lines is technically solved, this option would make IPL more cost-effective.

Conclusions

97

It might not improve the cost advantage to let IPL customers purchase the IPL modems.

Because the retail prices of other broadband methods also decrease by the similar degree, this option is not effective to improve the cost advantage of IPL.

6.1.2. Key findings from the policy analyses a. The Japanese broadband market From the policy analyses, the followings related to the Japanese broadband market are found:

The degree of influence on society is the criterion to determine whether to regulate the entrants, though the criterion does not have a quantitative measurement,

Although the penetration of cable television is one of the few quantitative measurements, this measurement alone will not tell the market power of the entrants.

The Japanese government should not impose the UNE policy on power companies which offer the IPL services,

The reasons are as follows: first, the IPL would not have a cost advantage over other broadband methods. Second, the power companies with IPL are not first movers. Third, because the cross subsidy from the electricity revenues is prohibited, it is impossible to offer the discounted bundled service of IPL and the electricity service. Finally, the UNE policy would bring about the complex operational issues of distribution networks.

The power companies should be allowed to use the customer proprietary network information (CPNI) obtained from the electricity services,

As JFTC states in their report, it is uncertain how dominant the market power of power companies in the broadband market will be with the IPL service. Rather, in order to stimulate 98 Chapter Six

further competition, the Japanese government should not impose strict regulation on power companies unless they turned out to have dominant market powers.

The asset allocation issues need to be analyzed further,

As discussed in Section 5.3.1., if the LV distribution network assets are partially regarded as telecommunications assets, there would be organizational conflicts not only the inside a power company, but also between the regulators.

The Japanese government should not impose the pole attachment fees on the electrical cables, used for the IPL purpose,

Because IPL would not have a cost advantage even without the pole attachment fee, it is recommendable for the government not to impose the fees on the power companies unless power companies develop technologies, which would improve the IPL cost structure, i.e., increase the number of homes per LAN.

The Japanese government should reconsider the allocation of the spectrum as well as assist the development of the IPLs emission suppression technology.

Considering that the IPL technology is also expected to be used in the home-networking in the future, the relocation of the spectrum should be investigated sooner or later, though the work would not be easy.

b. The Japanese electricity market From the policy analyses, the followings related to the Japanese electricity market are found:

The IPL service would not hinder the fair competition in the Japanese electricity market.

Conclusions

99

First, the relatively expensive IPL service would not attract the electricity customers. Second, because the current regulation prohibits incumbent power companies from offering the cross subsidized bundled service of IPL and the electricity service, the IPL service by the incumbent power companies would not be an advantage over other electricity entrants.

6.2. Suggestions for further research The recommendable further researches are as follows:

The cost reduction analyses of pole equipment,

This thesis made several assumptions related to the O/E device at a pole. The sensitivity analysis in Section 4.4.3 shows that it is a challenge to make IPL as cost-effective as other broadband methods under the assumptions I made, like using IP-based devices. However, such cost-effectiveness might be possible under different assumptions. Because the pole equipment cost occupies the larger portions of the cost of implementing IPL, I recommend further researches on this topic.

The cost analyses of the different network architectures.

MV & wireless architecture, which is adopted by Amperion, might be a good substitute for fiber-based architecture. Considering the recent spread of wireless technology, specifically WiFi technology, this architecture deserves considering for power companie s which seek for the entry into telecommunications business.

6.3. Policy recommendations Although the market window for IPL is shrinking recently, IPL is still expected in some areas like rural areas, where the deployment of the broadband infrastructure is slow. In order to benefit such areas, this thesis recommends the following policies:

The Japanese government should not impose the UNE policy on power companies,

100

Chapter Six

Power companies should be allowed to use their customer information obtained from their electricity business, The Pole attachment fees should not be charged to the electrical cables unless the IPL service will be profitable, The Japanese government should consider the revision of the existing spectrum map, and Power companies should be allowed to offer the bundled IPL service with their electricity service at a discounted rate to the liberalized electricity customers.

I believe that this study based on the engineering cost model would contribute to the further effective policy implementation in the broadband market as well as the electricity market in Japan.

Conclusions

101

Endnotes
1

Hokkaido Electric Power Company Inc. See <http://www.hepco.co.jp/> Tohoku Electric Power Company Inc. See <http://www.tohoku-epco.co.jp/> Tokyo Electric Power Company Inc. (TEPCO) See <http://www.tepco.ne.jp/> Chubu Electric Power Company Inc. See <http://www.commufa.jp/> Hokuriku Electric Power Company Inc. See <http://www.rikuden.co.jp/> Kansai Electric Power Company Inc. (KEPCO) See <http://www.kepco.co.jp/> Chugoku Electric Power Company Inc. See <http://www.energia.co.jp/> Shikoku Electric Power Company Inc. See <http://yonden.co.jp> Kyushu Electric Power Company Inc. See <http://www.kyuden.co.jp/> Okinawa Electric Power Company, Inc. (OEPC) See <http://www.okiden.co.jp/> 2 The Japan Fair Trade Commission (JFTC). See <http://www.jftc.go.jp/e-page/f_home.htm>
3 4

Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). See < http://www.soumu.go.jp/>

Ministry of Economy, Trade and Industry (METI). See < http://www.meti.go.jp/english/index.html > 5 Agency for Natural Resources and Energy (ANRE). See < http://www.enecho.meti.go.jp/english/index.htm > 6 the European Telecommunication Standardization Institute (ETSI). See <http://www.etsi.org/>. 7 the IEEE Power Engineering Society Power System Communications Committee (PSCC). See < http://www.ewh.ieee.org/soc/pes/pscc/>.

102

Bibliographies

Bibliographies
Alfonso. DS2. Re: Inquiry about technique. E- mail to the author, 10 Dec. 2002. American Public Power Association (APPA). FCC has authority to limit pole attachment fees, high court rules. Public Power Weekly No.3 21 Jan. 2002: 5. 8 Oct. 2002. <http://www.appanet.org/pdfreq.cfm?PATH_INFO=/legislativeregulatory/broadband/pol es/ppwpoleattach.pdf&VARACTION=GO> Allied-telesis. The price list of media converters: Media-converter kakaku ichiran. 31 Mar. 2003. Total Networking Solutions. 29 Apr. 2003. <http://www.alliedtelesis.co.jp/products/price/converter.html> Amperion. The Market >> Powerline Communications (PLC) Overview. 2003. Home page. 29 Apr. 2003. <http://www.amperion.com/market.asp> Black, Jane. Behind the High-Speed Slowdown. 17 Sept. 2002. Business week online. 8 May 2003. <http://www.businessweek.com/print/technology/content/sep2002/tc20020917_2824.htm ?tc> Chubu Electric Power Company Inc. <http://www.commufa.jp/> Chugoku Electric Power Company Inc. <http://www.energia.co.jp/> International Special Committee on Radio Interference (CISPR). International Special Committee on Radio Interference. 2003. Home page. 29 Apr. 2003. <http://www.iec.ch/cgibin/procgi.pl/www/iecwww.p?wwwlang=E&wwwprog=dirdet.p&committee=SC&numb er=cispr> The Columbia Institute for Tele-Information (CITI). Power Line Communications: More Than a Scientific CuriosityBut Is It (Finally) the Long-Awaited Third Wire to Every Home? 2003. Homepage. 29 Apr. 2003. <http://www.citi.columbia.edu/> Data Over Cable Service Interface Specification (DOCSIS) Team. CableLabs. DOCSIS Overview. Jan. 2003. Home page. 31 Mar. 2003. <http://www.cablemodem.com/downloads/slideshow.ppt> Japan. The Dispute Processing Committee: Funso shori iinkai. Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). The Report on the fair settlement of disputes in an IT age: IT jidai no kosei na funso kaiketsu ni mukete. 6 Dec. 2001. Home page. 29 Apr. 2003. <http://www.soumu.go.jp/hunso/021206/011.pdf> Dostert, Klaus. Powerline Communications. New Jersey: Prentice Hall PTR, 2001

Bibliographies

103

Dream Train Internet (DTI). ADSL splitter (by NTT-AT). 2002. Dream Mall. 2 Apr. 2003. <https://club-dti.dti.ne.jp/DreamMall/catalog/COTV07.html> eAccess. The list of ISPs: taio purovaida ichiran. 2003. Home page. 29 Apr. 2003. <http://www.eaccess.net/service/outline/provider/index.html> Japan. The Electricity Business Subcommittee (EBS): Denki Jigyo Bunkakai. Agency for Natural Resources and Energy (ANRE). The Report on the framework of the desirable electricity business in the future: Kongo no nozomashii denki jigyo seido no kokkaku ni tusite. 18 Feb. 2003. Home page. 29 Apr. 2003. <http://www.meti.go.jp/policy/electricpower_partialliberalization/bunkakai/14th/tousin.p df> Economic and Social Research Institute (ESRI), Cabinet Office, Consumer Confidence Survey :Shohi doko chosa. 23 Apr. 2002. 2 Apr. 2003. <http://www.esri.cao.go.jp/jp/stat/shouhi/0203shouhi.html> EnerSearch AB. Project summary: Powerline as an Alternative Local AccesS (PALAS). Home page. 8 Oct. 2002. <http://www.enersearch.se/palas/palas-proj%20summary.htm> F.A.Z.-Institut fr Management-. RWE ends Powerline project. 3 to 9 Sept. 2002. Chemical newsflash. 29 Apr. 2003. <http://www.chemicalnewsflash.de/en/news/100902/news9.htm> U.S. the Federal Communications Commission (FCC). FCC Begins Inquiry Regarding Broadband Over Powerline (BPL). 23 Apr. 2003. FCC NEWS. 29 Apr. 2003. <http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-233537A1.pdf> Fryxell, Daniel, Marvin Sirbu, and Kanchana Wanichkorn. An IP-Based Local Access Network: Economic and Public Policy Analysis. Competition, Regulation, and Convergence. Ed. Sharon Eisner Gillett and Ingo Vogelsang. New Jersey: Lawrence Erlbaum Associates, 1999. 255-281. Fujitsu. Catalogue of network facilities by Fujitsu: Fujitsu nettowaku seihin sogo katarogu. 2. 2002. 29 Apr. 2003. <http://telecom.fujitsu.com/jp/products/catalog/lan0202/lan0202price.pdf> Gardner, Steve, Brian Markwalter, and Larry Youge, HomePlug Standard Brings Networking to the Home, CommsDesign. 3 Jan. 2001. 18 Dec. 2002. <http://www.commsdesign.com/story/OEG20010103S0062> Gillett, Sharon E. Connecting Homes to the Internet: An Engineering Cost Model of Cable vs. ISDN. Diss. Massachusetts Institute of Technology, 1995.

104

Bibliographies

Gray, Mark., et al. United Telecom Council. Revised Report of the UTC Power Line Telecommunications Forum. June 2001. Home page. 1 Aug. 2001. <http://www.utc.org/members/pltf/Final_PLTF_Report.pdf > Gray, Mark., et al. United Telecom Council. Initial Report of the UTC Power Line Telecommunications Forum. June 1999. Home page. 1 Aug. 2001. <http://www.utc.org/pltf/exec.htm>. Hazlett, Thomas W. and George Bittlingmayer. The Political Economy of Cable Open Access. AEI-BROOKINGS JOINT CENTER FOR REGULATORY STUDIES Working Paper. 01-06. (May 2001). 10 Nov. 2002. <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=286652> Helman, Christopher. Tilting at Power Lines. Forbes.Com.20 Jan. 2003. 1 Mar. 2003. < http://www.forbes.com/global/2003/0120/050.html> Hines, David., et al. Powerline as an Alternative Local AccesS (PALAS). D2: PLC Technology Inventory and Development Roadmap. June 2000. Home page. 8 Oct. 2002. <http://www.enersearch.se/palas/> Hokkaido Electric Power Company Inc. <http://www.hepco.co.jp/) Hokuriku Electric Power Company Inc. <http://www.rikuden.co.jp/> Ho, Seizaburo., et al. Transmission and distribution electric power engineering: Sohaidenkogaku. Tokyo, Japan: The Institute of Electrical Engineers of Japan (IEEJ), 1993. iTS.COM. The price list:sa-bisu ryokin ichiran. 2003. Home page. 29 Apr. 2003. <http://www.itscom.net/sales/index.html#> Japan. IT Strategy Headquarters. e-Japan Priority Policy Program -2002. 18 June 2002. 29 Apr. 2003. <http://www.kantei.go.jp/jp/singi/it2/kettei/020618-2-1.html> ---. Benchmark Fall of 2002. 2002. 29 Apr. 2003. <http://www.kantei.go.jp/jp/singi/it2/others/030109benchmark.html> Japan Electric Associate and Committee (JEAC). The Rule of Telecommunications for Electric Power Systems: denryoku hoan tsushin kitei. Tokyo Japan: JEAC, 1991. J-COM. The price list: goriyo ryokin. 2003. Home page. 29 Apr. 2003. <http://www.jcom.co.jp/kansai/> J-Com Kanasai. Pricing. Home page. 29 Apr. 2003. <http://www.jcom.co.jp/kansai/english.html>

Bibliographies

105

Japan. The Japan Fair Trade Commission (JFTC). Microsoft: Maikuro sofuto kabusiki gaisha ni tiasur kankoku nado nituite. Press release. 20 Nov. 1998. 29 Apr. 2003. <http://www.jftc.admix.go.jp/pressrelease/98.november/98112001.pdf> ---. The guideline of competition policy and system reform of telecommunications market: Denki tusin bunya no seido kaikaku oyobi kyoso seisaku no arikata ni tuite. 15 Nov. 2002. Press release. 29 Apr. 2003. <http://www.jftc.go.jp/pressrelease/02.november/02111501.pdf> ---. 2. What is the Structure and Role of the Japan Fair Trade Commission? 2003. Home page. 29 Apr. 2003. <http://www.jftc.go.jp/e-page/about/role/q-2.htm> Japan. JFTC and the Ministry of Economy, Trade and Industry (METI), Publication of the revised Guidelines Concerning. Appropriate Electric Power Dealings: Tekisei na denryoku torihiki ni tuite no sisin no kaitei ni tsuite. July 25, 2002. Press release. 29 Apr. 2003. <http://www.jftc.go.jp/e-page/guideli/electrGL.PDF> Japan. JFTC and Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). Policy to promote competition in telecommunications business: Denkitushin jigyo bunya niokeru kyoso no sokushin ni kansuru shishin. 30 Nov. 2001. Press release. 29 Apr. 2003. <http://www.jftc.go.jp/pressrelease/01.november/01113001.pdf> Johnson, Garrett F. Taking Fiber Home. Public Power magazine. 60.5 (Sept.-Oct. 2002) 31 Mar. 2003. <http://www.appanet.org/newsroom/magazine/high2.cfm> Johnson, L. L. and D. P. Reed. Residential Broadband Services by Telephone Companies? Technology, Economics, and Public Policy. Rand. R-3906-MF/RL. 1990. Kansai Electric Power Company Inc. (KEPCO) <http://www.kepco.co.jp/> Kwok, Ben. Hong Kong launches powerline broadband. South China Morning Post. CNET Asia. 23 Dec. 2002. 29 Apr. 2003. <http://asia.cnet.com/newstech/communications/0,39001141,39103280,00.htm> Kyushu Electric Power Co., Implements of high speed Internet experiments: Inta- net ko-soku ka siken no jisshi ni tuite, 12 July 2000. Home page. 29 Apr. 2003. <http://www.kyuden.co.jp/cgibin/pa_rel/cre_rel_page.cgi?contrCode=r_20000712_2000 0712_100001_1001> Kyushu Electric Power Company Inc. <http://www.kyuden.co.jp/> ---. The trial of high-speed Internet: Inta- netto no kosokuka siken no jisshi ni tsuite. Press Release. 12 July 2000. 8 Oct. 2002. <http://www.kyuden.co.jp/cgibin/pa_rel/cre_rel_page.cgi?contrCode=r_20000712_20000712_100001_1001>

106

Bibliographies

Lemley, Mark A. and Lawrence Lessig. The End of End-to-End: Preserving the Architecture of the Internet in the Broadband Era. Stanford Law School Working Paper. 207. (2000) 10 Nov. 2002. <http://papers.ssrn.com/paper.taf?abstract_id=247737> le Tanneur, Erwan P. Residential Resale of Wireline Broadband via Wireless. Diss. Massachusetts Institute of Technology, 2003. Libby, Seth. Whats Up with Powerline Communications? 5 Nov. 2001. Yankee Group Reports. Massachusetts Institute of Technology Lib., Cambridge, MA. 29 Apr. 2003. <http://www.yankeegroup.com/custom/research/report_full.jsp?ID=4070> Lyon, Jill M. Spectrum Policy: New Opportunities, Same Obstacles. UTC Journal. Dec. 2002/Jan. 2003: 10-11. 29 Apr. 2003 <http://www.journal.utc.org/file_depot/0-10000000/0-10000/3389/conman/InWash.pdf> Mader, John. HomePlug Alliance. Re: Question about HomePlug technology. E- mail to the author. 11 Mar. 2003. Matsumoto, Wataru. The Power Line Communication Modem by the Dispersed Tone Modulation Method which is Applied Multicarrier Data Transmission Technology. The Institute of Electronics, Information and Communication Engineers (IEICE) paper B J84-B No.1 (Jan. 2001): 38-49. IEICE Transactions Online. 8 Oct. 2002. <http://search.ieice.org/jpn/2001/files/j000b01.htm#j84-b,1,38>. Microcenter, The price lists of switches: SpeedStream Powerline Ethernet Adapter, $89.99 2002. 2 Apr. 2003. <http://www.microcenter.com/search_results_e.phtml?keyword=&code=&manufacturer_ title=siemens&manufacturer_part=&new_search22=TRUE&submit222.x=0&submit222. y=0> Japan. The Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPHPT). Tokyo Electric Power Company Inc. obtained permission of Type 1 Telecommunications Business: Tokyo denryoku kabusikigaisha ni taisuru daiisshu denki tushin jigyo no kyoka. 8 Feb. 2002. Press release. 29 Apr. 2003. <http://www.soumu.go.jp/s-news/2002/020208_2.html> ---. Manual for Market Entry into Japanese Telecommunications Business. March 2002. 29 Apr. 2003. < http://www.soumu.go.jp/joho_tsusin/eng/index.html> ---. White Paper Information and Communications in Japan Year 2002. Apr. 2002. 20 Mar. 2003. <http://www.johotsusintokei.soumu. go.jp/whitepaper/ja/h14/index.html>

Bibliographies

107

---. MPHPT submits accounting standards to Tokyo Electric Power Company Inc.: Tokyo denryoku kabusiki geisha ni taisuru kaikei shori kijun no teiji: the standard of accounting process for TEPCO. 8 Aug. 2002. Press release. 29 Apr. 2003. <http://www.soumu.go.jp/s-news/2002/020803_3.html> ---. Announcement of Report by Power Line Communication Study Group: Denryokusen hansou tusin setubi ni kansuru kenkyukai houkokusho no kohyo Genjiten ni oite denryokusen hanso tusin setubi ni siyou suru shuhasuutai no kakudai ha konnnan. 9 Aug. 2002. Press release. 29 Apr. 2003. <http://www.soumu.go.jp/s-news/2002/020809_4.html> ---. Permission of Type 1 Telecommunications Business for Chubu Electric Power Company Inc.: Chubu denryoku kabusikigaisha ni taisuru daiisshu denki tushin jigyo no kyoka. 25 Sept. 2002.IT jidai no kosei na funso kaiketsu ni mukete. 29 Apr. 2003. <http://www.soumu.go.jp/hunso/021206/018_05.pdf> ----. The penetration of DSL service in Japan: DSL fukyu jokyo kokai pe-ji. 11 Apr. 2003. 29 Apr. 2003. <http://www.soumu.go.jp/joho_tsusin/whatsnew/dsl/index.html>. ---. The public disclosure of the frequency allocation: shuuhasuu wariate, kokai. 2003. Home page. 29 Apr. 2003. <http://www.tele.soumu.go.jp/j/freq/index.htm> Minto, David. Electric broadband trialed in Scotland. Europemedia.net. 14 Feb. 2003. 19 Apr. 2003. <http://www.europemedia.net/shownews.asp?ArticleID=14929> MTT Corporation. A surge absorber for communication lines, MS99: Tusin kaisen you saji abusoba, MS99. 2002. Home page. 29 Apr. 2003. <http://www.mtt.co.jp/contents/products/sig/pdf/19ms90/ms99.pdf> MYLINE Carriers Association. The numbers of MYLINE Customers. 30 Mar. 2003. 29 Apr. 2003. <http://www.myline.org/report/mar_2003.htm> NEC. The sale of IP8800/700 series, which fulfill the fastest IPv6 routing functions in the world: Sekai saikosoku no IPv6 ru-tingu wo jitsugen sita maruchi reiya suicchi IP880/700 siri- zu kyoka moderu no hatsubai ni tsuite. Press release. 1 Mar. 2001. 12 Apr. 2003. <http://www.nec.co.jp/press/ja/0103/0102.html> Newbury, John E. Re: Power line Carrier communications research. E- mail to the author. 30 Apr. 2003. Noll, Roger G. Resolving Policy Chaos in High Speed Internet Access. Stanford Law School Working Paper. 239. (May 2002) 10 Nov. 2002. <http://papers.ssrn.com/paper.taf?abstract_id=311900> NTT EAST. An Optical transmission system CN-100 :Hikari denso sisutemu CN-100E. 1999. east+. 29 Apr. 2003. <http://www.ntt-east.co.jp/ced/goods/cn100/method.html>

108

Bibliographies

---. The installation fee for FTTH service: Kouji- hi. 1999. FLETS.com, 2 Apr. 2003. <http://flets.com/opt/s_fee.ht ml#fee_02> ---. Service menu: sa-bisu naiyo. 1999. Flets.com. 29 Apr. 2003. <http://flets.com/opt/s_outline.html> ---. The change of DSL connection fee: DSL setuzoku ryo no henko naiyo. NTT EAST news.15 Dec. 2000. 31 Mar. 2003. <http://www.ntt-east.co.jp/release/0012/001215_1.html> ---. The revision of the report on Flets and ADSL fees as well as the revised application of the DSL connection fees: DSL setsuzoku ryokin no hosei shinsei oyobi furettsu, ADSL ryokin nado no todokede no hosei ni tsuite. News Release. 15 Dec. 2000. 31 Mar. 2003. <http://www.ntt-east.co.jp/release/0012/001215.html> ---. Changes in the fee of Flets and ADSL services due to the policy change in modem sales: ADSL modemu nado no tanmatsu setsubika ni tomonau fur ettu, ADSL ryokin nado no henko ni tsuite. News Release. 18 Jan. 2001. 31 Mar. 2003. < http://www.ntt-east.co.jp/release/0101/010118b.html> ---. The revision of the connection fee of fiber networks and others: Kanyusha hikari faiba setuzoku ryo nado no minaosi ni tuite. News Releas. 5 July 2001. 29 Apr. 2003. <http://www.ntt-east.co.jp/release/0107/010705b_1.html> ---. ADSL modem no nesage ni tuite: The price down of an ADSL modem, News Release. 29 Aug. 2001. 31 Mar. 2003. <http://www.ntt-east.co.jp/release/0108/010829b.html> ---. The Report of the fee changes in Flets, ISDN, and other services and the Application for the Approval of the Connection Fee Change of ISM Turning Functions: Furettsu, ISDN nado no ryokin nesage no todokede oyobi ISM orikaesi kino no setuzoku ryokin minaosi no ninka sinsei ni tusite. News Release. 17 Sept. 2001. 31 Mar. 2003. < http://www.ntt-east.co.jp/release/0109/010917.html> ---. The Application for the Approval of the Changes in the Connection Agreement about the conditions of DSL circuits: DSL kaisen no shuyo joken nado ni kansuru setsuzoku yakkan henko on kyoka shinsei ni tsuite. News Release. 17 Oct. 2002. 31 Mar. 2003. < http://www.ntt-east.co.jp/release/0210/021017b.html> U.S. Office of Spectrum Management. National Telecommunications & Information Administration (NTIA). International Special Committee on Radio Interference (CISPR). 4 Sept. 2001. 29 Apr. 2003. <http://www.ntia.doc.gov/osmhome/international/cispr.html> U.S. Office of Technology Policy (OTC). U.S. Department of Commerce. Understanding Broadband Demand. 23 Sept. 2002. 8 Oct. 2002. <http://www.ta.doc.gov/reports/TechPolicy/Broadband_020921.pdf>

Bibliographies

109

Okinawa Electric Power Company, Inc. (OEPC) <http://www.okiden.co.jp/> Power Plus Communications (PPC AG). In Mannheim, the powerline technology Vype is named. And with you? : In Mannheim heit die powerline-Technologie Vype. Und bei Ihnen? 2001. Home page. 29 Apr. 2003 <http://www.ppc-ag.de/referenzen/index.html> Japan. the Prime minister of Japan and his cabinet. The benchmark of Internet penetration in Japan. Oct. 2002. 20 Mar. 2003. <http://www.kantei.go.jp/jp/singi/it2/others/030109benchmark.html> Ramseier, Stefan, Michael Arzberger, and Andreas Hause. MV and LV powerline communications: new proposed IEC standards. Transmission and Distribution Conference, 1999 IEEE 1 (Apr. 1999). IEEE: 235-239 Xplore. Massachusetts Institute of Technology Lib., Cambridge, MA. 8 Oct. 2002. <http://ieeexplore.ieee.org/iel4/6102/16340/00755350.pdf?isNumber=16340&prod=IEE E+CNF&arnumber=755350&arSt=235&ared=239+vol.1&arAuthor=Ramseler%2C+S.% 3B+Arzberger%2C+M.%3B+Hauser%2C+A.%3B> Reed, D.P. Residential Fiber Optic Networks: An Engineering and Economic Analysis. Norwood, MA, Artech House. 1992. Reed, D.P.. The Prospects for Competition in the Subscriber Loop: The Fiber-to-theNeighborhood Approach. Twenty-First Annual Telecommunications Policy Research Conference, Solomons, Maryland, Telecommunications Policy Research Conference. 1993. Sanderson, Wayne. Appratus for coupling radio- frequency signals to and from a cable of a power distribution network. United States Patent. 5,864,284. 26 Jan. 1999. 8 Dec. 2002. Sanderson, Wayne. Broadband Communications Over a Rural Power Distribution Circuit. Southeastcon 2000. Proceedings of the IEEE (2000): 497-504. IEEE Xplore. Massachusetts Institute of Technology Lib., Cambridge, MA. 8 Oct. 2002. <http://ieeexplore.ieee.org/iel5/6808/18269/00845620.pdf?isNumber=18269&prod=IEE E+CNF&arnumber=845620&arSt=497&ared=504&arAuthor=Sanderson%2C+W.%3B> Schaar, Craig. PLCA. Personal interview. 4 Dec. 2002. Serizawa, Takanori. Yahoo! BB has started with 8 Mbps ADSL service at 2280 yen per month: Getsugaku 2280 yen/ Saidai 8Mbps no ADSL sa-bisu Yahoo! BB shido. ZDNet News. 19 June 2001. 8 Feb. 2003. <http://www.zdnet.co.jp/news/0106/19/yahoobb.html> Shikoku Electric Power Company Inc. <http://yonden.co.jp>

110

Bibliographies

Sirbu, M., D. Reed and F. Ferrante. An Engineering, Economic and Policy Analysis of Residential Broadband Networks. Journal of Lightwave Technology (Nov. 1989): 1876Japan. The Telecommunications Council (TC). Final report on how the competition policy in telecommunications should be in order to promote IT revolution: IT kakumei wo suishin suru tameno denki tsushin jigyo niokeru kyoso seisaku no arikata ni tuite no saishu toshin. 7 Aug. 2002. Press release. 29 Apr. 2003. <http://www.soumu.go.jp/snews/2002/pdf/020807_14_02.pdf> Tohoku Electric Power Company Inc. <http://www.tohoku-epco.co.jp/> Tokyo Electric Power Company Inc. (TEPCO) <http://www.tepco.ne.jp/> ---. TEPCO ILLUSTRATED FY2002, Oct. 2002. TEPCO Corporate communications Dept. Tokyo Metropolitan Government. Dwellings by District, Kind, Tenure of Dwelling, Type, Structure of Building and Kind of Facilities (1988-1998). Tokyo Yearbook. 11 Feb. 2003. <http://www.soumu.metro.tokyo.jp/08toukei/tyosei/jyoho/01qyti0510i.htm> Turner, Steven E. PowerComm Systems, Inc. Re: Inquiry about plc technology. E- mail to the author. 9 Dec. 2002. Vype. Vype tariffs:Vype Tarife. 2003. Home page. 29 Apr. 2003. <http://www.vype.de/pages/Tarife.htm> Yahoo! BB. The menu of services and the price list: Yahoo teikyo sa-bisu narabini ryokin ichiran. 1 May 2003. Home page. 5 May 2003. <http://provider.bb.yahoo.co.jp/gaiyou.html> Yamazaki, Junichiro, WPC ARENAs column, Geographical divide of FTTH development between east and west sides of Japan :Kininaru FTTH no to- zai chiiki kakusa. The Fasion on the Internet: Netto de hayaru mono. 5 June 2002. 27 Mar 2003. <http://arena.nikkeibp.co.jp/col/20020605/100638/>

Bibliographies

111