Glitches slow VoIP take-up

09 Oct 2006

In the latest hiccup in the rapid deployment of consumer VoIP in Japan, the 800,000 users of NTT East's B-Flets FTTH-based Hikari IP-phone service found it difficult, if not impossible, to get a connection across the whole of its service area on August 19.

According to NTT, its servers were unable to handle a huge surge in the volume of traffic the day after a national holiday. Temporarily the company put limits on the traffic and prioritized its corporate customers. It reported that the traffic subsided to manageable levels in the evening. But in the next few days the same thing occurred.

This is nothing new for NTT. In March and April, NTT West had similar problems with its own Hikari IP-phone service. It found the main cause was software bugs in its call agent servers and finally corrected and upgraded the programs and NTT East followed suit. This time the phenomenon looks similar, but NTT East still can't specify the cause.

Even NTT's competitors have been having FTTH VoIP problems. For example, in the Kansai/Osaka area in early May, NTT West's main FFTH rival, K-Opticon, had similar troubles affecting 226,000 corporate and private IP-phone users.

Japanese customers are notoriously demanding and their patience with the new technology may start to run thin. 'If FTTH-based VoIP is not reliable, it is a big setback for VoIP in general,' commented George Hoffman, research manager for communications at IDC Japan.

One of the underlying causes of NTT East's problem is the rapid growth in its FTTH subscribers as Japan's broadband shifts at an accelerating pace to FTTH. MIC data for 1Q 2006 ending June 30 shows that for the first time the total number of DSL subs actually fell (by 26,865 to 14,490,914) while FTTH subs soared 915,907 to 6,305,597, with 556,000 signing up with NTT.

Victims of success
NTT East and West are threatening to steamroll the competition in FTTH and clearly are partly victims of their own success. According to IDC Japan, 70% of NTT's new FTTH subscribers have been opting for the VoIP service, and NTT's FTTH IP-phone users have already more than tripled since the beginning of this year.

Part of the problem may be that NTT was forced to deploy B-Flets much cheaper and earlier than it had planned to counter Softbank's ADSL blitz.

Doubts about VoIP in Japan are not limited to FTTH VoIP. In the world of enterprise VoIP, the hype has not resulted in the expected orders. 'Two years ago it seemed about to take off, but nothing much has changed since then - the uptake is slow,' says Hiroyuki Kadowaki, IDC Japan's senior market analyst for communications. 'Corporate users in Japan are still suspicious about the quality and the cost of VoIP.'

One early, high-profile enterprise VoIP project was launched in 2003 by Tokyo Gas. The project was completed, but it is reported that the company has not found the benefits that it expected and is planning to return to conventional telephone systems.

Some experts see one of the key issues as the preference of large firms to use system integration firms that then subcontract parts of a project to several vendors. The system was designed round an IP Centrex system as a hosted VoIP service managed by a carrier.

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