Broadband Boom

As Brazil’s Ronaldo slammed the ball into Germany’s goal to win the World
Cup final last summer, Tokyo spectators rose to their feet and cheered wildly.
It’s almost as if they felt the power of the shot. No wonder: Although the
game was being played 50 kilometers to the south, in Kanagawa, the 500 fans in
Tokyo saw it live on a 40-meter-tall, 100-meter-wide screen–a monster nearly
the size of the football field itself. "In the future, people anywhere in
the world will be able to watch the Olympics and other major events in virtual
stadiums," predicts Michitaka Hirose, the University of Tokyo professor who
designed the system.

Video Avatar Technology at Tokyo University

The key to delivering this long-distance soccer fix was a hyperfast optical
network that linked digital projectors in Tokyo to high-definition TV cameras in
the stadium. For innovative next-generation services like this, the center of
the universe is in Japan and South Korea. That’s because both have made
high-speed optical networks a national priority. That stands in sharp contrast
to the US and Europe, where broadband penetration has lagged as carriers dig
their way out from a mountain of debt piled up by early bets on wireless and
Internet infrastructure.

There’s little doubt that a revolution is under way. Most new buildings in
Japanese and Korean cities are served by high-speed fiber-optic cables.
Two-thirds of South Korea’s 15 million households boast broadband connections,
compared with about 15% of U.S. homes. And the average speed of these Korean
networks is 3 megabits per second, about twice as fast as most U.S. systems. In
Japan, some 40% of homes are expected to have broadband running as fast as 12
Mbps by yearend. One big attraction: price. Broadband in Japan costs just $18
per month, less than half the typical US price. In Korea, it’s about $25 per
month.

In the ’90s, both Japan and Korea largely missed the Internet boom. Not
wanting to be caught again on the wrong side of the wave, South Korea’s
government invested $9.2 billion in broadband infrastructure over the past four
years and will spend another $11 billion to deliver 20-Mbps services to 90% of
households by 2005. In Japan, Nippon Telegraph & Telephone will spend $6.4
billion this year on new fiber-optic networks. Japan expects to bring fiber–with
speeds of 100 Mbps–to almost every home by the end of the decade. "Japan
has suddenly gone from being the worst to the best in the developed world,"
says Mark Berman, an analyst at Credit Suisse First Boston in Tokyo.

Thanks to these networks, the two countries can offer a dizzying array of
services. In Korea, housewives can’t seem to get enough of Internet soap
operas delivered via broadband. Nearly 150,000 small groceries, car-repair
shops, and others use online services for billing and inventory for as little as
$25 per month. In Japan, tech companies offer everything from unlimited
videoconferencing ($2.50 per month) to unlimited Japanese anime videos (also
$2.50 a month). "We expect online content will become a big
money-earner," says Yuji Yamagishi, content manager for Fujitsu’s network
operator, Nifty Corp.

Now, Japan is tackling whole new modes of communication. Sony Corp is
pursuing "grid" systems, using broadband to connect thousands of home
computers and game consoles. Ultimately, all the devices on the network will be
able to draw on the others, so each gains the power of supercomputer. And Tokyo
University’s Hirose has a system of cameras that captures a person’s image
from various angles, creating a video avatar–a sort of body double.

That information is then transmitted over a fast network, allowing others to
see and interact with the avatar. Heady stuff. If Japan and Korea are right in
betting that ubiquitous high-speed communications are the key to growth, this
new broadband era could usher in Asia’s Golden Age.

By Irene M. Kunii in Tokyo and Moon Ihlwan in Seoul in BusinessWeek. Copyright 2003 by The McGraw-Hill Companies, Inc