TOKYO -- Japan, once an Internet laggard, will be one of the world's most wired nations by 2007 as low fees boost demand for broadband services, a government report said on Friday.
The Telecommunications Ministry said in an annual white paper that 60 million Japanese -- nearly half the population -- will be surfing the Net on high-speed broadband networks by 2007.
This compares with about 20 million now.
Although Japan leads the world in Internet-enabled mobile phones, for many years it has lagged other advanced nations in fixed-line Internet connections, partly due to a lack of competition and some of the world's highest connection charges.
Japan also lagged far behind South Korea in adopting high-speed Internet connections, but has caught up quickly since service provider Softbank launched a cut-price ADSL (asymmetric digital subscriber line) service in late 2001.
Japan ranks third in the number of broadband subscribers, behind the United States and South Korea, but boasts the cheapest broadband access charges in the world, the report said.
Charges for bandwidth in Japan are around one-16th those of the United States, which had 18.7 million broadband subscribers in 2002, the report said.
It was unclear if this calculation included fixed phone line charges. Japanese consumers pay around 2,000 yen ($17) a month for a fixed line, needed to use ADSL broadband connections.
Analysts said that while competition has been a boon for Japanese consumers, providers are dripping red ink.
"You have to worry that what we have to play with as investors looks nothing like as good as the statistics we are hearing from the government," said Ben Wedmore, an analyst at HSBC Securities.
Softbank, Japan's biggest broadband provider, posted a group net loss of 100 billion yen ($846 million) in the year that ended on March 31, widening the previous year's loss of 88.8 billion yen due to the high cost of promoting and building its service.
Softbank's Yahoo BB, a joint venture with affiliate Yahoo Japan, charges around 2,400 yen a month for unlimited use of that service, and other providers including the giant Nippon Telegraph and Telephone, or NTT, have been forced to follow with their own cut-rate offerings.
The report also said that while Japan was making rapid progress in broadband infrastructure, Japanese businesses were slow to take advantage of the increased bandwidth.
"The Internet content market in Japan still hasn't really got off the ground," said Yoshinori Shibayama, deputy director of the Telecom Ministry's general policy division. "Users say prices are too high and there simply isn't enough attractive content out there."
On Thursday, Softbank said it would launch an online game portal later this month, betting that a market that is hugely popular in South Korea will also catch on in Japan.
Revenues from broadband services, including delivery of content such as sound and video, will surge fivefold to 10.2 trillion yen by 2007, the report said.
It forecast that one of the biggest growth areas would be in Internet security services, with annual revenues in that market to grow fourfold to almost two trillion yen over the same period.
Japan's biggest Internet security service provider is Trend Micro.
