Sachio Semmoto, eAccess

<![CDATA[Co-founder of KDDI, the second-largest telephone company in Japan, Sachio Semmoto's eAccess has gone public and now sells $100 million in product a year and is valued at more than $1 billion. He is an academic while acting as an entrepreneur.
He’s doing slides on the broadband market in Japan…. In one of those curious moments, he has to figure out how to operate the slide controls.
Japan is the largest ADSL market in the world — about 10 million subscribers. This accounts for 17.7 percent of the population, compared to 14.6 percent in Korea and 16.4 percent in the United States.
In total, there are about 12 million broadband subscribers in Japan. NTT offers fiber to the home, but has only 600,000 customers. Interestingly, there are only 2 million cable data subscribers.
Semmoto says the reason is that Japan’s is the fast and cheapest ADSL service in the world. In Japan, ADSL service is 14 Mbps. Korea offers 8 Mbps. Here in the U.S., ADSL is available only at 1.5 Mbps. The cost for the service in Japan is $26 a year, half the average U.S. cost.
If I were getting that kind of speed for that price, I’d be a happy camper.
The eAccess model is roughly the same as Covad. It provides IP services over existing lines through partnerships with carriers, including NTT. SoftBank, another competitor, is losing $1 billion a year because they provide physical connections. Being the provider of logical connections on other companies’ cables is a viable and profitable business. eAccess has more than 4,000 co-lo facilities with NTT today. Provisioning time has plummeted from three months for a new line to about seven working days today.
eAccess has lobbied for unbundling of dark fiber, which has allowed it to develop an infrastructure that links its POPs without significant capital expenditures. This has allowed eAccess to become the largest IP backbone owner in Japan. They partner with ISPs to get service into the market at a low cost to eAccess.
A key cost savings was achieved by having consumers set up their connection themselves.
People in Japan are embracing VoIP services, which was more important to eAccess’ growth than wireless services for a long time. Now, the company is contemplating entering the content business now that it has such a large channel in place.
The discussion with Alex Vieux turns to SoftBank, which has spent several billion dollars on build-out, but never achieved profitability. Alex presses on whether SoftBank will collapse under the debt of the past few years.
Semmeto suggests that SoftBank spends $200 to acquire a customer. Then, there is the question of reach. eAccess has local presence, with perhaps 800 co-lo facilities where SoftBank is in 2,200 co-lo facilities. The addressable market for eAccess is much smaller than SoftBank.
Alex asks about the move from KDDI to eAccess: Why go from a $22 billion company to a startup?
Semmoto: My wife said I shouldn’t do it, but I say the broadband trend. Nobody stood up. KDDI is still moving too slowly and bureaucratically, so we started eAccess. The company will become the #1 data oriented content company in Japan, Semmoto says, achieving revenues of $10 billion.]]>