Consumer benefits from FTTH development and its regional characteristics: A revealed preference approach

Abstract

This study aims to evaluate the consumer benefits derived from fiber-to-the-home (FTTH) services that are gaining availability throughout Japan. For this purpose, FTTH services were broken down into two parts: infrastructure (hardware) and application (software). First, the Revealed Preference Method based on the data obtained from a questionnaire survey on consumer behaviors concerning Internet usage such as browsing websites and using e-mail was used. The results showed the willingness to pay (WTP) for the FTTH infrastructure was 5,198 yen, for the TV service was 1,807 yen, and for IP telephone service was 526 yen. In addition, we found it will take more than 10 years before the total consumer surplus exceeds the total cost if a consumer can not enjoy TV services through FTTH under certain conditions. As a result, the application, especially TV services, greatly impact the spread of FTTH services in Japan. Although the infrastructure of FTTH will be improved in the future, the benefits of FTTH applications are thought to be limited and the total benefits of the two parts are lower than expected. Moreover, the tendency that WTP for highland areas is higher than for lowland areas. This may be because other broadband services (e.g. xDSL) can be accessed relatively easily in lowland areas, whereas those services are practically impossible to access in highland areas.