According to a Ministry of Internal Affairs and Communications (MIC) survey that compares ADSL services in seven major cities in the world, Tokyo, together with Seoul, achieves the fastest downlink telecommunication speed of 50 Mbps at maximum, and the lowest cost per 1 Mbps.*1 Such superior service boosted the increase in broadband service users, and resulted in the ever-increasing number of broadband service subscription contracts in Japan. The total number of households signing up for subscription totaled 23.29 million at the end of March 2006 ? this is 46% of the total number of households.*2

With such spreading of broadband service infrastructure in the background, various companies are proactive in their recent approaches to provide video content distribution services. Today, many users enjoy video content via the Internet, and it has become common for individuals to create and distribute their own content. Such trend is expected to accelerate in the future.

Notes:
*1 MIC, “Survey on Rate Variances between Domestic and Overseas Telecommunications Services” (August 1, 2006)
*2 MIC, “Subscription Contract Numbers for Broadband Services” (June 6, 2006);
“Population, Dynamics of Population and Number of Households Derived from Basic Resident Register” (August 4, 2006)

Television transmits images by broadcasting systems, and the Internet delivers video by telecommunication systems. Although the act of the viewer/user is the same in the sense that they watch video images/moving pictures, the systems to output images/moving pictures absolutely different. Therefore, television and the Internet have their own merits and demerits.

In the broadcasting system, the relationship between the broadcasting station and viewers is a one-to-many relationship. A specific image (channel) is transmitted from a specific broadcasting station to a large number of viewers simultaneously. Even though terrestrial broadcasting initially requires the designation of a frequency band by the national government and a large initial investment for the first broadcasting, the necessary cost for broadcasting after the initial setup is basically the same, regardless of the number of viewers-be it one or one million. Since the unit cost of commercials, which is the greatest source of income, is influenced by audience ratings and TV station popularity that is an accumulated result of audience ratings, it is said that broadcasting stations tend to broadcast programs that are likely to achieve high audience ratings. Although viewers must watch programs corresponding to the program schedule decided per station, around the clock, they can smoothly watch highly popular programs viewed by millions of people.

In the telecommunication system, the relationship between the content distributor and a user is a one-to-one relationship. Specific video content is sent from a specific sender to a specific user. Companies and individuals can easily start distribution of moving-picture content over the Internet with a personal computer and a broadband line. However, they must also continue to upgrade equipment in relation to the number of users that will simultaneously view the content. Niche moving pictures can be freely distributed in large numbers without limitation. On the other hand, the cost will increase along with any increase in the number of viewers. It is said that popular video content viewed by thousands of viewers does not easily produce income. Looking from the viewer’s side, although viewers can always watch video content at their convenience, popular content may cause access convergence and become unavailable.

Nevertheless, in recent years, there have been some technical developments such as Multicast technology, which will be explained later, bringing about exceptions to the telecommunication rule of a one-to-one relationship between distributor and user.