In Japan, cablemakers report "no improvement" in the home market during Q3 (FYQ2). This has come as quite a major disappointment as demand usually experiences a seasonal recovery after low purchasing in Q2 (FYQ1). In fact, July cable shipments deteriorated to 722,000fkm (-51 percent year-on-year) from 761,000fkm (-41 percent year-on-year) in June. Manufacturers now concede that they are likely to be facing a "tough situation" for some time to come. This "unexpected delay" in the recovery of market volumes, coupled with the strict price reduction that NTT has enforced this year, has undoubtedly compelled manufacturers to make the closure announcements that they have done in recent weeks. These measures have been taken because they now feel they have "no forward visibility" on when any recovery may emerge. The problems that had been thought to be temporary are now becoming more structural. NTT is seeing growing competition in its core business from Yahoo.bb following its merger with Japan Telecom, and no longer feels it can afford to maintain the disproportionate pace of its FTTH rollout relative to its small existing subscriber base. Other FTTH service providers, such as K-Opticom have recently cut their charges in order to boost subscriptions, but the monthly net addition has yet to breach the landmark 100,000 barrier that many feel is necessary if a decisive share of the broadband market is to be won. Even so, the Japanese FTTH subscriber base reached 1,506,000 in July, compared to 894,000 at end-2003 and 531,000 a year ago.
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