The FTTH market for single-unit homes in the eastern Japan area has been less competitive to date, but there is a possibility that entry could have been realized if the Ministry of Internal Affairs and Communication (MIC) had implemented the additional policy measures when they intervened to correct NTT East’s predatory pricing.

In this paper, we assume a hypothetical FTTH market in its formation period consisting of a dominant firm, a potential competitor planning to enter the market, and a regulatory authority overseeing the market. By analyzing the model and assuming that they select the scenario to maximize their own utility, we consider and evaluate policies in the actual FTTH market.

According to the analysis, we consider that MIC needed to emphasize investment incentives for NTT East to promote the FTTH infrastructure, so it was rational in terms of maximizing total surplus to maintain the policy consistent with NTT East’s preferences, and not to take additional measures to realize entry in the market during the formation period.