Linking Europe and Asia through the U.S.
Mr. Ichiro Terai, Vice President & General Manager IIJ America Inc.

IIJ America, established as a subsidiary by Internet Initiative Japan (IIJ) in 1996, is one of the few Japanese companies to enter the highly competitive U.S. ISP market, supporting its clients’ needs through a wide range of IP services including Internet access, hosted e-mail, managed firewalls and VPNs. IIJ America, as a Tier 1 Internet service provider, places central focus on the creation and operation of a U.S. side backbone network; the offering of high-quality Internet environments spanning the United States, Japan, and Asia; intelligence gathering about industry developments; and the development of new products and services.

Kanabo Consulting recently interviewed Mr. Ichiro Terai-Vice President & General Manager at IIJ America Inc. based in New York for this month’s Bridge Builder.

Q. Mr. Terai, will you tell us about your background and role at IIJ America?

A. After I finished my Master’s degree at the University of Electro-Communications (Denki Tsushin University) in 1985, I joined the “sogo shosha” Itochu Corporation. Since my major was Mechanical Engineering and Intelligent Systems (Robotics), I was assigned to “mechatronics”-related work with responsibility for the export of industrial robots to the Big Three auto manufacturers in the U.S. In order to gain insight into this field, Itochu sent me to work on assignment at a robotics manufacturer in Japan. After that, my boss’ new mantra was that we were entering “a new age of imports,” and I was assigned to domestic marketing activities and was responsible for new initiatives to import CAD/CAM equipment Management again shifted its vision, this time towards Asia, involving me in M&A transactions across Asia, including Hong Kong, India and Indonesia. It was at this time that I first came into contact with IIJ. IIJ had established an Asian operating company called Asia Internet Holding and had launched a pan-Asian backbone ISP business with Asian partners. During that time, I got to know Mr. Suzuki, the President and CEO of IIJ. It was not long after meeting Mr. Suzuki that I was assigned to the London office of Itochu. Although my responsibilities there were not directly related to the Internet, my private and corporate life in London furthered my intercultural experience in ways that I carry with me in my work today. After my third year in London, I was approached out of the blue by Mr. Suzuki to join IIJ America in New York. I accepted that offer in the summer of 1999 and moved straight from London to New York. Since then, I have acted as country manager for IIJ America and have in fact been the senior day-to-day operating executive of the firm based in the US.

Q. IIJ America Inc. has operated Gigabit-class backbones between Japan and the U.S. and has also been conducting private peering with major U.S. ISPs through direct connection at eight IXs (Internet eXchange points). What set the stage for entering the highly competitive U.S. network infrastructure service market?

A. Although I joined the company after its establishment here, I think that such global expansion of the business emerged naturally from the nature of the Internet business and information communications nowadays. If you want to create an optimal environment for the Internet or for data communications, it is inevitable to build this environment on an advanced infrastructure optimized for data, not voice communications. A desire to build such an environment naturally led us to take our network environment overseas, built on infrastructure that we controlled and managed ourselves. The reason that the IIJ group could make it happen is because of our technical expertise. As you pointed out, it is very true that the U.S. market is very competitive and therefore tough for a Japanese ISP. I believe that we are the only Japanese ISP in the U.S. market with the exception of the data business units of some Japanese telecom carriers. Getting into such direct competition with American ISPs is not our goal. Instead, we are taking advantage of our strengths, such as our excellent connectivity to Asia and our high quality services, in order to be successful here.

Q. Although this might be a broad topic, would you please compare the Japanese and U.S. ISP markets in terms of trends?

A. The ISP markets in Japan and the U.S. are quite different. After coming to the U.S., I perceived that sports can be an apt metaphor to describe this country – she possesses a nicely conditioned ground, skilled players, experienced coaches and referees, and supportive fans. This metaphor can be applied to a wide range of businesses including Internet operations. The market is under reasonable deregulation with fair judgment from public institutions, and it is crowded with entrepreneurs who are fearless of failure, and investors as well. I feel that all these elements in a given environment provide the power of the U.S. In spite of the fact that most of the start-up DSL providers have filed for Chapter 11 over the last 2 years, acquisition strategies have permitted their business operations to survive. It looks like they are able to use Chapter 11 to effectively reorganize their businesses. On the Japan side, the mobile Internet market is advanced and has employed quite amazing technologies being driven by a cellular boom by younger generations. Although the Japanese and US markets have developed differently so far, I’m assuming that content, not method of access, is going to be the key factor in both markets in the future. I don’t think that the audience cares whether TV content is broadcast from ground-based antennas, from satellites or over cable. This phenomenon might happen to the Internet space in the same manner—the end consumer will not care whether the content reaches them over a cellular network, over a dedicated circuit, or using DSL technologies.

Q. What would be interesting and/or challenging to you in terms of carrying out business development while understanding different business cultures across countries?

A. Each business culture is unique depending on the conditions a country is under. There might be some similarities with respect to the ways of interpersonal communication and business procedures between Japan and England due to their insularity. In those cultures, people are likely to treat others in a gentleman-like manner, but this may also be seen as discriminatory behavior towards outsiders. For that matter, people in the U.S. tend not to draw that clear a distinction about newcomers, but make fair and logical decisions. It seems in the US that “cheap and ugly” services are accepted. It is hard for us to convince someone who is already connected to the Internet that our service performance is superior, and when they run into trouble with their existing service they figure that they are getting fair service for what they paid. But with ample opportunity to demonstrate our technical expertise and support capabilities, I am sure that the differentiation of our services will be well understood and appreciated here in the US as well. It is this high quality technical performance that has created satisfaction among the IIJ Group customers.

Q. In the future, what are you interested in trying to do through business operation in the U.S.?

A. I want to develop our business globally even more than now. Although the IIJ Group’s Internet backbones have already spread out to Asia, from New York we hope to soon build our network in an easterly direction out to Europe. Then, from our base in the US, we will have in our right and left hands network connectivity that spans from Asia and Japan all the way to Europe.

Thank you Mr. Terai. Mr. Terai can be reached via e-mail at ike@iij.com. For more information regarding IIJ America and IIJ, please take a look at their website at http://www.iij-america.com/ (IIJ America) and http://www.iij.ad.jp/index-e.html  (IIJ).

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