The Crosswave collapse and taking capital from the NTT group (2003)

What, exactly, was independence meant to protect

The character of this capital move cannot be grasped as merely the financial mopping-up after a failed business. IIJ, which through the Crosswave joint venture had challenged the telecom infrastructure that was NTT’s own domain, took capital from that very NTT once the challenge collapsed. In the gap between the banner of defiance that an independent-ISP standard-bearer had raised and the outcome of entering the largest carrier’s capital keiretsu, one glimpses the weight of carrying a capital-intensive business on independent capital alone. When Koichi Suzuki later said it was “not even half-done — eighty per cent regret,” it was, it seems, this gap he meant.

Seen another way, the episode forced IIJ to rethink how it earned in the first place. Having learned the weight of investment that acquires plant up front and then waits to recover it, the company shifted its mainstay to an enterprise stock model of accumulating contracts, and twenty years later stepped out from under NTT’s umbrella into a capital structure equidistant from KDDI — a result of weaving the lesson of the collapse into both business design and capital policy. What does independence point to — independence of capital, or the independence of standing a business up on one’s own strength? IIJ’s twenty years mirror that question from both the capital structure and the earnings structure at once.