Press Release

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December 26, 2000

AII to Start Japan's First Nationwide Content Distribution Service for Broadband Internet
A High-Speed, Continuously Connected Broadband Service to be offered to Con

Sony Corporation
Tokyu Corporation
The Kansai Electric Power Co., Inc.
ITOCHU Corporation

(Tokyo, Japan) Sony Corporation (Sony), Tokyu Corporation (Tokyu), the Kansai Electric Power Corporation (KEPCO) and ITOCHU Corporation (ITOCHU) today announced a joint agreement to reorganize the existing joint venture company - AII Planning Inc. established in April this year. It will become a fully operational Content Distribution Service Provider (CDSP) that will soon start offering consumers Japan's first nationwide content distribution service on a commercial basis via broadband Internet. The existing AII Planning Inc. will be renamed "AII Inc." as of December 27, 2000, pending required revisions to its bylaws. Sunobu Horigome, Chief Executive Officer of AII Planning Inc. will continue to be Chief Executive Officer of the new company. AII Inc.'s capital, currently Y150 million, will be increased to Y3 billion on a gradual basis.

AII Inc. will start distribution of unique content and application services on a commercial basis from the end of January 2001. This decision was made possible as a result of a meticulous field tests undertaken by its predecessor, AII Planning Inc. which was established as an entity to draw out business blueprints for various network-related services such as cable TV and to create unique content for such services. Immediately after its establishment, AII Planning Inc. successfully set up Japan's first content distribution network centered around a server network built within respective CATV networks located in various parts of Japan. During the field test period utilizing that network, the total customer access to the AII' s Internet home page exceeded one million hits (on a page view basis), without any operation shutdown (shutdown due to the maintenance work excluded).

The content to be commercially distributed by AII Inc. from the end of January 2001 will include moving image-based news, weather forecasts, live sport broadcasts coupled with such applications as chat, motion picture previews, electronic book downloads, live event broadcasts, network karaoke, information for living, finance, school & education and online gaming. AII Inc. is also in talks with Sony regarding possible distribution of their entertainment content such as motion pictures and music. AII Inc. desires to increase service coverage to one million homes through 100 CATV stations by the end of March, 2002.

The cable Internet is currently the most widely used broadband service infrastructure, but it is expected that other emerging means such as Asymmetric Digital Subscriber Line (ADSL) and Fiber to the Home (FTTH) will grow into viable options. AII Inc. will not limit its broadband infrastructure priorities to cable Internet and will maintain close dialogue with every viable broadband infrastructure operator to further enhance its content distribution services.

The four major founding partners of AII Inc. will respectively bear the following operational responsibilities:

Sony will provide with AII Inc. its know-how and technologies in the network-based business arena.

Tokyu will offer AII Inc. Internet connection services through the CATV network operated by its subsidiary Tokyu Cable TV Company, and abundant know-how concerning the needs of broadband content service users accumulated by Tokyu Cable TV Company.

KEPCO will render to AII Inc. a wide array of data communication business know-how acquired through its involvement in cable Internet and optical fiber-based high-speed Internet connection businesses.

ITOCHU will provide AII Inc. with various CATV-related business know-how including that acquired through its experience in Titus Communication and additional expertise in content distribution services through such platforms including satellite.

In addition to those four founding partners, the AII Inc. expects that Kinki Nippon Railway Corporation and Kyushu Communication Network Corporation will also make investment in AII Inc.

[About AII Inc.]
1. Corporate Name :
AII Inc. (formerly known as AII Planning Inc.)
2. Date of Corporate Name Change:
December 27, 2000
3. Headquarters:
Kitashinagawa, Shinagawa-ku. Tokyo
4. Business Outline:
5. Capital:
Y3 billion (to be increased to this level by the end of January, 2001)
6. Shareholder Structure:
Sony Corporation 51.00%
Tokyu Corporation 20.00%
The Kansai Electric Power Co., Inc. 10.00%
ITOCHU Corporation 8.00%
Kinki Nippon Railway Co. Ltd. 3.00%
ITX Corporation 3.00%
Toyota Motor Corporation 1.67%
Kyushu Telecommunication Network Co., Inc. 1.00%
Others 2.33%
7. Management:
Sunobu Horigome, President & Representative Director
(also Corporate Executive Vice President, Sony Corporation)