CORRESP

Internet Initiative Japan Inc.,
Jinbocho Mitsui Bldg.,
1-105 Kanda Jinbo-cho,
Chiyoda-ku, Tokyo 101-0051, Japan

March 29, 2010

Ms. Kathleen Collins,
Accounting Branch Chief,
Division of Corporation Finance,
Securities and Exchange Commission,
100 F Street, N.E.,
Washington, D.C. 20549,
U.S.A.


RE:		Internet Initiative Japan, Inc. Form 20-F for the year ended March 31, 2009 File No. 000-30204

Dear Ms. Collins:

This is in response to the comments of the Staff (the “staff”) of the Securities and Exchange Commission (the “Commission”) in your letter dated March 4, 2010, with respect to the annual report on Form 20-F of Internet Initiative Japan, Inc. (“IIJ”) for the fiscal year ended March 31, 2009 (the “2009 Form 20-F”). For your convenience, we have included the text of the staff’s comments below and have keyed IIJ responses accordingly.


Ms. Kathleen Collins		-2-

Item 4. Information on the Company

Business Overview, page 12

Consistent with your response to prior comment 3, please revise your disclosure in the business section to describe more specifically the nature of the backbone network, including general contract terms and the breakdown of the number of physical lines and/or contracts with your major carriers. In addition, the information provided in your response concerning contingent plans in the event you are unable to renew any contracts with NTT or KDDI appears to be material information that should be disclosed.


		Response:		IIJ respectfully advises the staff that, as discussed with our counsel, Sandra Treusdell of Sullivan & Cromwell LLP, it believes it has provided the requested disclosure in its response letter dated January 29, 2010 and it will revise its disclosure by inserting the proposed additional disclosure in its future filings starting with the Form 20-F corresponding to the 2009 fiscal year.


Ms. Kathleen Collins		-3-

Note 1. Description of Business and Summary of Significant Accounting Policies

Revenue Recognition, page F-12

We note from your response to prior comment 5 that given the short duration of your arrangements, the company believes your financial position and results of operations would not vary materially from those resulting from the use of the percentage-of-completion method and therefore you believe it is appropriate to use the completed-contract method for your system construction contracts. With regards to your arrangements that are completed within six months, please explain further, and quantify if possible, how you determined that these contracts would not create a material difference in your results of operations and, in particular, how you considered the impact of using the completed contract versus the percentage-of-completion method on your interim financial statements.


		Response:		IIJ respectfully advises the staff that the differences in the financial statements line items between the completed-contract method (As reported) and the percentage-of-completion method (Pro forma) are as follows;

Consolidated Balance Sheets

(JPY thousands)

2008/1Q


	As reported			Pro forma			Difference
Account receivable		8,909,504			10,003,166			1,093,662
Inventories		1,185,250			89,381			(1,095,869	)
Total current assets		24,452,803			24,450,596			(2,207	)
Total asset		51,934,164			51,931,957			(2,207	)

Accumulated deficit		(19,592,890	)		(19,595,097	)		(2,207	)
Total shareholders’ equity		24,991,279			24,989,072			(2,207	)
Liability and shareholders’ equity		51,934,164			51,931,957			(2,207	)

2008/2Q


	As reported			Pro forma			Difference
Account receivable		9,980,614			11,478,547			1,497,933
Inventories		1,537,377			93,431			(1,443,946	)
Total current assets		24,286,519			24,340,506			53,987
Total asset		53,275,475			53,329,462			53,987

Accumulated deficit		(19,394,413	)		(19,340,426	)		(53,987	)
Total shareholders’ equity		24,979,217			25,033,204			53,987
Liability and shareholders’ equity		53,275,475			53,329,462			53,987

2008/3Q


	As reported			Pro forma			Difference
Account receivable		9,570,348			11,077,431			1,507,083
Inventories		1,617,815			165,991			(1,451,824	)
Total current assets		24,212,397			24,267,656			55,259
Total asset		52,558,295			52,613,554			55,259

Accumulated deficit		(19,614,123	)		(19,558,864	)		(55,259	)
Total shareholders’ equity		24,381,730			24,436,989			55,259
Liability and shareholders’ equity		52,558,295			52,613,554			55,259

2008/4Q


	As reported			Pro forma			Difference
Account receivable		12,255,163			12,539,484			284,321
Inventories		1,184,160			785,134			(399,026	)

Total current assets		28,485,627			28,370,922			(114,705	)
Total asset		55,702,546			55,587,841			(114,705	)

Accumulated deficit		(19,555,489	)		(19,670,194	)		(114,705	)
Total shareholders’ equity		24,980,713			24,866,008			(114,705	)
Liability and shareholders’ equity		55,702,546			55,587,841			(114,705	)

Consolidated Statements of Income

(JPY thousands)

2008/1Q


	As reported		Pro forma		Difference
System construction revenue		3,035,748		3,019,872		(15,876	)
System integration revenue		7,688,824		7,672,948		(15,876	)
Total revenue		16,328,133		16,312,257		(15,876	)

Cost of systems integration		6,024,237		6,010,568		(13,669	)
Total cost of sales		13,302,916		13,289,247		(13,669	)

Operating income		411,262		409,055		(2,207	)
Income before income tax		309,571		307,364		(2,207	)

2008/2Q


	As reported		Pro forma		Difference
System construction revenue		3,254,198		3,658,469		404,271
System integration revenue		8,028,731		8,433,002		404,271
Total revenue		16,925,708		17,329,979		404,271

Cost of systems integration		6,154,063		6,502,140		348,077
Total cost of sales		13,781,602		14,129,679		348,077

Operating income		594,180		650,374		56,194
Income before income tax		456,479		512,673		56,194

2008/3Q


	As reported		Pro forma		Difference
System construction revenue		3,724,073		3,733,223		9,150
System integration revenue		8,387,520		8,396,670		9,150
Total revenue		17,535,162		17,544,312		9,150

Cost of systems integration		6,325,592		6,333,470		7,878
Total cost of sales		14,170,476		14,178,354		7,878

Operating income		838,900		840,172		1,272
Income before income tax		476,110		477,382		1,272

2008/4Q


	As reported		Pro forma		Difference
System construction revenue		4,644,483		3,421,721		(1,222,762	)
System integration revenue		9,542,022		8,319,260		(1,222,762	)
Total revenue		18,941,727		17,718,965		(1,222,762	)

Cost of systems integration		7,038,866		5,986,068		(1,052,798	)
Total cost of sales		14,890,725		13,837,927		(1,052,798	)

Operating income		1,073,040		903,076		(169,964	)
Income before income tax		792,328		622,364		(169,964	)

FY2008


	As reported		Pro forma		Difference
System construction revenue		14,658,502		13,833,285		(825,217	)
System integration revenue		33,647,097		32,821,880		(825,217	)
Total revenue		69,730,730		68,905,513		(825,217	)

Cost of systems integration		25,542,758		24,832,246		(710,512	)
Total cost of sales		56,145,719		55,435,207		(710,512	)

Operating income		2,917,382		2,802,677		(114,705	)
Income before income tax		2,034,488		1,919,783		(114,705	)

	•		The above includes all systems construction projects, including projects that take longer than six months for completion.

	•		The profit impacts are calculated based on the average gross margin related to system construction of 13.9% for the year ended March 2009.

	•		As reported is the figures calculated based on completed-contract method.

	•		Pro forma is the figures calculated based on percentage-of-completion method.

	•		The effect on income tax is not considered.


Ms. Kathleen Collins		-4-

Note 7. Goodwill and Other Intangible Assets, page F-22

With regards to the information provided in your response to prior comments 6, please explain further the following:

	•		Tell us why you believe competition is not a factor that limits the useful life of customer relationships and how you concluded that your customers will continuously renew their contracts based solely on the cost they would be expected to incur if they transferred their developed internal network systems to other service providers. In this regard, please quantify and further explain why these costs would in essence control a customer’s decision to not transfer its business elsewhere.

	•		In your response to comment 13 in your letter dated October 30, 2009, you indicated that at the time of appraisal and as of March 31, 2009, the Internet Protocol technology was not “expected” to be replaced. Tell us what you believe the estimated useful life of the underlying technology is and explain further how this supports your conclusion that the “obsolescence” of this technology is not a factor which limits the useful life of the customer relationship.

	•		We note that subsequent to the filing of the 2009 Form 20-F you identified “scale downs or withdrawals from certain businesses and bankruptcies reflecting the deteriorating economic situation of [your] customers” and that you are evaluating if these circumstances still continue to support an indefinite useful life for your year ending March 31, 2010. Please clarify when these problems began versus when they were identified by the company. Also, tell us whether your conclusions regarding the indefinite life for your customers relationship intangible assets has since changed as a result of these circumstances and further explain what impact this has had on your impairment analysis for this asset.


		Response:		IIJ respectfully advises the staff that IIJ provides its customers with network systems and operation and maintenance that can only be provided by knowing and understanding the customers’ businesses, its organizational structure and its internal business flow. In order for our customers to switch their already-developed network systems to other providers, it would require costs such as consultation fees, costs to remove and replace equipments from our facility to other vendor’s facility, configuration costs and other costs to be paid to the new vendor. Customers would also have to be cautious about business interruption concerns. If they would have to run a parallel system for a certain amount of time before being able to transfer their system to the new provider it would again incur additional costs. Thus, corporate customers would continuously renew their contracts with the same vendor that constructed their network system instead of choosing a different vendor to operate their developed system. It is difficult to quantify the relevance between the customers’ decision to continuously renew their contracts with us and the cost that is required to switch to a different vendor because it would vary depending on the size of each system and by the level of customers’ understanding of the system. We want to emphasize that there is little competition with other vendors over our existing customers’ already-developed network systems because our customers are not willing to switch their already-developed systems to other vendors, not only because it would require additional costs and time but because customers would need to put in additional efforts, such as explaining to other vendors about their businesses and their internal business flow and also be cautious about business interruption concerns. Therefore, we believe competition is not a factor that limits the useful life of customer relationships.

				The Internet Protocol technology is the foundation of IIJ’s business and its continuous development and further penetration to various fields is set forth as a premise to our business. The Internet Protocol technology was introduced to the market in the past decade and has penetrated to various fields due to its convenient use and its low cost. It is now essential and indispensable to our business and to our daily lives. Considering such situation, the Internet Protocol is expected to further penetrate in our businesses and our daily lives which would make it difficult to simply switch to other technology. In addition, we are not aware of a new technology that would replace the Internet Protocol. Thus, we believe the obsolescence of this technology is not a factor which limits the useful life of our customer relationships.

				During the FY2009 second quarter closing, we identified that the customer attrition rate for the six months ended September 2009 was 2.2%, due to the scale down or withdrawal from certain businesses and bankruptcies. We are currently evaluating if these circumstances continue to support an indefinite useful life for the year ending March 31, 2010.The attrition rate for the nine months ended December 2009 was 2.3%, which is almost the same compared to the attrition rate for the six months ended September 2009. The recent cancellations were insignificant to the entire revenues and cash flows derived from the customers that compose the customer relationships and therefore, we decided that the cancellations were not trigger events which require an impairment analysis. On the other hand, we recorded JPY60.5 million losses related to the cancellation of the customers by applying the specific identification method for the nine months ended December 2009.


Ms. Kathleen Collins		-5-

* * * * *

IIJ acknowledges that:

	•		IIJ is responsible for the adequacy and accuracy of the disclosure in the filing;

	•		staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

	•		IIJ may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

Should you have any questions on the foregoing, please do not hesitate to contact me by phone at 81-3-5205-6333, by email at register@iij.ad.jp, or by facsimile at 81-3-5259-6311.


	Sincerely,
	/s/ Akihisa Watai
	Akihisa Watai
	Director, Chief Financial Officer and Chief Accounting Officer


cc:		Megan Akst Ryan Houseal Maryse Mills-Apenteng (Securities and Exchange Commission) Izumi Akai Taniguchi Yoichiro Sandra Treusdell (Sullivan & Cromwell LLP)