IIJ Adds Features and Broader Network Compatibility to IIJ SMF Service; SMF Now Compatible with Closed-Network Services on All Carriers as Well as ISP services of Yahoo!BB, CATV and Others.

TOKYO -- Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI, TSE Mothers: 3774), one of Japan's leading Internet access and comprehensive network solutions providers, today announced the release of new features on its proprietary network managed solution, IIJ SMF Service (1), including new compatibility with the closed network services of various carriers and the DHCP (2) service of other ISPs starting August 3. These enhancements give IIJ SMF Service broader compatibility with other networks and enable trouble-free network administration via SMF.

The new features provide added convenience, flexibility, and security to IIJ SMF Service customers.

--  Administrator PPPoE account configuration

    In addition to the PPPoE account configuration that is necessary
    for regular network connections, a new administrator's PPPoE
    account configuration feature enables the user to utilize FLET'S
    sessions that are specialized in administrating remote service
    adapters. In the past, IP-VPN and other closed-network services
    that are provided by many carriers made it difficult to configure
    or administer remote network service adapters using the IIJ SMF
    Service, and this new feature solves that problem (3).

--  Compatibility with DHCP services of other ISPs

    IIJ SMF Service now interfaces with networks using the DHCP
    dynamic IP address assignment scheme, which makes it compatible
    with providers such as Yahoo!BB and various cable companies that
    provide Internet connectivity. This means lower costs for Internet
    VPN network construction and management since companies can use
    cheaper DHCP services instead of fixed IP address services.

--  Winny peer-to-peer file sharing program filtering

    Service adapters at each location monitor and detect Winny
    transmissions through the Winny Filter settings. With this
    feature, terminals on a corporate network using Winny will be
    blocked, helping to enforce the company's security policy. This
    feature is planned to be in service on October 2006.

--  MAC address filtering

    With this feature, the service adapter at each location maintains
    a list of valid MAC addresses, which is used to restrict access to
    the network. This is called MAC address filtering, and it keeps
    the corporate network safe from unauthorized PC access. This
    feature is planned to be in service on October 2006.

In the past, IIJ SMF Service provided centralized management capabilities for Internet-based VPNs using NTT's BFLET'S and FLET'S ADSL, and ACCA Networks' ADSL service. With the addition of these new features, IIJ SMF Service can now be used to implement centralized network management for IP-VPNs and other closed networks. IIJ will also follow up these latest security enhancements with more application features in the future.

IIJ is committed to providing more service features, stronger security, and increasing convenience for all customers.

(1) IIJ SMF Service: A centralized network management system developed by IIJ and based on the SEIL Management Framework (SMF). This system enables centralized management of network configuration, administration, and maintenance. SMF received patent approval in March 2006 (patent 3774433).

(2) DHCP: The Dynamic Host Configuration Protocol automatically assigns IP addresses to terminals when they connect to the network, rather than providing a fixed IP address to each terminal.

(3) Only available when using NTT East and West's B-FLET'S or FLET'S ADSL access lines for IP-VPN and similar services.

About IIJ

Founded in 1992, Internet Initiative Japan Inc. (IIJ, NASDAQ: IIJI, Tokyo Stock Exchange Mothers: 3774) is one of Japan's leading Internet-access and comprehensive network solutions providers. IIJ and its group of companies provide total network solutions that mainly cater to high-end corporate customers. The company's services include high-quality systems integration and security services, Internet access, hosting/housing, and content design. Moreover, the company has built one of the largest Internet backbone networks in Japan, and between Japan and the United States. IIJ was listed on NASDAQ in 1999 and on the Mothers market of Tokyo Stock Exchange in 2005. For more information about IIJ, visit the IIJ Web site at http://www.iij.ad.jp/en/.

The statements within this release contain forward-looking statements about our future plans that involve risk and uncertainty. These statements may differ materially from actual future events or results. Readers are referred to the documents furnished by Internet Initiative Japan Inc. with the SEC, specifically the most recent reports on Forms 20-F and 6-K, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.