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Japan’s telecommunications sector is one of the most active markets in the world. Coming into 2010, the country was undergoing strong competition among the mobile operators in the 3G segment of the market which now comprises 95% of the total mobile market. Heavy discounts and aggressive promotions, as well as the introduction of new methods of handset repayments in instalments, are responsible for the growth occurring across Japan’s already mature mobile sector. This, combined with operators shutting down their 2G networks in the next few years and the acquisition of mobile content, is propelling the robust growth being experienced in the 3G market. ARPU has continued to decline but this is expected to turn around by 2011 to show growth as more non-voice data makes it way to the market.

Japan is one of the world’s leading mobile telephone markets, not only in terms of size but also in terms of innovation and its ability to be early with the introduction of advanced technologies. The market is characterised by intense competition and as user needs become varied, it becomes more difficult for any one carrier to hold on to a majority of market share. Japan has concrete plans to start implementing commercial operations of Long-term Evolution starting in 2010 by NTT and other operators following suit up to 2012.

The affordability of mobile services, and customers looking to cut down outgoings, even though Japan has emerged out of a recession, has damaged the fixed-line market. The number of available lines has continued to decline. It is not only the affordability of mobile services that has damaged the fixed-line market, so too have VoIP services.

Entering 2010, Japan had over 30 million broadband lines in place, making it the third largest broadband country in the world after the US and China. Much of the success of broadband in Japan is owed to the stunning growth surge that occurred back in 2003 on the back of DSL broadband technology. Today Fibre-to-the-Home comprises around 50% of the total broadband market. Japan has also been an early adopter of triple play models which provide TV, broadband Internet and voice telephony as packaged services from a single provider. E-services are continuing to gain ground as a driver of convergence in the Japanese telecommunications market.

The telecommunications regulatory authorities in Japan have been very active in shaping the industry in this country. As a result of their efforts, Japan has assumed a dynamic leadership role in many aspects of global and regional telecommunications. In addition the country has made big strides in developing digital and mobile broadcasting.

Although Japan emerged from a recession during 2009, it is anticipated that it faces a long and bumpy recovery in 2010. The new DPJ government is unlikely to enact major reforms and it is expected that the new government will struggle to get to grips with the country’s structural problems.

Key highlights:

• The number of broadband lines in Japan has posted dramatic growth to over 31 million by end 2009. In terms of quality and affordability, Japan’s telecommunications infrastructure is significantly ahead of those in the US and Europe. Going into 2010, DSL subscribers were still declining from the peak in 2006, as customers continued to shift to FttH. Subscribers of FttH had reached over 15 million by mid-2009;
• Entering 2010, the number of fixed subscribers had declined even further to 41 million (less than 35% penetration), and that of mobile subscribers surpassed 110 million (more than 85% penetration). The trend highlights the severe pressure on NTT, faced with declining fixed-line subscribers and high levels of competition eating away at their market dominance;
• New mobile operator eMobile continued its network expansion and going into 2010 had reached over 1.2 million subscribers which the operator plans to increase to 2.5 million by mid-2010. The company launched the country’s first commercial HSPA+ network across six cities in 2009, offering download speeds of 21.6Mb/s;
• The strong uptake of 3G continued, with over 105 million subscribers going into 2010, representing 95% of all mobile subscribers. DoCoMo is one of the strongest drivers of the Long-term evolution standard, and plans to launch commercial operations in late 2010;
• The local market’s other significant growth area coming into 2010 was in the IP-based telephony reaching over 20 million subscribers. Here Softbank is a major player, with 21% of the total VoIP subscriber base. The various divisions of NTT, as well as KDDI, are also playing a big role in this rapidly expanding market segment, with NTT showing considerable increases to over 50% of market share;
• Popular Value-Added Service continued to be i-mode for Internet access via mobile phones, music downloads facilitated by linkage between the content providers and the operators, and Osaifu-Keitai which is a mobile wallet allowing subscribers to pay for train tickets and the like with their mobile phones. Japan had over 92 million wireless Internet subscribers going into 2010;
• Softbank Telecom conceded to become a reseller of NTT’s Hikari branded services on a national scale. From July 2009, the operator has been selling Hikari services after announcing that it could not keep up with payment of higher leasing fees;
• NTT Com acquired Pacific Crossing, which operates the Pacific Crossing-1 trans-Pacific network, in May 2009. The 21,000km long cable has a capacity for speeds of 1Tb/s, for which NTT paid an estimated ¥10 billion (US$104 million), giving it a new trans-Pacific fibre link between Japan and the US;
• NTT launched the TPE submarine cable network, which runs between Southeast Asia and the United States, in December 2009. The TPE now has a capacity of up to 5.12Tb/s, and comprises around 18,000 km of cable. The construction and startup of the Japan-Asia leg was the second phase of construction for TPE. It has been operational since September 2008, interconnecting Mainland China, South Korea, Taiwan and the US;
• UQ Communications, in which KDDI is the largest shareholder, starting commercial operations in July 2009 providing high-speed mobile data communications through its UQ WiMAX service. By early 2010, coverage is expected to include all 18 government-designated major cities nationwide.

For more information see: Japan – Telecoms, Mobile and Broadband

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This entry was posted on Wednesday, February 24th, 2010 at 10:21 am and is filed under From Paul's Desk. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.