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2006 Asia - Telecoms, Mobile and Broadband in Japan


Attention: There is an updated edition available for this report.

This report provides a comprehensive overview of the trends and developments in telecommunications, broadcasting and pay TV markets in Japan. Subjects covered include:

Key Statistics
Market and Industry Overviews
Regulatory Environment
Major Players (fixed and mobile)
Infrastructure
Mobile Voice and Data Markets
Internet, VoIP, IPTV
Broadband (FttH, DSL, cable TV, wireless)
Convergence and Digital Media


Japan’s telecommunications sector is continuing to witness strong growth into 2006, with the expansion of Third Generation services and the uptake of Fibre-to-the-Home services being especially noteworthy. There have also been big strides in digital and mobile broadcasting. At the same time, Voice over Internet Protocol (VoIP) and triple play services are continuing to make their mark.

Japan’s NTT Corp, the world’s largest telecommunications operator, has been facing up to some big challenges in the Japanese telecommunications market. It has been pursuing KDDI big lead in the 3G mobile field. After lagging KDDI in this market for some years, NTT was closing on its rival into 2006. In the broadband market, Softbank continues to dominate with its Asymmetrical Digital Subscriber Line (ADSL) and its VoIP services.

Softbank remains the player to watch in this market. Having purchased C&W IDC and the fixed-line unit of Japan Telecom in 2004 and becoming the largest shareholder in Fuji TV in March 2005, the expanding company was pushing hard for a 3G licence. After a number of attempts, Softbank finally succeeded in acquiring 2 licences. The Ministry of Internal Affairs & Coms awarded Softbank a licence to provide a 3G mobile service in its on right in November 2005. Softbank then acquired mobile provider Vodafone K.K. for US$15.6 billion in early 2006. At the time, it was unclear how Softbank would structure its commercial entry into the 3G mobile market. No doubt there will be much interest in this issue. In any event, the operator was becoming a real force in the Japanese telecoms scene.

The IP telephony market in Japan has continued to run hot. With around 9 million VoIP subscribers by end-2005, it is expected that the country will chalk up 28 million Internet phone lines by end-2007. VoIP is an ongoing problem for NTT Corp, the operator having already begun to offer IP phone services of its own customers. As the traditional telephony voice services move into decline, NTT’s huge copper network remains significant in Japan, as it must support the millions of ADSL broadband subscribers. By early 2006, there were 15 million ADSL subscribers in the country, representing about 65% of the total broadband market.

Though the 2G mobile telephone sector in Japan has entered a maturing market phase, the overall Japanese mobile market is in a dynamic period of activity, given the buoyancy of the mobile data segment. The popularity of built-in camera mobile phones has been an especially interesting phenomenon. Wireless Internet and mobile services have helped to keep the mobile market stimulated. Into 2006, Japan was still leading the world in wireless Internet subscribers. DoCoMo laid claim to over 50% of Japan’s mobile market into 2006 and was consequently maintaining a comfortable lead over its rivals KDDI and Vodafone K.K. At the same time, KDDI was hanging on to the lead in the all-important 3G market by a reasonable margin, but NTT DoCoMo’s FOMA service was starting to catch up. Meanwhile Vodafone K.K. (formerly J-Phone) continued to struggle in the 3G arena, despite some earlier successes in the market. It came as no surprise when Softbank acquired the Vodafone K.K. business in early 2006. The market was threatening to become even busier as Softbank, NTT Com and eAccess were each awarded a 3G licence in November 2005.

By early 2006, Japan had over 24 million broadband services in place, making it the third largest broadband country in the world after the US and China (China surpassed Japan earlier in 2004). Softbank, via its Yahoo! BB service, has been the driving force behind the booming broadband market. Its leadership in the rollout of ADSL services took the Japanese market by storm and the push is continuing. Enthusiasm for ADSL appears to be waning, however, as FttH starts to present a serious option for broadband service in the country. The FttH subscriber base hit the 5 million milestone in early 2006.

In one of the biggest challenges for the telecom industry in Japan, the government wants to see the domestic fixed-line telephone network completely replaced with a fully integrated IP system. This could possibly happen by as early as 2010. KDDI has announced that it plans to replace its fixed-line services with the IP system by the start of 2008, while NTT Corp has plans to replace part of its fixed-line services with the IP system by 2010. With NTT still dominating Japanese telecoms infrastructure, KDDI and Softbank have been busily working to bypass NTT’s system in whatever way possible. This sets the scene for some interesting investment moves.

1. KEY STATISTICS
2. TELECOMMUNICATIONS MARKET
2.1 Overview of Japan’s telecom market
2.2 Fixed-line and mobile phones in Japan
2.3 Internet, broadband and wireless Internet in Japan
2.3.1 Japan Internet Providers Association (JAIPA)
2.4 Television broadcasting in Japan
2.5 Telecommunications carriers
2.6 Market highlights and analysis - 2005
2.7 Market highlights and analysis - 2004
3. REGULATORY ENVIRONMENT
3.1 Major stages of reform
3.2 The MPHPT / MIC
3.3 Telephone numbering plan
3.4 Mobile Number Portability (MNP)
3.5 Interconnection arrangements
3.5.1 Fixed-mobile interconnection
3.6 History of regulatory developments
3.6.1 Telecommunications Business Law of 1985
3.6.2 Years 1992 - 1999
3.6.3 Year 2000
3.6.4 Year 2001
3.6.5 Year 2002
3.6.6 Year 2003
3.6.7 Year 2004
3.6.8 Year 2005
4. MAJOR TELCOS
4.1 Market developments
4.1.1 Selected mergers and acquisitions
4.2 Overview of major players
4.2.1 NTT Corporation
4.2.2 KDDI Corporation
4.2.3 Softbank Corporation
4.2.4 Vodafone Holdings K.K. / Japan Telecom
4.2.5 POWEREDCOM and Power Nets Japan (PNJ)
4.2.6 Utility companies
5. TELECOMMUNICATIONS INFRASTRUCTURE
5.1 Overview of infrastructure developments in Japan
5.1.1 The push to develop next generation network (NGN) standards
5.1.2 Opening up the last mile
5.2 Major national infrastructure players
5.2.1 Crosswave Communications
5.2.2 KDDI Corp
5.2.3 NEC and Hitachi make next-generation routers
5.2.4 NTT Corp
5.2.5 Softbank
5.2.6 Tokyo Electric Power (TEPCO) and Kansai Electric Power (KEPCO)
5.2.7 Willcom (formerly DDI Pocket)
5.3 National Telecom Network
5.3.1 Market overview
5.3.2 Domestic services
5.4 International infrastructure
5.4.1 Submarine cable overview
5.4.2 Satellite overview
5.5 Infrastructure developments
5.5.1 Broadband networks
5.5.2 Fibre-to-the-Home (FttH)
5.6 Voice over Internet Protocol (VoIP)
5.6.1 Overview
5.6.2 Major VoIP providers
5.6.3 Regulatory environment for IP telephony
5.7 Data communications
5.8 Regulatory issues
5.8.1 Policy on national information superhighway
5.8.2 Government’s IT Basic Strategy
5.8.3 Government plan for ubiquitous networks
6. BROADBAND MARKET
6.1 Overview
6.1.1 Mega Consortium / Broadband Consortium Japan (BB Japan)
6.1.2 Impact of broadband on voice market
6.2 Cable modems
6.2.1 Market overview
6.2.2 Regulatory issues
6.3 Asymmetrical Digital Subscriber Line (ADSL)
6.3.1 Market overview
6.3.2 Major ADSL providers
6.4 Fibre-to-the-Home (FttH)
6.4.1 Market overview
6.4.2 Major FttH players
6.5 Broadband over powerline (BPL) / powerline communications (PLC)
6.6 Wireless broadband
6.6.1 Wireless LAN (WLAN)
6.6.2 Major WLAN providers
6.6.3 Voice over WLAN (VoWLAN)
6.6.4 Ultra Wideband (UWB)
6.6.5 Local Multipoint Distribution Service (LMDS)
6.6.6 Broadband Internet via satellite
6.7 Global LAN Ethernet
7. CONVERGENCE
7.1 Overview of media convergence
7.2 Triple play models
7.3 Digital TV
7.3.1 Overview
7.4 Broadband TV
7.4.1 TV-over-DSL / IPTV
7.4.2 Video-on-Demand (VoD)
7.5 Cable TV
7.5.1 Market overview
7.5.2 Regulatory issues
7.5.3 Industry consolidation
7.5.4 Major cable TV players
7.5.5 Interactive TV (iTV) via cable
7.6 Satellite TV
7.6.1 Market overview
7.6.2 Regulatory issues
7.6.3 Digital satellite TV
7.6.4 Major satellite TV players
7.7 Digital terrestrial TV
7.7.1 Market overview
7.7.2 Interactive TV via terrestrial broadcasting
7.7.3 Five station joint venture
7.8 E-services
7.8.1 Overview
7.8.2 E-commerce
7.8.3 E-cash
7.8.4 E-banking
7.8.5 Online trading
7.8.6 E-government
7.8.7 E-entertainment
8. MOBILE COMMUNICATIONS
8.1 Overview of Japan’s mobile market
8.1.1 Statistical overview
8.1.2 Market developments
8.1.3 IP mobile telephony to hit the Japanese market around 2008
8.2 Mobile technologies
8.2.1 PDC
8.2.2 CDMA
8.2.3 PHS
8.2.4 Third generation (3G) mobile
8.2.5 Fourth Generation (4G) mobile
8.2.6 Mobile handset market
8.3 Major mobile operators
8.3.1 Statistical overview
8.3.2 NTT DoCoMo
8.3.3 KDDI
8.3.4 Vodafone K.K. (formerly J-Phone)
8.3.5 New entrants into the mobile market
8.3.6 Mobile Virtual Network Operators (MVNO)
8.4 Mobile voice services
8.4.1 Prepaid cards
8.4.2 Mobile satellite services (MSS)
8.5 Mobile data services
8.5.1 Analysis - mobile data market
8.5.2 Mobile Internet
8.5.3 Short Message Service (SMS)
8.5.4 Multimedia Messaging Service (MMS)
8.5.5 General Packet Radio Service (GPRS)
8.5.6 Push-to-Talk (PTT)
8.5.7 BlackBerry
8.6 Mobile content and applications
8.6.1 Content for mobile market
8.6.2 Global Positioning System (GPS)
8.6.3 M-commerce / m-cash
8.6.4 Mobile gaming
8.6.5 Mobile conferencing
8.6.6 Mobile videoconferencing / mobile video
8.6.7 Mobile TV and radio
8.6.8 Mobile ringtone and music downloads
8.6.9 QR code readers
9. GLOSSARY OF ABBREVIATIONS
Exhibit 1 - NTT corporate structure
Exhibit 2 - Major members of MYLINE Carriers Association - April 2006
Exhibit 3 - Types of telecom convergence
Exhibit 4 - Japanese satellite TV overview of broadcasters - January 2005


Table 1 - Country statistics Japan - 2005
Table 2 - Telecom revenue and investment statistics - 2005
Table 3 - Telephone network statistics - 2005
Table 4 - Internet provider statistics - 2005
Table 5 - Internet user statistics - 2006
Table 6 - Broadband statistics - 2005
Table 7 - Mobile statistics - January 2006
Table 8 - National telecommunications authorities
Table 9 - Subscriber growth and penetration: fixed-line versus mobile - 1993 - 2005
Table 10 - Telecommunications carriers in Japan - February 2006
Table 11 - VoIP subscribers by operator - March 2005
Table 12 - Cable modem, ADSL and FttH subscriber growth - 1998 - 2005
Table 13 - Overall broadband subscriber growth - 2000 - 2005
Table 14 - Cable TV subscribers - 2003 - 2005
Table 15 - Number of cable TV operators - 1997 - 2005
Table 16 - J-COM subscribers by service - 2000 - 2005
Table 17 - BS and CS subscribers - 2003 - 2006
Table 18 - Satellite broadcasters - 2003 - 2005
Table 19 - SKY PerfecTV! subscribers - 1998 - 2006
Table 20 - Mobile subscriber growth - 1995 - 2006
Table 21 - Mobile subscribers by system - 2005
Table 22 - cdmaOne subscribers - 1999 - 2006
Table 23 - CDMA 2000 1x subscribers - 2003 - 2006
Table 24 - WCDMA subscribers - 2003 - 2006
Table 25 - PHS subscribers by carrier - 2005 - 2006
Table 26 - PHS subscribers - 1995 - 2006
Table 27 - 3G subscribers by operator in Japan - 2005
Table 28 - NTT DoCoMo FOMA WCDMA subscribers - 2001 - 2006
Table 29 - Mobile subscribers by operator - 2005
Table 30 - Prepaid mobile subscribers - April 2006
Table 31 - Wireless Internet subscribers - April 2006

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