• 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
Executive Summary
Japan’s telecommunications sector is one of the most active markets in the world. Into 2007, there was continuing strong growth, with Third Generation (3G) mobile services and FttH broadband leading the way. And at the same time, the adoption of VoIP and triple play services has been signalling a significant shift in the market.
The local telecom landscape continues to be dominated by NTT Corp, the world’s largest telecommunications operator. The company has had to face up to some big challenges in the market place. NTT has been busy pursuing KDDI’s big lead in 3G mobile. After lagging KDDI in the market for some years, NTT caught up and passed its rival in 2006. By 2007 mobile operator NTT DoCoMo had a comfortable lead. Though the 2G mobile telephone sector in Japan has entered a maturing market phase, the healthy expansion of 3G has seen the overall Japanese mobile market in a period of dynamic activity. More sophisticated handsets, and the popular built-in camera phones in particular, have been an especially interesting phenomenon that is certainly stimulating the local mobile data market.
Softbank remains the player to watch in the Japanese 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 two licences. The Ministry of Internal Affairs and Communications (MIC) 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. Having acquired Vodafone K.K., Softbank returned the licence it had been awarded in November 2005. The company said it was planning to unite its broadband services and Vodafone’s mobile services, including providing a video service to mobile subscribers. No doubt there will be much interest in how Softbank restructures its business. In any event, the operator was becoming a real force in the Japanese telecommunications scene. For more information, see chapter 4.2.3, page 32.
The IP telephony market in Japan has continued to run hot, with 14 million registered VoIP subscribers by early 2007. VoIP is an ongoing issue for NTT Corp, the operator having already begun to offer IP phone services to its own customers. NTT (NTT Com, NTT East, and NTT West) had a total VoIP subscriber base of 6 million by early 2007, representing a significant 43% of the market. As the traditional telephony voice services move into decline, however, NTT’s huge copper network remains significant in Japan as it must continue to support the millions of DSL broadband subscribers.
By start of 2007, Japan had more than 26 million broadband lines in place, making it the third largest broadband country in the world after the US and China (China surpassed Japan in 2004). Much of the success of broadband in Japan is owed to the stunning growth surge that occurred back in 2003; the growth took place on the back of DSL broadband technology. Other broadband services such as FttH have since attracted even greater interest in the Japanese market and the enthusiasm for DSL has begun to wane. By early 2006, there were 15 million DSL subscribers in the country, representing about 65% of the total broadband market. However, 12 months later the DSL subscriber numbers had remained almost the same, while other forms of broadband access, including FttH, were growing at an overall annual rate of around 45%. In the meantime, the DSL share of the total broadband market had dropped to 55%. The hot FttH market saw that subscriber base hit the eight million milestone in early 2007, up from just one million in early 2004. For more information, see chapter 7, page 61.
As for the players in the broadband market, Softbank continues to be a strong performer with its DSL and VoIP services. Although DSL growth levelled off in 2006, Softbank unit BB Technology had 5.2 million DSL subscribers by end-2006, representing 36% of the total DSL market.
In one of the biggest challenges for the telecom industry in Japan, the government has been pushing hard to ensure that the domestic fixed-line telephone network is completely replaced with a fully integrated IP system. Japan’s Ministry of Internal Affairs and Communications (MIC) is seeking to make this strategic transition by 2010 at a cost of around ¥50 billion. KDDI has announced that it plans to replace its fixed-line services with an IP system by the start of 2008, while NTT Corp has plans to replace at least part of its fixed-line services with an IP system by 2010. For more information, see chapter 6.9.1, page 54.
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