Around 90% of the mobile market in Japan was made up of 3G subscribers at the end of June 2009. Crossing over the 100mn mark for the first time during Q209 to reach 102.065mn, there were 11.233mn net additions in the year. This compared favourably to the 4.761mn net additions reported in the overall mobile market in the same period of the previous year. Heavy discounts and aggressive promotions, as well as the introduction of new methods of handset repayment 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 - NTT DoCoMo acquired a 35% stake in mobile video vendor PacketVideo in July 2009 and, at the time of writing, plans to make a bid for Germany's Net Mobile Group, a distributor of mobile content - is propelling the robust growth being experienced in the 3G market. It is hoped that these efforts will aid the launch of 4G networks, with the leading four operators expected to launch trials in 2010/11. Sadly, however, efforts made on the part of operators to encourage greater mobile content adoption are not translating positively into ARPUs. BMI's newly introduced forecast indicator for ARPUs shows that, during 2008, this had fallen by 7.9% in the year to reach a market average of JPY5,230, and on the back of further declines witnessed during 2007 of 9.5% y-o-y. Behind this has been the heavy tariff discounts and earlier price wars fought between operators to raise their market shares. This does not appear to be showing any signs of abating, and while BMI forecasts further declines for 2009, we expect this trend to slow in the coming three to four years, as more and more non-voice data makes its way to the market. The affordability of mobile services, and customers looking to cut down outgoings - even though it has now emerged out of recession - has damaged the fixed-line market. At the end of June 2009, there were a total of 42.608mn lines, led by NTT East and NTT West on 17.583mn and 17.966mn, respectively. Both operators, sister units of NTT Group, have witnessed falling lines, and as the dominant operators, this has translated into overall declines in the fixed-line market. It is not only the affordability of mobile services that has damaged the fixed line, so, too, has VoIP services, so that the fixed-line sector has contracted faster than BMI had expected. In view of this, we have revised our forecasts. We expect the market to contract by 12.9% in 2009, in line with trends witnessed during 2008 and 2007. By the end of this year, there are estimated to be 43.561mn fixed-line subscribers and a penetration rate of 34.2%, before falling further to 36.1mn by 2013 and a penetration rate of 30.7%.
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