Outline of the
Telecommunications Industry
In Japan
May 2007
Prepared by the Economic Department
Israeli embassy
Tokyo Japan
I. Outline of Japan’s Telecommunications Industry
Market Overview
The cellular phone market is dominated by three major players:
NTT DoCoMo (54.6% of the market),
KDDI (28.9%) and
Softbank (16.5%).
Main Broadband networks in Japan are using DSL, FTTH and CATV. The main players are
NTT (NTT East and NTT West), KDDI and Softbank. As of September 2006, NTT has 66%
share of the FTTH lines, and announced that by 2010 FTTH installations will exceed 30 million.
Internet connection in Japan is characterized by very low prices and high speeds. Monthly charge
per bps is still lowest in the world. All major broadband network providers and ISPs provide
Triple Play services (Internet connection, IP telephony and IP TV broadcasting). IP Phone
services offer attractive prices, and the FTTH network infrastructure become also a battle on
ownership of fix line market.
As for new technologies, WiMax is being used for business users and is being tested at several
places in Japan. In the near future we may expect competition in the broadband network field.
In 2006 PLC (Power Line Communication) usage was approved, and is being offered as an
alternative to Wi-Fi connection.
Short term history: Timeline of Japan’s Telecommunication and Internet Related Business
Telecommunication Business in Japan, Telecommunications Bureau Ministry of Public Management, Home Affairs, Posts and Telecommunications Japan
( MPHPT of Japan), July 2004.
Until 1985 there was a monopoly on the telecommunication business by two companies, NTT
and KDDI, for domestic and international calls respectively. After the Telecommunications
Business Law and NTT Law were implemented in April 1985, NTT was privatized and was
divided into separate companies by business line and region. On 2000, the rules for unbundling
of DSL were introduced.
The scale of Japan’s Telecom Industry
According to a survey conducted on July 2006 by the Ministry of Internal Affairs and
Communications of Japan, the telecommunications sector worth about 16,510 billion yen
(approx. 150 billion USD). This figure supports the notion that Japan is the second largest
telecommunications equipment market in the world, after the United States.
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
16,72916,761 16,61516,74116,512
15,390
14,222
Fixed phone line
Mobile phone
13,238
11,584
9,941
8,239
8,836
10,87710,766 10,67310,434
10,205
10,183
9,328 9,561
5,123
4,595
3,845
Services incidental to
telecommunications
Total
telecommunications
market
5,789 5,940 5,884 6,255 6,280
2,683
1,641
49
2004
52
2003
58
2002
56
2001
63
2000
62
1999
66
1998
65
1997
65
1996
64
1995
Nominal Value ( in billion yen)
Japanese Telecom Market
Year
Year
Fixed phone line
Y-to-Y change (%)
Mobile phone
Y-to-Y change (%)
Services incidental to
telecommunications
Y-to-Y change (%)
Total
telecommunications
market
Y-to-Y change (%)
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
8,239
8,836
9,328
9,561
10,205
10,877
10,766
10,673
10,434
10,183
1,641
7.3
2,683
63.5
5.6
3,845
43.3
2.5
4,595
19.5
6.7
5,123
11.5
6.6
5,789
13.0
-1.0
5,940
2.6
-0.9
5,884
-0.9
-2.2
6,255
6.3
-2.4
6,280
0.4
64
65
65
66
62
63
56
58
52
49
1.5
-0.4
2.0
-6.9
3.1
-12.4
3.8
-10.8
-4.8
11,584
13,238
14,222
15,390
16,729
16,761
16,615
16,741
16,512
16.5
14.3
7.4
8.2
8.7
0.2
-0.9
0.8
-1.4
9,941
Figure 1.2
Data Source: Ministry of Internal Affairs and Communications
Main Players in the Communication Market
■
Competition in the domestic long-distance communications market originally revolved around NTT, KDDI and Japan
Telecom. With the advent of broadband services, the main players are now NTT, KDDI, SoftBank, the power companies and
CATV. Increasing competition is also expected in the mobile telephone market as new entrants emerge.
Produced by MIC from information available on websites
Group
Own subscriber
lines
Long distance,
international and
corporate
communication
Broadband
services
Broadcasting and
video distribution
services
Mobile telephony
NTT
NTT
East/West
NTT com
NTT East/West
NTT com
Plala Networks
４ｔｈＭＥＤＩＡ
NTT DoCoMo
KDDI
KDDI
Hikari Plus TV
KDDI
TEPCO
TEPCO
casTY
K-Opti.com
K-Opti.com
K-CAT
KDDI
TEPCO
K-Opti.com
JCN Group
＋
SoftBank
Japan Telecom
SoftBank BB
BBTV
TV Bank
Vodafone
In future:
Vodafone
eAccess
eAccess
Willcom
In future:
Willcom
Willcom
J:COM
J:COM
USEN
Yuzu
Communications
J:COM
Media
USEN
J:COM
Gyao Show time
All copyrights reserved (MIC)
Figure 1.3
Source: www.itu.int/osg/spu/ngn/documents/presentations/seki-23-march-2006.ppt
Date of presentation: March 2006
Please note that K-Opticom has already merged with Kansai Electric Power Corporation
(KEPCO). And that TEPCO FTTH business was completely acquired by KDDI.
II. Mobile Phone Industry
Brief history of mobile communications in Japan
1979
1985-1988
1993
1994
1998
1999
2000
2001
2002
NTT Public Corporation provided the 1st automobile phone service (1G)
New carriers were introduced in the market
NTT DoCoMo begins PDC (2G)
New entry continues (PDC)
Sale of terminal equipment starts
DDIcellular introduces the first CDMA
NTT DoCoMo introduces i-Mode (2.5G)
Analog transmission for mobile phones was terminated.
NTTDoCoMo introduces FOMA on W-CDMA (3G)
CDMA2000 competes with W-CDMA (3G competition)
Figure 2.1
Data Source: Mobile Communications in Japan, Stanford Japan Center, May 2, 2005
Mobile Services and Utilized Technology
Currently, the following are carrier groups that provide mobile phone services, according to area:
Mobile Phone Company
Technology
PDC*(Mova) @ 800MHz and 1.5GHz
3G(FOMA)WCDMA
NTT DoCoMo Group
KDDI Group
SoftBank Group
CDMA
cdmaOne(800MHz only)
CDMA 1X
CDMA 1X WIN
(PDC @1.5GHz
For Tu-Ka)
PDC*
WCDMA(UMTS 3G)
PHS
Table 2.2
*PDC – 2G in Japan
Data Source: Recent Developments in the Telecommunications industry, Japanese Economy Division, JETRO 2007and Wikipedia.
Mobile Phone Carriers Statistics
Figure 2.4
Source: NTT DoCoMo, as of Feb 2007
NTT DoCoMo has the biggest share of subscribers in the market followed by KDDI and
SoftBank (which has recently acquired Vodafone Japan). Note that Tu-Ka by KDDI services will
be stopped in the future and new subscribers are not accepted for this service.
Recently two additional players, ipMobile and eMobile received permission to operate as carriers,
and we should expect for competition on both voice and data communication services.
III. Broadband Networks
Internet was introduced in Japan in the early 1980’s. Japan Statistical Yearbook 2007 of MIC,
by end of 2005, there are 85.3 million Internet users in Japan, which represent approximately
67% of the population and around 27.3% of Internet subscribers are using broadband networks.
Broadband Subscriber ( Fixed Line)
2500
2000
1500
1000
500
Mar01
Sep01
Mar02
Sep02
Mar03
Sep03
Mar04
Sep04
Mar05
Sep05
Mar-06
Nov-05
Jul-05
Mar-05
Nov-04
Jul-04
Mar-04
Nov-03
Jul-03
Mar-03
Nov-02
Jul-02
Mar-02
Nov-01
Jul-01
0
Mar-01
Number of Subscribers ( in 10,000)
Wired Broadband Services
Mar06
DSL
10
70
240
420
700
920
1120 1280 1370 1430 1450
CATV
80
120
150
180
210
230
260
280
300
310
330
10
30
70
110
200
290
400
550
90
190
390
610
940
FTTH
Total
1220 1490 1760 1960 2140 2330
Figure 4.1
Data Source: http://www.ciaj.or.jp/e/japanmarket/index.htm#high
Among broadband users, Asynchronous Digital Subscriber Line (ADSL) subscribers still have
the largest share, with14.5 million subscribers. However, Fiber-to-the Home (FTTH) that was
introduced to the market on 2004 is growing aggressively with almost 8 million subscribers at
the end of 2006. It was on 2005, where the increase in the number of FTTH subscribers has
surpassed that of the ADSL subscribers.
This table shows the connection speed of each service:
Wired Broadband Service
DSL
FTTH
CATV
Maximum
Speed ( in
Mbps)
50
100
30
Table 4.2
Source: http://www.ciaj.or.jp/e/japanmarket/index.htm#high
DSL Providers
BB Technology (subsidiary of SoftBank) has almost the same market share as that of NTT East
and West combined.
Fiber-to-the-House (FTTH)
As of December 31, 2006, there were 7.94 million FTTH subscribers which were about 30.8% of
the broadband subscribers as of that time. This diagram shows the major providers of FTTH:
NTT East, NTT West and Power companies – TEPCO (FTTH business is now a part of KDDI)
and KOpticom (now a part of KEPCO) has the most numbers of FTTH subscribers.
Mobile Phone Broadband Services
Number of Subscribers ( in
10,000)
Mobile Phone Internet Subscriber
1000
500
0
2002
2003
2004
2005
2006
i-mode
355
403
431
456
472
Ezw eb
115
147
175
198
225
Yahoo!Keitai
113
128
130
128
129
Total
583
678
736
782
826
Year
Table 4.4
Data Source: http://www.tca.or.jp/eng/database/daisu/yymm/0703matu.html
Internet in mobile phones is a growing market. In just a month, from Feb 2007 to March 2007;
there was an increase in 963,900 subscribers.
NTT DoCoMo provides a maximum speed of 3.6 Mbps for download and 384Kbps for upload
KDDI provides a maximum speed of 2.4 Mbps for download and 384Kbps for upload
Softbank provides a maximum speed of 384 Kbps for download and upload
eMobile, a new player in the mobile communications industry, provides HDSPA services for
data communications at 3.6Mbps speed.
ipMobile, also a new player in the mobile communications industry, plans to provide mobile
broadband services using TD-CDMA technology by end of 2007. ipMobile plans to offer a flat
monthly rate with 5.2Mbps downlink speed.
While 3G becomes very popular in the Japanese market, WILLCOM is still providing services
using narrow band Personal Handy System (PHS), where voice and data transmission rates are
flat.
The number of 3G subscribers has been steadily increasing and reached 51 million as of 2006
which is 55% of all the mobile phone subscribers.
With the increase in the number of 3G subscriber, all the major mobile phone carriers offered a
number of varied services that would use this technology. The following are main services that
are being offered by the carriers:
a. Entertainment services such as music downloads and interactive games.
b. Fast information download like the i-channel of NTT DoCoMo and EZ Channel of au
KDDI
c. TV on mobile phones ( “One Segment System” which is initially available in Tokyo,
Nagoya and Osaka)
d. Video telephony
With 3G, the number of mobile phones with camera and music player capabilities had also
increased. According to the survey of MIC, percentage of mobile phones that are used to
download and play music stands on 26.2%.
The following are some of the mobile music services in Japan (as of 2004): Ringing Melody,
Ring Back Song, Ringing Song, and Full track music download.
As shown in the table below, the mobile music business in Japan as of 2004 has a value of 1,099
million USD.
Year
Offline
Online
PC
Mobile
Total
2000
6,174
134
6,308
2001
5,934
519
16
503
6,453
2002
5,808
689
25
664
6,497
2003
5,319
929
32
897
6,248
Table 6.2
Source: Source: http://project.hkkk.fi/helsinkimobility/papers/Mobile%20Applications_3_2.pdf
2004
5,202
1,149
50
1,099
6,351
IV. IP Telephony
Introduction
NTT dominates the telecommunication market in Japan. On 1985, as part of the government plan
to create a competitive telecommunication industry, NTT was privatized and divided to several
companies - NTT East, NTT West, NTT DoCoMo, NTT Communications, NTT Data and other
large subsidiary companies.
Statistics on Telecommunication Subscribers
Telecommunication Service Subscribers
Subscribers ( in ten
thousands)
120000
100000
80000
60000
74819
61325
81118
60772
86655
91474
96484
60219
59607
58053
Fixed Line
(Subscriber +
ISDN)
IP Telephony
5276
8305
11457
Mobile Systems
( Mobile Phone +
PHS)
40000
20000
0
2001 2002 2003 2004 2005
Year
Figure 3.2
Source: Recent Developments in Telecommunication Industry, JETRO 2007
As shown in Figure 3.2, the number of fixed line subscribers is decreasing while the number of
IP Telephony subscribers increases rapidly. This can be attributed to the lower monthly costs and
to the fact that IP Telephony provides same type of service as fixed lines.
The IP Phone services introduced a fixed rate for local calls, approximately 8 yen per 3 minutes,
disregarding distance between the callers.
Figure 3.5 below shows the total share for IP phones at the end of September 2006. SoftBank BB
has the highest share of 37.2%, NTT Communications have 24.8%, and NTT East and NTT
West, together, have a total of 15.2%.
Provider Specific Shares of IP Telephone Numbers
100%
90%
80%
Percentage
70%
54.4
48.3
37.2
39.8
42
SoftBank BB
NTT Communication
60%
50%
40%
24.2
19.1
10%
0%
NTT East
16.7
14.7
Other
KDDI
22.2
30%
20%
24.8
24.9
17.2
9.3
14.7
14.8
8
8.8
8.1
6.2
11.8
0.1
0
10.7
0.4
0.1
3.5
5.4
7.1
05.3
05.9
06.3
06.6
06.9
4.3
NTT West
Period
Figure 3.5
Source: Ministry of Internal Affairs and Communications
Diffusion Rate of IP Telephony
Diffusion Rate of IP Telephony
45.0%
40.0%
39.4%
35.0%
Percentage
30.0%
27.8%
25.0%
Business
20.0%
Households
15.0%
15.0%
11.1%
10.0%
12.7%
7.3%
5.0%
0.0%
End of 2003
End of 2004
End of 2005
Period
e
Figure 3.6
Source: Ministry of Internal Affairs and Communications
From Figure 3.6, it can be concluded that IP Phones are becoming popular both for
business and household use.
2. Internet Users Behavior
Internet is very accessible in Japan, from mobile phones, home PC, office PC and even in
cafes, and with this internet is very suitable medium for anything. In this figure from
MIC, it was used for selling and purchasing goods.
Figure 6.1
Based on the report of MIC, May 2006, internet has a number of purposes. In the survey
of MIC, the top reasons for using the internet in mobile phones are for communicating or
exchanging information (including e-mails), download or playing of music content and
obtain of information like weather and news. While for internet in PC, the top 3 reasons
are communicating or exchange of info, obtaining information on merchandise and obtain
information such as news and weather forecast.
Figure 6.2
Source: Ministry of Internal Affairs and Communication