2014 Japan - Telecoms, Mobile, Broadband and Forecasts

Japan’s telecom operators face a major challenge with the more nimble OTT competitors

Japan is preparing to face a myriad of challenges in the coming decade with looming social and economic changes ahead. Accelerated globalisation sees the increasing influence of emerging countries in the international community and the global economy. This, coupled with the global shift to a more sustainable society, is forcing governments and industry to engage with environmental issues and ensure efficient use of energy and resources.

In its home market, Japan has an aging and decreasing population base that demands the creation of appropriate social systems and supports services. The market has also seen a change in values and the behaviour with people wanting quality instead of mass consumption. At the same time there has been a shift from personal ownership to efficient use and sharing of resources. As it happens, Japan’s sophisticated IT infrastructure and high broadband penetration sets the scene for improved productivity, convergence of industries and a more flexible industrial structure.

Clearly Japan has been a dynamic leader in many aspects of global and regional telecommunications. The government has been particularly active in regulating its telecommunication industry in such a way as to introduce more effective competition. This competitive market has been challenged to develop the most effective business structures to achieve commercial success.

A key 2010 government-led initiative is the ‘New ICT Strategy’ which aims to realise a “knowledge/information society” by switching from a society led by government and providers to a society led by citizens (taxpayers and consumers). It focuses on key strategies in the lead up to 2020 to support the sustained growth of Japan. The strategic goals include:

• improved e-government;
• high-quality medical services using ICT;
• a nationwide environment for school education and lifelong learning using ICT;
• creation of new markets worth approximately ¥70 trillion;
• universal deployment of the smart grid;
• using ICT to halve traffic congestion on key roads nationwide;
• advancing intensive R&D in strategic fields (eg next-generation optic networks, next-generation wireless, cloud computing, smart grid, robotics, 3D video).

These initiatives support and drive technological development and advanced infrastructure.

Through this sustained oversight, the government has already ensured that Japan can claim one of the world’s leading mobile telephone markets, not only in terms of size but also in terms of innovation and, in particular, its ability to be early with the introduction of advanced technologies. With 3G subscriber numbers having peaked at around 97% of all mobile subscribers coming into 2013, Japan has shifted its focus to 4G/LTE becoming the fourth country in the world to introduce this next generation platform. Competition has been intensifying in areas such as low pricing, a wide variety of handsets, music, video, e-books, and other content services. Not surprisingly the volume of smart phones and telecommunications modules entering the market has been rapidly increasing.

Japan can also claim to have developed one of the most advanced broadband environments in the world. It is the third largest broadband market in the world after the US and China. Especially noteworthy has been the continued strong uptake of FttH services (with a corresponding move away from DSL). In the fixed-line market the expansion of broadband services centred on FttX is accompanied by an ongoing convergence between fixed-line and mobile communications broadcasting. As a result, competition between services has entered a new phase. With content and services driving revenue and profitability, the telecom operators now, more than ever, need to focus on leveraging their full-service network capabilities and take advantage of the new opportunities presented by a digital age.

Data in this report is the latest available at the time of preparation and may not be for the current year