2012 Japan - Telecoms, Mobile, Broadband and Forecasts

Telecommunications operators face a coming of age, ramp up initiatives to counter threats by OTT competitors / allies

Japan enters the following decade faced with looming social changes and challenges. Accelerated globalisation sees the increasing influence of emerging countries in the international community and the economy. This is coupled with the global shift to a more sustainable society 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 requires the creation of services and social systems for support. The market has also seen a change in values and the behaviour of people wanting quality instead of mass consumption, and a move from ownership to efficient resource use and sharing. Japan’s sophisticated IT infrastructure and high broadband penetration sets the scene for improved productivity, convergence of industries and a more flexible industrial structure.

Japan has assumed a dynamic leadership role in many aspects of global and regional telecommunications. The government has been active in regulating its telecommunication industry to introduce more effective competition. This competitive market is 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 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; by 2013 to advance 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 led Japan to have one of the world’s leading mobile telephone markets, not only in terms of size but also in terms of innovation and its ability to be early with the introduction of advanced technologies. With 3G subscribers making up around 98% of all mobile subscribers into 2012, Japan had become the fourth country in the world to introduce LTE. Competition was intensifying in areas such as low pricing, a wide variety of handsets, music, video, e-books, and other content services. Increases are expected in the areas of smart phones and telecommunications modules.

Japan has also developed one of the most advanced broadband environments in the world and is the third largest broadband country in the world after the US and China. Especially noteworthy has been the continued strong uptake of FttH services into 2012 (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.

The technical advancements in fixed-line and mobile communications are however not sufficient for the traditional telecommunications operators. The prevalence of content and services driving revenue and profitability means a coming of an age for the telecommunications operators who now, more than ever, need to focus on leveraging their full-service network capabilities and take advantage of the new opportunities in a digital age.

Market Highlights:

• Over 98% of Japan’s 120 million mobile subscribers use 3G services after 10 years in operation. Japan became the fourth country in the world to deploy Long-term Evolution (LTE) technology in 2010 with DoCoMo’s competitors to launch their own LTE networks into 2013;
• Mobile operator eMobile launched its LTE network  in February 2012 and was acquired by Softbank in October 2012;
• Over 100 million mobile internet subscribers embraced iPhones, smart phones and tablets and drove data usage to new levels as the society continued to move from connecting places, to connecting people and devices;
• New operator UQ Communications, in which KDDI is the largest shareholder, continued its WiMAX rollout and had over 3 million subscribers by mid 2012;
• FttX continues to make impressive strides taking 60% market share in 2012 and over 22 million subscribers. Japan has established the second largest FttX subscriber base at around 30% of the world market after China at about 40%;
• Cloud-based services with virtual hosting and online storage started to take hold as companies sought to reduce system-operating costs as the financial downturn continued to depress the economy;
• Analogue to digital switchover also took place during 2011 except in tsunami affected areas, presenting opportunities for all in the value chain.

Internet, broadband, IP telephony and telecoms statistics for Japan – 2010 - 2012

(Source: BuddeComm based on various sources)