Executive SummaryJapan’s telecommunications sector is one of the most active markets in the world.
The year 2005 is witnessing the strong growth of Voice over Internet Protocol (VoIP) and triple play services, continued Third generation (3G) competition among mobile operators, the noteworthy uptake of Fibre-to-the-Home (FttH) and big strides in digital and mobile broadcasting.Despite the fact that NTT Corp is the world’s largest telecommunications operator, it faces a challenging future in the Japanese telecommunications market, as KDDI leads by a wide margin in the 3G mobile field and Softbank rules the Asymmetrical Digital Subscriber Line (ADSL) broadband and VoIP markets.
Entering 2005, Softbank has become the telecom player to watch as it makes strides to become a real force in the Japanese telecommunications scene.
Toward that end, Softbank purchased C&W IDC and the fixed-line unit of Japan Telecom in 2004 and became the largest shareholder in Fuji TV in March 2005.Japan is one of the world’s hottest markets for IP telephony.
It is predicted that the country will have 28 million Internet phone lines up by 2007.
NTT Corp, the fixed-line giant, is justifiably worried about VoIP and has begun to offer IP phone services of its own.
The growing popularity of IP telephony is dealing a blow to fixed-line giant NTT.
The fixed-line network in Japan is undergoing a major transformation as the traditional telephony voice services move into decline.
The copper cable of the fixed network, nevertheless, remains significant in Japan as it must support the millions of ADSL broadband subscribers.Though the 2G mobile telephone sector in Japan has entered a maturing market phase, the overall Japanese mobile market is in a dynamic period of activity, given the popularity of built-in camera mobile phones and 3G services.
Wireless Internet and mobile services have helped to keep the mobile market stimulated.
Into 2005, Japan leads the world in wireless Internet users.
A hot topic in Japan in 2005 is mobile satellite and terrestrial TV broadcasting.Though DoCoMo holds over 50% of the mobile market in Japan over its rivals KDDI and Vodafone K.K.
(formerly J-Phone), KDDI dominates the 3G market by a wide margin.
Vodafone K.K., formerly known as J-Phone, continued to struggle in the 3G arena into 2005, despite the earlier success of camera-equipped cellular phones for its PDC service.
To further open up the market, the government is considering doubling the number of mobile operators in Japan, with Softbank, eAccess and NTT Com showing interest in securing 3G licences.Though NTT DoCoMo offered the world’s first 3G mobile phone service in late 2001, KDDI has become the dominant force in the 3G market in Japan.
Nevertheless, NTT’s FOMA service began making impressive strides in 2004 and into 2005.
Vodafone K.K., which entered the 3G market in December 2002, only had about 260,000 3G subscribers entering 2005.Into 2005, Japan has the third largest number of Internet users after the USA and China, if we include mobile Internet users in the tally.Japan dominates e-commerce activity in the Asia Pacific region.
Yahoo! Japan continues to be the country’s most popular Website and competes closely with Rakuten Ichiba in the online shopping space.
Into 2005, online auctions appear to be the hot online market.Entering 2005, Japan had over 17 million broadband lines in place, making it the third largest broadband country in the world after the USA and China (China surpassed Japan earlier in 2004).
Japan, long considered a laggard in the broadband market, is living up to earlier expectations of becoming a dominant player in broadband use.
Softbank, via its Yahoo! BB service, is largely credited with the success of ADSL as a broadband technology in Japan.
NTT Corp and Yahoo! BB are competing almost neck-to-neck in this space.
Enthusiasm for ADSL appears to be waning, however, as FttH is being perceived as the hot new broadband service in Japan.Fierce competition has emerged among Japanese data service providers, spurred on by the remarkable growth of broadband in Japan.
Sluggish corporate spending has been offset by government efforts to transition to an ‘e-Japan’.It is expected that broadcasting in Japan will transition from analogue to digital by 2010.
In a similar fashion to the country’s cable TV sector, Japan’s satellite TV market underwent a period of consolidation, leaving SKY PerfecTV! as the dominant DTH operator.Japan will see significant network developments over the coming years as the Ministry of Internal Affairs and Communications (MIC) plans to completely replace the current system of domestic fixed-line telephone network with the IP system by the early 2010s.
Although NTT dominates Japanese telecommunications infrastructure, KDDI and Softbank are taking steps to bypass NTT’s system.