The Digital Economy is driving growth JapanJapan’s telecommunications sector is one of the most developed markets in the world. Japan’s telecoms market is characterised by customers possessing a willingness to adopt new technologies combined with an increasingly sophisticated interest in the wider application of telephone lines.
Moving towards 2017 Japan’s market is served by three multi-service operators offering fixed-line telephony, fixed broadband Internet access, mobile voice telephony, mobile broadband Internet access and pay TV services.
Japan’s fixed line market is dominated by incumbent operator NTT. However with a saturated fixed-line telephone subscriber market (on a per household basis), mobile has emerged as the major force in Japan’s telecoms market. The emphasis on mobile has allowed new market entrants to enter and grow in the market despite NTT’s dominance of the fixed market.
Moving into 2016 there were approximately 160 million mobile subscribers in Japan with the majority expected to be accessing services through LTE networks. Japan’s mobile market place remains an aggressive arena given the mature nature of the market. With few new subscriber acquisition opportunities operators are focused on acquiring subscribers from each other as well as satisfying and retaining existing ones.
Data makes up the majority of ARPU although voice remains an important application. Overall ARPU is declining due to competition as well as Over-The-Top (OTT) product substitution for messaging and voice.
Operators are also increasing focus on higher value mobile content and applications to diversify revenue sources away from commoditised access services and also to improve customer retention. A number of operators have been involved in the initial stages of 5G network trials. Mobile content and applications is receiving increased focus as revenue growth from mobile data ARPU is expected to fall due to the mature.
Moving towards 2017 Japan possesses one of the most advanced and largest broadband markets in the world. Much of the success of broadband in Japan is owed to the stunning growth surge that occurred on the back of DSL broadband technology. Since then Japan has focused investment on FttH and on cable to a lesser extent. The faster speeds afforded by these technology platforms has seen both increase in popularity at the expense of DSL, with FttH representing almost two thirds of total fixed broadband subscriptions. Japan has also been an early adopter of triple-play models which provide TV, broadband internet and voice telephony as packaged services from a single provider.
Recognising the potential of applying ICT to improve both social and economic development, Japan has taken steps to develop a digital economy. Businesses, governments and private citizens have been instrumental in creating the online content and services that make up the digital economy.
Japan possesses a vibrant multichannel pay TV industry with services readily accessible across Japan via cable TV (CATV), satellite, IPTV and Over-the-top (OTT) Video-on-Demand (VoD). Total pay TV subscriptions are steadily growing with penetration household penetration levels lower than that of the UK or USA, indicating room for potential growth.
What is interesting to note is that although Japan has the necessary physical infrastructure to support OTT VoD, pure OTT players have not found much success as Japanese broadcasters, as the largest Japanese content producers, have traditionally been reluctant to release content to the OTT players believing it will cannibalize advertising revenue.
Key developments:
Continued decline in traditional fixed-line services;
High fibre deployment and accompanying VoIP uptake;
Government policies drive broadband household penetration above 70%;
Continued decline in DSL subscriptions, down to under 10% of the total fixed broadband market;
FttX subscriptions comprise the majority of the fixed broadband market;
Implementation of strong government policies over a decade see over 90% of households with access to FttX;
Japan’s is well positioned to showcase the benefits of e-health given its demography and market characteristics;
OTT VoD struggles to take off;
IPTV emerges as a prevalent pay TV platform on the back of widespread broadband;
SK Telecom and KT Corp, NTT DOCOMO and Verizon formed a 5G Open Trial Specification Alliance;
LTE represents the majority of mobile subscriptions;
Overall ARPU continues to decline despite growing data ARPU;
Operators are focusing CAPEX on LTE, with operators expected to eventually cease investing in 3G;
Increasing LTE speeds are made possible through carrier aggregation technology;
WiFi investments made to alleviate 3G/4G network congestion by offloading traffic.Companies mentioned in this report:
NTT; KDDI; Softbank Mobile, Internet Initiative Japan, NTT DoCoMo; eAccess, eMobile; Willcom; J:COM; USEN; KDDI; UQ Communications; Hulu; K-Opticom; Tepco, SKY PerfecTV!, Hulu
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1. Key statistics
2. Telecommunications market
2.1 Market Overview and Analysis
3. Regulatory environment
3.1 Historic overview
3.2 Regulatory authority
3.2.1 The MPHPT/MIC
3.2.2 Radio Regulatory Council
3.2.3 Telecommunications Council
3.2.4 Telecommunications Carriers Association
3.2.5 Japan Internet Providers’ Association (JAIPA)
3.3 Government policies
3.3.1 Government investment in infrastructure
3.3.2 Skill building, education and demand programs
3.3.3 Competition policy
3.3.4 Network non-discrimination
3.3.5 Spectrum policy
3.3.6 Broadband Policy
3.4 Access
3.5 Carrier PreSelection (CPS)
3.5.1 MYLINE calling categories
4. Fixed network operators
4.1 NTT Corporation
4.1.1 Company Overview
4.1.2 Financial statistics
4.1.3 Operational statistics
4.1.4 International expansion
4.2 KDDI Corporation
4.2.1 Company Overview
4.2.2 Business strategy
4.2.3 Financial statistics
4.3 Softbank Corporation
4.3.1 Company background
4.4 Internet Initiative Japan (IIJ)
4.4.1 Company overview and background
4.4.2 Financial statistics
4.4.3 Operations statistics
5. Telecommunications infrastructure
5.1 Overview of the national telecom network
5.2 NTT NGN
5.3 Submarine cables
5.3.1 Overview
5.3.2 NTT and TransTelecom of Russia (HSCS)
5.3.3 Russia-Japan Cable Network (RJCN)
5.3.4 Trans-Pacific Express Cable Network (TPE)
5.3.5 Pacific Crossing (PC-1)
5.3.6 Google investments
5.3.7 Asia Submarine Express (ASE)
5.3.8 Asia Pacific Gateway (APG)
5.3.9 South-East Asia Japan Cable (SJC)
5.3.10 KDDI landing station
5.4 Satellite
5.5 Specific IT developments
5.5.1 Cloud Computing
5.6 Smart infrastructure
5.6.1 Internet of Things (IoT)
5.6.2 Smart grids
5.6.3 Smart cities
6. Broadband market
6.1 Introduction and statistical overview
6.1.1 Market Overview and analysis
6.1.2 Broadband statistics
6.1.3 Forecasts – broadband subscribers – 2015; 2018; 2021
6.2 Fixed Broadband Technologies
6.2.1 Hybrid Fibre Coax (HFC) networks
6.2.2 Digital Subscriber Line (DSL) networks
6.2.3 Fibre-to-the-Premises (FttP) and Fibre-To-The-Home (FttH)
6.2.4 Fixed wireless
6.2.5 Other fixed broadband services
7. Digital media
7.1 Introduction
7.2 Pay TV
7.3 Digital TV
7.4 Cable TV (CATV)
7.5 Satellite TV
7.5.1 SKY PerfecTV! Communications Inc (Sky Perfect JSAT)
7.6 Internet Protocol TV (IPTV)
7.7 Video streaming
7.7.1 Introduction
7.7.2 Hulu
7.7.3 Netflix
8. Digital economy
8.1 Introduction
8.2 E-Government
8.2.1 Overview
8.3 E-Health
9. Mobile communications
9.1 Market Overview and Analysis
9.1.1 Background
9.2 Mobile statistics
9.2.1 General statistics
9.2.2 Forecasts – mobile subscribers – 2015; 2018; 2021
9.3 Regulatory issues
9.3.1 Licensing
9.4 Mobile infrastructure
9.4.1 Digital networks
9.4.2 Other infrastructure developments
9.4.3 IoT and M2M networks
9.5 Major mobile operators
9.5.1 Operators
9.5.2 NTT DoCoMo
9.5.3 KDDI
9.5.4 Softbank Mobile
9.6 Mobile Virtual Network Operators (MVNO)
9.7 Mobile content and applications
9.7.1 Introduction
9.7.2 e-Health
Table 1 – Country statistics Japan – 2015
Table 2 – Telephone network statistics – 2015
Table 3 – Internet user statistics – 2015
Table 4 – Broadband statistics – 2015
Table 5 – Mobile statistics – 2015
Table 6 – National telecommunications authorities
Table 7 – Subscribers and penetration: fixed-line – 1993 - 2016
Table 8 – NTT major shareholders – 2015
Table 9 – NTT financial data – 2000 – 2015
Table 10 – NTT proportion of operating revenue by segment – 2010 – 2016
Table 11 – NTT subscribers by service – March 2015
Table 12 – NTT video service subscribers – 2009 - 2016
Table 13 – KDDI financial data – 2001 - 2015
Table 14 – KDDI total capital expenditure on mobile and fixed line – 2005 - 2015
Table 15 – Softbank major shareholders
Table 16 – IIJ revenue and net income – 2006 - 2016
Table 17 – Internet Initiative Japan – MVNO subscribers – 2013 - 2015
Table 18 – Internet Initiative Japan – IP subscribers – 2010 - 2015
Table 19 – Broadband subscribers and population penetration – 2005 - 2015
Table 20 – Fixed broadband subscribers by access type – 1998 -2015
Table 21 – Fixed broadband subscriber annual change / market share by access type – 2001 - 2015
Table 22 – NTT Broadband subscribers and market share by segment – 2004 – 2016
Table 23 – Total international internet bandwidth – 2003 - 2015
Table 24 –Forecast fixed broadband subscribers and penetration – 2015; 2018; 2021
Table 25 – Cable modem subscribers and penetration – 1998 – 2015
Table 26 – DSL subscribers and penetration – 1999 – 2015
Table 27 – FttH subscribers and market share by operator – 2010 - 2015
Table 28 – Japan FttH subscribers and penetration – 2002 – 2015
Table 29 – ADSL and FttH subscribers – 2005 – 2015
Table 30 – WiMAX subscribers (BWA) - UQ Communications: 2010 - 2015
Table 31 – Cable TV operators – market share – 2009 - 2016
Table 32 – SKY Perfect JSAT Group – Financial data – 2008 - 2015
Table 33 – SKY Perfect JSAT Corporation subscribers, ARPU and churn – 1997 - 2015
Table 34 – NTT video service subscribers – 2009 - 2016
Table 35 – Mobile subscriber, annual change and penetration rate – 1995 - 2015
Table 36 – Market share of mobile operators in Japan – September 2015
Table 37 – Carrier share of mobile telephone and PHS market – 2004 - 2015
Table 38 –Forecast mobile subscribers and penetration – 2018; 2021
Table 39 – NTT DoCoMo major shareholders
Table 40 – NTT DoCoMo revenue, net income, capex and EBITDA – 2005 – 2015
Table 41 – NTT DoCoMo capex breakdown – 2013 - 2015
Table 42 – NTT DoCoMo ARPU and churn – 2004 – 2016
Table 43 – NTT DoCoMo subscribers – 2011 - 2016
Table 44 – NTT DoCoMo’s subscribers by technology – 2002 – 2016
Table 45 – NTT DoCoMo dmarket subscribers by product – 2014 - 2015
Table 46 – NTT DoCoMo NOTTV subscribers – 2014 - 2015
Table 47 – NTT DoCoMo DCMX and iD members – 2007 - 2015
Table 48 – NTT DoCoMo Karada-no-kimochi subscribers – 2014 - 2015
Table 49 – KDDI au ARPU, MOU and churn – 2001 – 2015
Table 50 – Softbank financial data – 1995 – 2015
Table 51 – Softbank proportion of revenue by segment – 2014 - 2015
Table 52 – Softbank mobile ARPU and churn – 2004 - 2015
Table 53 – Softbank operational data – thousands of subscribers – 2007 – 2015
Chart 1 – Japan fixed-line subscribers – 2005 - 2016
Chart 2 – NTT Group revenue and capex – 2003 – 2016
Chart 3 – KDDI revenue, capex and ARPU – 2006 - 2015
Chart 4 – Japan – fixed broadband subscribers and population penetration – 2000 - 2015
Chart 5 – Japan cable modem subscribers and population penetration – 1998 - 2015
Chart 6 – Japan DSL subscribers and population penetration – 1999 - 2015
Chart 7 – Japan FttX subscribers and population penetration – 2002 - 2015
Chart 8 – Japan mobile subscriber growth and population penetration – 1995 - 2015
Chart 9 – Softbank revenue, capex, ARPU – 2005 – 2015
Exhibit 1 – NTT Group structure – 2015
Exhibit 2 – Softbank operations
Exhibit 3 – Major global/regional submarine cables with landing point in Japan - 2015
Exhibit 4 – NTT DoCoMo investment in international operators – March 2015
