ICT Policy in Japan

- Broadband and Mobile -

April 16, 2009

Hiroyuki HISHINUMA
Director for New Competition Policy
Telecommunications Policy Division
Telecommunications Business Department
Telecommunications Bureau
Ministry of Internal Affairs and Communications (MIC)
Japan
 ICT Economic Growth (40% Contribution)

!"#$%&'()*+,(*&'$)-(#$&.$("#$/0!$*'1,2()3$*'$)#4-(*&'$(&$("#$.4,%(,-(*&'$&.$)#-4$567$*2$8#)3$"*9":

!"#
ICT Sector’s Contribution to Real GDP Growth
4
3.1
2.7
2.3 2.7
2.3 1.7
2 2.3 1.7
1.4 2.2 1.6
1.3 0.9
0.6 0.2 0.3
1.0 0.7 0.3 0.3 0.5 0.9
0.4 0.7 0.8 0.7 1.0
0
‐0.6 ‐0.7 ‐0.2
‐2.4 ‐0.3 The ICT industry leads
‐2 ‐2.1 approximately 40%
of the real GDP growth.

‐4
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Other sectors ICT sector Real GDP growth rate
(Source) 2008 White paper, Information and Communications in Japan

!"ICT policy is important especially in such a situation as the current

economic crisis. Broadband is the vital infrastructure for ICT activities. 1
Broadband Services
 Progress Status of Broadband Deployment
(Unit: 10K contracts) Optical Fibers (FTTH)
Population: approx. 128 million (Census in Oct. 2008) ! Number of contracts: 14.42 million
1 , 600 ! Number of carriers: 170
Households: approx. 50 million (Census in 2005)
IP Telephones: approx. 19 million (Sept. 2008)

1 , 400 14.42 mil

1 , 200
11.59 mil
DSL
! Number of contracts: 11.59 million
1 , 000 ! Number of carriers: 48

FTTH
800 overtakes
DSL
(June ’08)

600
Cable Internet
! Number of contracts: 4.08 million
! Number of carriers: 381
4.08 mil
400

200 Wireless (FWA)

! Number of contracts: 0.01 million
! Number of carriers: 30 0.01 mil
0

Note: Reported numbers compiled by MIC in accordance with the provisions of the Rules for Reporting on Telecommunications Business.
(Numbers compiled before the end of March 2004 were reported voluntarily by carriers) 3
 Why has FTTH grown in popularity in Japan?

1. Competition Policy
2. Demand for faster broadband
3. Continuous investment by NTT
4. National target
5. Government support
6. Geographical features of Japan, etc.

4
 User Charge for ADSL and FTTx

DSL 1 + PSTN PSTN: 1,700

Maximum 47 Mbps DSL: 2,520 ISP: 850
(Tokyo)
NTT East + NTT Plala
5,070 yen (approx. 38 euros)
DSL 2 + PSTN PSTN: 1,700
Maximum 50Mbps DSL: 2,938
(Tokyo)
Softbank BB + NTT East

FTTH + VoIP 4,638 yen (approx. 35 euros)

(Detached house)
Maximum 100Mbps FTTH: 5,460 ISP: 1,050 VoIP: 500
NTT East + NTT Plala
7,010 yen (approx. 53 euros)
FTTH + VoIP
(Collective house) VoIP Router: 
FTTH: 2,625 ISP: 630
Maximum 100Mbps 450
NTT East + NTT Plala VoIP: 500
4,205 yen (approx. 32 euros)

[Source] MIC research on March 31, 2008

5
 Interconnection Charge for ADSL and FTTx
! !"#$
The interconnection charge for line sharing, approved by MIC, is only for 
additional device and line managing costs because the cost of local loop is 
already paid by users as a basic telephone charge.
[Interconnection charge for line sharing:  less than 1 euro]
NTT bldg

MDF Local Switch

Telephone Telephone
SP network

DSLAM
Splitter ISP
Subscriber’s house

Additional device = Extra MDF  Equipment of competitive DSL operators

[Interconnection charge for dry copper:  less than 10 euros]
! %&&'
The interconnection charge for FTTx service is for whole access line 
because the fiber access line is completely new and substitution for current 
metal access.
[Interconnection charge for dark fiber:  approximately 35 euros
for detached house] 6
 Market Share of NTT East and West
#@K1035L39CM5013.N38490:

-.//0123%4501363-!&738490: ()*+,
[March 2008]

%&&= ;<*(,
[March 2008]

-.//0138490: ((*<,
[March 2008]

#@K1035L3:C5:B14501
!"#$ JO*J,
[September 2008]

%&&=3#01I4B0 ;J*H,
[September 2008]

P!QRS3ET3&080/@.90 ;U*H,
[September 2008]

V!F3#01I4B0 JO*),
[September 2008]
%4'0>3?080/@.90
<<*H,
A49B8C>49D3E#"FG
[September 2008]
(Note ) The figure for 0AB~J IP telephone shows the percentage of numbers held by NTT East and West within the total IP telephony telecommunications
numbers (0AB~J) assigned by MIC.
[Source] Compiled based on the numbers of lines and contracts in the reports submitted under the Rules for Reporting on Telecommunications Business 7
Fiber unbundling has not affected NTT’s Investment in fiber so far

$Total investment and trend of investment for fiber local loop%
(unit: 
hundred  12,000 10,977
Total investment
million yen)
Investment for fiber local loops
10,000
8,851 8,650
8,483
8,235
7,754 7,969
8,000 7,662
6,966

6,000

4,000 3,330 3,490 3,560

3,280
2,830 3,010
2,370

2,000 1,490 1,640

0
2000 2001 2002 2003 2004 2005 2006 2007 2008
&'()*+,-)*./*0.1)+,2)*34*-()*,1)+,2)*./*5''*6,4-*,78*9)4-:*'()*opticalization of access network means the ratio of .;-30,<3=)8
/))8)+*;.37-4*./*-()*,<<*-()*/))8)+*;.37-4: 8
Bridging the Digital Divide in Building Broadband Facilities

J,+0(*BCCK*ELM++)7-F @ABCDC*E',+2)-F
Elimination of 
Broadband >GHI" All Broadband 
Zero Areas
Ultra‐High‐Speed 
Broadband (FTTH) GNHO" >?"

Expansion of the Local Information and Communications

Infrastructure Development Grants (ICT Grants)

Draw Road Maps of Building Broadband Facilities

Improvement of the Use Environment of Satellite Broadband

9
Mobile Communications
 Changes in the Mobile Phone Environment
!million#
Feb. 2009 Number of subscribers RD:RQ
100
- Mobile phones: Approx. 106,481,700 (83.5%)
- Internet connection: Approx. 91,700,000 (71.9%) KP:DQ
90
- IMT-2000: Approx. 97,892,400 (76.7%)
!Population (estimate) 127,590,000 (March, 2009)

Number of IMT-2000 subscribers

Number of Internet connection subscribers

Number of mobile phone subscribers

80

70 1999
Start “i-Mode”, “EZ Web”,

IMT-2000
“J Sky Service”

Internet connection
60

50

40

30

20

10

0
1996 1998
2003
2007
2002 BCCR:B
2000 Download music services 2005
Mobile phone with camera E-mail with picture/movie services Flat rate data plan

2001 2006
!Start of IMT-2000 service# 2004 Mobile phone with terrestrial TV
Mobile phone with GPS Osaifu-Keitai (Mobile phone Dual mode (IMT-2000+STU)
Mobile video phone with electronic money Mobile Number Portability 11
Penetration of various applications with mobile phone

Felica 55.2%

GPS 47.7%

Digital TV (OneSeg) 35.6%

Camera 88.9%

Internet Connection 86.1%

IMT‐2000 91.9%

Total Subscribers 106,481,700 units
0 20,000,000 40,000,000 60,000,000 80,000,000 100,000,000 120,000,000

(As of 2009 .2) 12
 Evolution of Mobile Phone Applications

GAME TV Telephone
Information Code

Broadband 
Communication

GPS
Digital TV 2D Barcode, Camera, High‐resolution Display
(1 Seg)
Electronic Money
Season Ticket
Credit Card
W‐LAN

Bluetooth

Infrared

Wireless Media
Built‐in RFID (Felica) 13
 Competition policy for mobile communications

1. Mobile number portability

2. Promoting new entries of MVNOs
3. Improving interconnection regulations

14
 Interconnection Rules Responsive to Changes in the Telecom Market
(1/2)

!The fixed line broadband market saw FTTH surpassing DSL in their 
number of subscribers in June 2008.

!The mobile telephone market now exceeds 100 million subscribers 
with advanced handsets and is rapidly becoming a key infrastructure in 
business operations and everyday life in general. Also, Fixed‐Mobile 
Convergence is expected to bloom in the near future.

!In response to these market changes in the last decade, the Japanese 
Government launched a comprehensive review of the interconnection 
policy for securing fair competition in the telecommunications market
on February 24, 2009. 

15
 Interconnection Rules Responsive to Changes in the Telecom Market
(2/2)
1. Outline of review items

I. Development of fair competition  II. Development of fair competition 
environment in the mobile  environment in the fixed‐line 
communications market broadband market
1. Verification of current regulations 1. FTTx services
(Unbundling policy, optimal cost for tariff rates, etc.) 
2. DSL services 
2. Effective network infrastructure use 
(Facility sharing rules & roaming system establishment) 3. Effective network infrastructure uses 

III. Development of fair competition  IV. Policy on interconnection rules in 
environment to boost entry in telecom  the age of fixed‐line and mobile 
platform and content distribution markets  communications integration
1. Opening up telecom platform functions  1. Issues in tariff rates calculation

2. Strengthening dispute settlement function, etc.  2. Policy on future interconnection rules and 
underlying dominant carrier regulation)

2. Tentative Schedule 
Feb. 2009: Consultation with the Information and Communications Council
July  2009: Invitation for comments on draft recommendations
Sep. 2009: Recommendations from the Council (tentative date)
16