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Japan is one of the world's most advanced telecoms societies, with advanced networks, sophisticated telecoms services and techno-savvy consumers. Japan's fixed and mobile markets are both experiencing rapid changes.
In the fixed area, along with the government's strong policy drive towards a 'Ubiquitous Networked Society', incumbent NTT has aggressively deployed its fibre network, and we believe the incumbent will gain its reward for this heavy investment.
In the mobile market, 2007 saw the mobile operators experience fierce pricing competition, due to the introduction of mobile number portability (MNP) in October 2006 and the market entry of Softbank Mobil, which has successfully disrupted the market with attractive free on-net call pricing plans. Amid the three operators' intensified competition, based on their own different assets (size for NTT DoCoMo, service for KDDI and price for Softbank Mobile), in December 2007 the regulators awarded 2.5GHz spectrum for mobile WiMAX deployment to a KDDI-led consortium.
In the broadcast area, the government's drive for broadcast digitalisation has been gaining visible results. While the government announced plans for the analogue switch-off in July 2011, the coverage of digital broadcasting reached 92% of the population at the end of 2007. The adoption of handsets capable of receiving 1Seg broadcasts (the public free-of-charge terrestrial mobile TV service) is growing, but the business models for mobile operators have to be explored further.
Key strategic issues:
- The current mobile commission scheme, whereby handsets are distributed by mobile operators with heavy handset subsidies and the costs are recouped through high monthly usage charges, is likely to change in 2008. This will have a substantial impact, not only on mobile operators' performance, but also on handset vendors' and retailers' businesses. But there are questions over the extent and speed with which this will happen.
- The regulator is promoting service-based competition by the introduction of mobile virtual network operator (MVNO) business models. Will the new business model be successfully implemented in the Japanese market? Will it create a new service market with mobile WiMAX?
- Coupled with NTT's aggressive fibre deployment, IP-based services such as IPTV and VoIP are gaining momentum in the market. How quickly and effectively will the operator recoup its investments? How will the competitors react to this?
- Apart from the broadcaster-led 1Seg service, mobile operators have prepared for mobile broadcasting services based on MediaFLO. Will the operators acquire adequate spectrum and be able to lead the emerging broadcast and telecommunications convergence service area?
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