Moving towards 2016 Japan continues to show it possesses one of the most advanced telecommunications markets in the world. Operators are planning to shut down DSL networks as FttH makes up an increasing proportion of the fixed broadband market at the expense of DSL. Tough competition and technology convergence trends has resulted in consolidation and the emergence of large multi-service operators offering fixed-line telephony, fixed broadband Internet access, mobile voice telephony, mobile broadband Internet access and pay TV services. Widespread fixed broadband penetration has not foreshadowed success of new major pay TV platforms such as Hulu due to challenges posed by Japan’s vertically integrated broadcasting industry.

Masayoshi Son’s and SoftBanks’ acquisition of Sprint and potential acquisition of T-Mobile of USA or other operators, have drawn global attention on SoftBank and on Japan’s telecommunications sector – for many years our JCOMM-Report has been the most trusted and most convenient way to understand Japan’s telecom sector.
Japan’s telecommunications industry size is on the order of US$ 200 billion for the operators alone, and annually about US$ 20 billion are invested in networks. Japan’s has one of the world’s most advanced cellular networks.
There were approximately 160 million mobile subscribers in Japan with the majority expected to be accessing services through LTE networks. NTT DoCoMo still has a dominant market share in terms of subscribers, benefitting from its ex-monopoly status and the significant conservative customer base associated with ex-monopoly telecom operators, particularly in Japan due to its aging population. However, Softbank has emerged as the largest mobile operator when measured by revenue following its takeover of North American mobile operator Sprint.

Data makes up the majority of mobile ARPU with voice increasingly losing its importance as an application, albeit still an important one. Overall ARPU is declining due to competition as well as Over-The-Top (OTT) product substitution for messaging and voice. The need to maintain data ARPU by offering superior data products is driving investment in LTE and LTE-Advance as well as alternative wireless infrastructure such as WiFi and WiMAX.
Operators are increasing focus on higher value mobile content and applications to improve customer retention and diversify revenue sources away from commoditized access services. NTT DoCoMo, once the content leader with its i-mode platform, has changed its content and application strategy by disaggregating its mobile and content platform from the underlying network platform, essentially mirroring the OTT delivery model of content players such as Yahoo, Google and Facebook.

Key Developments:

• Operators planning to eventually shut down legacy DSL platforms
• NTT’s market share of the FttH market is being eroded by competition;
• Video-on-Demand (VoD) players have emerged spearheaded by Hulu
• Japan’s largest satellite pay TV platform is increasingly looking to South East Asia to grow revenue
• 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;