japan's telecommunication markets

(c) 2014 Eurotechnology Japan KK www.eurotechnology.com Japan’s telecom markets (Version 64) March 16, 2014

JAPAN’S TELECOM MARKETSVersion 64 of March 16, 2014

!by Gerhard Fasol PhD, Eurotechnology Japan KK

http://www.eurotechnology.com/ [email protected]

!Try-out version with a few selected pages for review.

Latest revision available from: http://www.eurotechnology.com/store/jcomm/ 1

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JAPAN’S TELECOM MARKETS- VERSION OVERVIEW

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Version Date Comments33 August 27, 200837 January 19, 200938 January 21, 200939 January 31, 200940 February 8, 200941 February 12, 200943 March 15, 200944 April 2, 200946 May 18, 200950 May 6, 201051 December 10, 201052 December 13, 2010Subscribe to this report, and we will regularly send you the latest versions. !subscription, monthly payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU58870246995 !subscription, annual payment, you can end the subscription any time (no refunds): http://store.eSellerate.net/s.asp?s=STR0576176470&Cmd=BUY&SKURefnum=SKU84043119788






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Version Date Comments54 December 15, 201055 January 6, 201156 January 20, 201157 January 28, 201158 October 1, 201259 January 15, 201360 February 19, 2013 subscriber numbers updated61 May 6, 2013 Financials for FY2012 added62 May 12, 201363 July 19, 201363 March 16, 2014 subscriber data updated

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5



EXECUTIVE SUMMARY: JAPAN’S TELECOM MARKETS

6

- The global mobile internet revolution started on February 22, 1999 with NTT-docomo’s i-Mode eco-system, and until the i-Phone and smart-phone revolution, Japan’s telecom markets have been driving global innovation. NTT-docomo in May 2001 was the first operator globally to start 3G services on a large commercial scale (experiments on the Isle of Man were only small scale), and many other mobile services were developed or first brought to market in Japan, including camera phones, mobile email, wallet phones, mobile payment, mobileTV, GPS for mobile phones, mobile applications (initially JAVA “i-appli”) and many more.

- However, Japanese companies did not succeed to build global business based on these domestic success stories. While telecom executives from Europe, US and elsewhere visited Japan to study Japan’s telecom sector, attempts by Japanese companies to capture global value from Japan’s telecom innovation largely failed, Japanese mobile handset makers essentially abandoned international business, and NTT-docomo’s attempts to build a global i-Mode business failed, and were terminated. The term “Galapagos effect” summarizes this situation, where beautiful products and services developed in Japan and for Japan thrive in Japan, but fail to capture value outside Japan.

- Japan’s fixed line internet services globally have the highest bandwidth (in many areas 1Gps) at lowest prices and the highest FTTH penetration. Japan has more FTTH subscribers than all of EU+Iceland+Switzerland+Norway.

- The size of Japan’s communication industry is about US$ 200 billion and annual investments are on the order of US$ 30 billion. - While the NTT group is still dominating many (not all) sectors of Japan’s telecom markets, NTT’s core business models and income

streams are under attack by technology innovation, Skype, Voice over IP, KDDI and Softbank, Willcom, eAccess/eMobile and others regarding basic voice service, broad band internet and mobile communications.

- SoftBank has emerged as the third major telecommunications group in Japan and is expanding aggressively: SoftBank acquired the failed Vodafone-Japan operations, and sponsors corporate rehabilitation of the PHS-Operator Willcom, which recently went into bankruptcy, and in 2012 decided to acquire eAccess/eMobile and US-Operator SPRINT.



AGENDA - LIST OF CONTENTS

7

- Japan’s telecom industry – overview, key trends for 2013 - e-Japan, u-Japan and national policy - globalization vs Japan’s “Galapagos Effect” - the “post Galapagos working group” and its recommendations

- Evolution of Japan’s telecom landscape - landscape overview and major M&A transactions

- The main players: NTT, KDDI and Softbank - Financial overview: annual revenues, operating income, net income and investments - Quarterly financial data: quarterly revenues, operating income and net income - NTT Group, NTT East, NTT West, NTT Communications, NTT Data and NTT docomo - KDDI - UQ Communications - Softbank - eAccess and eMobile - Willcom - Wireless City Planning

- Wireless markets - Wireless spectrum allocation - Mobile phone base station deployment for each operator - Market shares and subscriber numbers and trends for each operator - Prepaid mobile market - From birth of internet to legacy: i-Mode, EZweb, Yahoo Keitai - 3G and 3.5G and LTE in Japan - From Galake to Smartphones: Mobile phone handset market, monthly sales statistics, and recycle time - The AU design project: IIDA - Sweets for teenage girls

Raku Raku phones for the silver market, Tuka-S: pioneer for the silver market - Mobile music, LISMO! - Mobile payments and keitai credit - FeliCa wallet phones - Mobile TV

- Fixed line markets, FTTH - FTTH market - DSL market - Optical network - Transition to NGN - Business cases - Japan’s telegram market

- Summary



MAJOR RECENT M&A TRANSACTIONS

9

Acquirer Acquired company Value Date Comments

Softbank Vodafone-Japan US$ 15 billion March 17, 2006accelerated

Softbank’s entry into mobile

communications

Softbank SPRINT US$ 20 billion Oct 2012Softbank acquired

approx. 90% of SPRINT (subject to

negotiations...)

Softbank eAccess/eMobile US$ 2 billion Oct 2012Softbank

preempted acquisition attempt

by KDDI

KDDI and Sumitomo

J:COM (Jupiter Telecom), JCN US$ 7 billion Oct 2012

KDDI, Sumitomo switch from

competition to cooperation



E-JAPAN AND U-JAPAN AND

NATIONAL POLICY

10



GLOBALIZATION VS JAPAN’S “GALAPAGOS EFFECT”

22



JAPAN’S “GALAPAGOS EFFECT”

23

“Galapagos effect” is a term which has been used since about 2005 even by Japanese Government to describe a situation, where Japanese companies develop new technologies, and bring new services and business models to Japan’s market, but fail to capture global value. !The term “Galapagos effect” is often used to characterize Japan’s pioneering development of mobile internet and mobile internet phones starting with DoCoMo’s i-Mode in 1999, while Japanese mobile phone handset makers failed to capture global market share. !Another similar example is electronic money and mobile payments, which Japan introduced much earlier than other countries, but where Japanese companies failed to make global impact or capture global value. !Recently this term is used much more broadly in many areas, and is also used to characterize the current crisis of Japan’s electronics industry, especially SONY, SHARP and Panasonic.



JAPAN’S “GALAPAGOS EFFECT”

24

DoCoMo’s pioneering mobile data service i-Mode started on February 22, 1999, about 14 years ago, and was soon followed by KDDI/AU’s Ezweb and J-Phone’s Jsky mobile data services. Japan’s mobile phones at that time were far in advance of mobile phones anywhere else in the world, and a wide range of mobile data services emerged. !DoCoMo attempted to build a global business based on i-Mode, and Japan’s mobile phone makers and content businesses hoped to build on DoCoMo’s global expansion. This attempt collapsed and failed, and DoCoMo wrote off about US$ 10 billion (investments in AT&T Wireless, KPM-Wireless, Hutchison Whampoa) during 2002-2003 as a consequence, leading to net losses of US$ 10 billion. Japan’s mobile phones where the most advanced during this time, while Japan’s handset makers failed to capture global market share with these “galake” phones. Today Japanese makers global market share is 5% or less, and essentially restricted to Japan. !It took until about 2008 – about 6 years – for this situation to sink in, and today even Japan’s Government and many press articles and books are discussing the “Galapagos Effect”. ! “Galapagos effect”: on Galapagos islands many fantastic exotic species exist, which cannot survive in other parts of the world. Similarly, when people talk about the “Galapagos effect”, they refer to beautiful technologies and business models such as i-Mode, where globalization has been attempted but which failed.



REASONS FOR JAPAN’S “GALAPAGOS EFFECT”

25

Reasons for Japan’s “Galapagos effect” include: !•Domestic Japanese companies focused on Japan only: “created by Japan, for Japan and of Japan, and Japan is the crux of the issue” (Junko Yoshida, Journalist for EE-Times about Renesas and Renesas-Mobile in the article entitled “Free Renesas from its golden cage called Japan”) •(Temporarily) protected markets in Japan. e.g. Japanese mobile phone makers were almost exclusive suppliers to Japan’s mobile phone operators. Missed the paradigm shift from “Galapagos Keitai” (= Galakei) feature phones (using mainly Nokia’s Symbian OS) to smart phones (iPhone and Android phones). Missed opportunities to grow business outside Japan. •Lack of focus. Japanese electrical makers are spread very thinly over very many business areas at very low or zero margins, and do not achieve global impact on any. •Lack of diversity. Boards, management and employees are almost exclusively Japanese, therefore cannot understand markets outside Japan in depth, and therefore miss important market trends, such as smart phones. Lack of diversity reduces creativity and management quality. IMD President Dominique Turpin said “You can argue that the strength of Japanese culture, in terms of homogeneity, is also a weakness”



THE “POST-GALAPAGOS WORKING GROUP”

26

•The “Post-Galapagos Committee” has been convened and is chaired by one of the three creators of i-Mode, Takeshi Natsuno, and the author of this present report is the only non-Japanese member working on this committee. •Purpose of the “Post-Galapagos Committee” is to call attention among Japanese leadership on changes necessary in industry structure and thinking to enable more global business to be built based on Japan’s advanced technologies and content, and to encourage entrepreneurship.



“POST GALAPAGOS STUDY GROUP” 25 JAPANESE LEADERS + 1 FOREIGNER (GERHARD FASOL) WORKING FOR ONE YEAR ON CONCEPTS TO OVERCOME JAPAN’S “GALAPAGOS EFFECT”

27

see: http://accjjournal.com/the-galapagos-effect/


http://accjjournal.com/the-galapagos-effect/



28





SEVEN RECOMMENDATIONS TO ELECTRONICS MANUFACTURERS

31

1.Reshape the conglomerates 2.Structural reform: withdraw from unprofitable business, focus on growth businesses 3.In cases of overwhelming Japanese market share, make best use of cost reductions, and create a strategy for overseas business development 4.Strengthen the branding of Japanese technology 5.Because of increasing modularization it is difficult to enclose (black box) technology. It is necessary to integrate technology and create services. 6.It is necessary to create mechanisms and markets to evaluate and support novel technologies 7.For innovation to emerge, it is necessary to educate and develop intermediaries (connectors) between research and business



company A company B company C company D company E

TVs

batteries

solar cells

power stations

rice cookers

white goods

air conditioners

base stations

mobile phones

trains

VISION OF RESTRUCTURING JAPAN’S ELECTRICAL COMPANIES

For historic reasons combined with a low acceptance of M&A, Japan’s electrical conglomerates (Panasonic, Hitachi, Fujitsu etc) each are thinly spread over a very large number of business areas. None of these business areas is typically large enough to have global impact, and the necessary global market share to achieve high margins. We believe it is necessary to restructure Japan’s electrical sector, from thinly spread conglomerates to narrowly focused companies. Such restructuring has been done successfully for many companies in Germany, e.g. Germany’s chemical and pharmaceutical sector.



RECOMMENDATIONS TO THE CONTENT SECTOR

33

1.Globalize 2.Value real life, make real life more pleasant 3.Improve and strengthen market communication and branding 4.Soft power strategy

(A)Create global soft-power from Japanese lifestyle (B)Keywords: “interesting high-tech”, fashionable high-tech” (C)Create platforms similar to Disney



EVOLUTION OF JAPAN’S TELECOM

LANDSCAPE

34



EVOLUTION OF JAPAN’S TELECOMMUNICATIONS LANDSCAPE

35

The following diagrams show how Japan’s telecom landscape evolved from a dual monopoly in pre-liberalization, pre-internet times: •NTT monopoly for all national communications •KDD for all international communications (voice, leased line) to today’s structure via liberalization, new entrants (especially DDI now merged into KDDI, and Softbank via a series of acquisitions from Tokyo Metallic to Vodafone-Japan and Sprint), vigorous M&A, foreign investments, and recently consolidation. !While DoCoMo’s major internationalization drive failed, and recently show modest successes in India and Guam, Softbank recently ventured into the USA by acquiring SPRINT, and aims to become the global No. 1 in telecommunications.



JAPAN’S TELECOM LANDSCAPE PRE-LIBERALIZATION, PRE-INTERNET

36

Long Distance

Local

Mobile communications

KDD

Japan's Telecommunications Landscapepre-liberalization, pre-internet

(c) 2013 www.eurotechnology.com

International

NTT

PHS

NTT

KDD



THE THREE MAIN PLAYERS

40



JAPAN’S THREE MAJOR TELECOM OPERATORS FY 2012

Tokyo Stock Exchange Code

FY 2012 sales (ends March 31,

2013)

FY2012 net profit (ends March 31,

2013)

market cap (May 2, 2013)

NTT 9432 ¥ 10810 billion US$ 106 billion

¥ 530 billion US$ 5.3 billion


NTT docomo 9437 ¥ 4470 billion US$ 47.5 billion


¥ 6918 billion US$ 70 billion

KDDI 9433 ¥ 3662 billion US$ 36.8 billion



Softbank 9984 ¥ 3378.3 billion US$ 34 billion

¥ 289.4 billion US$ 3 billion




ANNUAL NET INCOME

46

• Clearly visible is the huge US$ 10 Billion hole in DoCoMo’s net profits around 2002, due to DoCoMo’s failed attempt to build a global business by investing in several companies around the globe including AT&T, KPN, and Hutchison/Three.

• SoftBank’s operating profits have overtaken KDDI’s in size, however, SoftBank’s debt from the Vodafone-Japan acquisition is holding down net income. Softbank’s successful acquisition (2006) and turn-round of Vodafone-Japan is clearly visible.

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130

500

1000

1500

netincom

e!YEN

billion"

US$ 5 billion

US$ 10 billion

Annual net income of Japan's mobile operators

DoCoMo

SoftBank

KDDI

Vodafone

!c"2013EurotechnologyJapanKK

www.eurotechnology.com



QUARTERLY FINANCIAL RESULTS

53



OPERATING INCOME

55

• SoftBank’s operating income (before taxes) rises continuously since the April-June 2005 quarter – and recently SoftBank has overtaken KDDI’s operating income on an annual and quarterly basis. If trends continue, we expect Softbank to overtake NTT-docomo as well.

• Strong fluctuations in operating income are partly due to handset subsidies

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Quarterly operating income!loss of Japan's mobile operators

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13EurotechnologyJapanKK


iPhoneSoftBankJuly 11, 2008

iPhone 4SKDDIOct 14, 2011

iPhone 5Softbank"KDDISept 21, 2012



NTT GROUP

59



NTT KK Nippon Telegraph and Telephone Corporation

Founded April 1, 1985 under the NTT Law (Law Nr. 85 of December 25, 1984), previously Nihon Denshin Denwa Kousha

Founder

Headquarters Tokyo

Stock Exchange Tokyo TSE 9432

Consolidated sales YEN 10305 Billion (US$ 116 Billion) (FY2012, ended March 31, 2011)

Number of employees 219,350 consolidated (March 2011)

Major share holders Japan’s Ministry of Finance (32.6%)

Major business areas telecommunication services



NTT DOCOMO

67



NTT docomo docomo = do communications over the mobile network

Founded August 14, 1991 as NTT Mobile Communications Planning Co. April 1992 named NTT DoCoMo, July 1993 split from NTT

Founder

Headquarters Tokyo

Stock Exchange Tokyo TSE 9437 (IPO: October 22, 1998), NYSE: DCM (IPO: March 2002), LSE: NDCM (IPO: March 2002)

Consolidated sales YEN 4240 Billion (US$ 47.5 Billion) (FY2011, ended March 31, 2012)

Number of employees 23,289, consolidated (March 2012)

Major share holders NTT (66.65%) (since Japan’s Ministry of Finance owns 32.6% of NTT, the Ministry of Finance owns 21.7% of NTT docomo via NTT)

Major business areas mobile communications



KDDI

69



KDDI DESIGN STUDIO

77

On March 4, 2005 KDDI opened the “KDDI Designing Studio” in Tokyo’s fashion district Harajuku. !The purpose of the “KDDI Designing Studio” is:

•Promote the KDDI brand •Collect customer feedback



UQ COMMUNICATIONS (KDDI)

78



SOFTBANK !

MORE ABOUT SOFTBANK: HTTP://WWW.EUROTECHNOLOGY.COM/STORE/SOFTBANK/

83


http://www.eurotechnology.com/store/softbank/


Softbank

Founded September 3, 1981

Founder Masayoshi Son

Headquarters Tokyo, Shiodome

Stock Exchange Tokyo TSE 9984 (IPO: July 22, 1994)

Consolidated sales YEN 3202.4 Billion (US$ 35.9 Billion) (FY2011, ended March 31, 2012)

Number of employees 21,858, consolidated (March 2012)

Major share holders Masayoshi Son (21.4%)

Major business areas fixed and mobile/wireless communications and data services



VODAFONE JAPAN > SOFTBANK MOBILE

95

•On Friday, March 17, 2006 SoftBank and Vodafone announced the sale of Vodafone KK (Vodafone’s Japan operations) to the SoftBank group. •On Monday, March 20, 2006 SoftBank moved Headquarters from Vodafone-Japan’s former Atago-HQ to Softbank’s Shiodome HQ, and started the turn-round •During Summer 2006 Vodafone’s brand was changed to Softbank.



EACCESS, EMOBILE

96



DR SACHIO SEMMOTO

97

While SoftBank is driven by Masayoshi Son, eAccess and eMobile are driven by serial mega-entrepreneur Sachio Semmoto. !In contrast to SoftBank’s Masayoshi Son who was financially independent since his student days by selling a patented invention, Sachio Semmoto intially worked several years at Japan’s telecommunications giant NTT, before becoming an entrepreneur as co-founder of the new telecommunications company DDI, which today is part of KDDI. Semmoto had a leading role in building DDI in record time, leading to an IPO. DDI was later acquired by KDD - the resulting merged company changed the name to KDDI, reflecting the merger of KDD with DDI (for an overview of KDDI, including the M&A history, see: http://www.eurotechnology.com/store/kddi/ ). !Short personal history • NTT: developed fibre optic systems

• 1974-1980: Japan’s representative to the ITU on optical fiber and ISDN

• Kyocera Corporation • Co-Founder of DDI Corporation (today part of

KDDI), • IPO on Tokyo Stock Exchange • Merged with KDD, the resulting company

named KDDI • Professor at Graduate School of Business

Administration of Keio University • November 1999: founded eAccess

• October 2003: IPO on Mothers • November 2004: Tokyo Stock Exchange, First

Section


http://www.eurotechnology.com/store/kddi/


WILLCOM (TO BE MERGED INTO

EMOBILE)

103



WIRELESS CITY PLANNING

109



WIRELESS MARKETS, MOBILE

COMMUNICATIONS

113



SPECTRUM ALLOCATION AND

MOBILE BASE STATIONS

114



SPECTRUM ALLOCATION AND BASE STATIONS FOR THE 2.5-2.7 GHZ BANDS

120

•This figure shows the number of base stations deployed by Japan’s mobile operators in different licensed spectrum bands •Width of bands shows actual spectrum widths, for both up- and down-link. Height of bands shows the total number of base stations deployed in all of Japan. Note that details of spectrum usage differs for different geographic regions of Japan with the highest number of base stations deployed in the Kanto (Tokyo) region. •Only cellular and WiMax base stations are shown here, PHS is not shown. Willcom’s next generation PHS system has been transferred into Softbank controlled Wireless City Planning Corp.

2500 2600 2700100

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5000

10000

50000

100000

frequency !MHz"

Basestations

Base stations vs spectrum allocation !status Nov. 2010"

Wireless City Planning

local WiMax

UQ





MOBILE PHONE BASE STATION

DEPLOYMENT

122



HOW MANY REPEATERS AND BOOSTERS ARE INSTALLED?

133

•End 2006, SoftBank started to roll-out about 120,000 boosters and repeaters to improve coverage. With ramp-up of full base-stations SoftBank is reducing the number of boosters •DoCoMo and KDDI use a much smaller number of repeaters and boosters

Jul 2006 Jan 2007 Jul 2007 Jan 2008 Jul 2008 Jan 2009 Jul 2009 Jan 2010 Jul 20100

20000

40000

60000

80000

100000

120000

boosters,repeaters

Cellular boosters,repeaters, IMCSs in Japan



DoCoMo

KDDI#AU

SoftBank!3G

eMobile



FROM GROWTH TO SATURATION AND

BATTLE FOR MARKET SHARES

137



MARKET SHARES FEB 2014 VS. APRIL 2013

146

•Current market shares are: •DoCoMo: 40.8% (decreased from 42.0% in April 2013) •Softbank (including eMobile, Willcom, Wireless City Planning): 30.3% (vs. 29.3% April 2013) •KDDI (including UQ): 28.9% (vs. 28.7% in April 2013)

DoCoMo !42.0!"

KDDI !" UQ # 28.7!"

UQ

SoftBank !"eM"Willc"WSP # 29.3!"eMobileWillc.

WSP

Mobile Operator group market shares !April 30, 2013"

DoCoMo !40.8!"

KDDI !" UQ # 28.9!"

UQ

SoftBank !"eM"Willc"WSP # 30.3!"eMobileWillc.

WSP

Mobile Operator group market shares !February 28, 2014"



MONTH-TO-MONTH BATTLE FOR SUBSCRIBERS

152

•Since 2010, Softbank has been continuously gaining market share of subscriber numbers, while DoCoMo and KDDI (except for WiMax operators UQ) have been losing market share. •positive numbers in this figure mean growth of market share, negative figures (as for DoCoMo) mean loss of market share

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!0.002

!0.001

0

0.001

0.002

0.003

0.004monthly

changeofmarketshare

Growth!fall of subscriptions market shares of Japan's mobile operators

DoCoMo

KDDI

SoftBank

eMobile

Willcom

UQ

"c#2014EurotechnologyJapanKK


SoftbankacquiresVodafone KK



PREPAID MOBILE

154



JAPAN’S PREPAID MOBILE PHONE MARKET

157

Softbank has the largest share of the very small and shrinking prepay market in Japan

2007 2008 2009 2010 2011 2012 2013 2014 20150

500000

1 000000

1 500000

2000000

subscriptions

Prepaid mobile phones in Japan

DoCoMo

AUTuKa

SoftBank

eMobile!c"2014EurotechnologyJapanKK




FROM BIRTH OF MOBILE INTERNET TO

LEGACY: IMODE, EZWEB, YAHOO-KEITAI

158



LTE, 4G IN JAPAN

162



3G IN JAPAN

166



TRANSITION FROM 2G/PDC TO 3G

168

Japan’s last 2G phones were shipped in December 2007. Since January 2008 no more 2G handsets have been shipped in Japan. !All 2G networks have been switched off, and all mobile phones in Japan today are either 3G or LTE phones, or PHS handsets.

3G subscr.!total

2G subscr.!total 3G phones shipped!total

2G phonesshipped!total10!

20!

30!

40!

50!

60!

70!

80!

90!

100!

"c#2010EurotechnologyJapanKK


Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012

shipments!sub

scriptionsas!oftotal

mobile phone shipments and subscriptions in Japan



FROM “GALAKE” TO SMART PHONES

170



THE AU DESIGN PROJECT - IIDA

179



AU DESIGN PROJECT: TALBY BY MARC NEWSON

186



SWEETS FOR TEENAGE AND SUB-TEENAGE

GIRLS

187



RAKU-RAKU PHONES FOR THE SILVER

MARKET

191



TUKA-S: PIONEER FOR THE

SILVER MARKET

194



EMONEY AND MOBILE PAYMENT

197



FELICA WALLET PHONES

200



MOBILE TV, “1SEG”

205



FIXED LINE BROADBAND ACCESS MARKET

210



FTTH MARKET

213



FTTH: EU VS JAPAN

224

Figure shows that Japan has more installed FTTH subscriptions than all countries in EU25 + Iceland + Switzerland + Norway combined. However, in recent years FTTH development in EU has been catching up, and is expected to exceed Japan’s FTTH subscriptions in the next few years.

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2000 2002 2004 2006 2008 2010 2012 20140

10000000

20000000

30000000FTTH

subscriptions

Japan

EU25!Iceland!Norway!Switzerland

FTTH subscriptions: EU vs Japan





DSL MARKET

225



DSL MARKET

228

Mar 2006 Mar 2007 Mar 2008 Mar 2009 Mar 2010 Mar 2011 Mar 20120

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100

DSLmarketshares!!"

DSL market shares in Japan !!"

SoftBank !38.8!"

eAccess !23.6!"NTT East !16.9!"NTT West !17.7!"

Other !3!"!c"20

12EurotechnologyJapanKK


Source: http://www.eurotechnology.com/store/jcomm/


http://www.eurotechnology.com/store/jcomm/


OPTICAL ACCESS NETWORK

229



TRANSITION TO NGN

EXIT POTS

236



NTT FTTH BUSINESS DEVELOPMENT AND STRATEGY

240



KDDI AS THE CHALLENGER

IN FTTH

255



JAPAN’S TELEGRAM MARKET

258



JAPAN’S TELEGRAM MARKET

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•Japan’s telegram market has been decreasing but still has a size of approximately YEN 52 Billion (= approx. US$ 500 Million)

•Telegrams in Japan are sent mainly by businesses for congratulations, condolences, to debtors or for other urgent communications where correspondents cannot be reached by phone, and for personal congratulations at weddings etc.

•Until April 2003, Japan’s telegram market was a 100% monopoly of NTT (= Nippon Telegraph Telephone), and still today NTT has about 90% of the telegraph market

•Currently there are about 12 companies offering competing telegraph services, among them KDDI, and Softbank (from 2009/2010).

•Telegrams are often sent through the special 115 number, which is currently operated by NTT. The Ministry is considering to open 115 service to competitors of NTT, such as Softbank.



SUMMARY

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SUMMARY: JAPAN’S TELECOM MARKETS

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•The size of Japan’s telecom operator industry alone is about US$ 200 billion in annual sales, and annual investments are on the order of US$ 30 billion

•While Japan’s Government took some steps to encourage new entrants, these either failed or were acquired. As a consequence Japan’s fixed and wireless telecommunications services markets are totally dominated by three groups:

•NTT - the former monopoly operator, and still today 32.6% owned by Japan’s Ministry of Finance

•KDDI - with major shareholders Kyocera (12.76%), Toyota (11.09%) •Softbank - driven by founder Masayoshi Son, who also is the major shareholder, owning 21.4%

•Japan introduced many services and technologies first globally, the global mobile internet revolution started with DoPa and i-Mode on February 22, 1999. However, Japan did not succeed to capture global value from this innovation, and today global leadership has been taken over by Apple’s i-Phone and Google’s Android, and Samsung has become the global handset market share leader. This effect is now generally known as Japan’s “Galapagos effect”.

•Japan has more FTTH (fibre to the home) subscriptions than all of Europe, and NTT has announced to switch completely to optical Next-Generation-Networks, and to switch off traditional copper based telephone and ISDN networks.

•One of the most important questions for the success of Japan’s telecom sector on the global platform this year is, whether Softbank’s acquisition of SPRINT can be successful.



EUROTECHNOLOGY JAPAN KK

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EUROTECHNOLOGY JAPAN KK FOUNDED: FEBRUARY 1997 IN TOKYO

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Services and products - focus areas are high-technology, telecommunications, software, middle-ware, environmental technology and medical equipment: !- Market entry to Japan for European and US high-tech companies, turn-round, reshaping, planning

and building of distribution networks - European business development and strategy for Japanese companies - M&A (European and US companies acquiring Japanese companies, Japanese companies acquiring or

investing in Europe) - Turn-round preparations and management of foreign business in Japan - Market research and strategy - Due diligence of high-tech companies, environmental due-diligence - Advisory services for investment fund managers and investors in technology fields !

- we publish a series of market reports for about 10 years, which are purchased world-wide, distributed direct and via distribution partners: http://www.eurotechnology.com/store/


http://www.eurotechnology.com/store/


EUROTECHNOLOGY JAPAN KK

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- Leading high-technology business development boutique in Tokyo, working globally - Founded in 1996/1997 - 14 years experience, relationships, cooperations and success record. - CEO works with Japan’s high-tech / telecom sector since 1984 - 27 years experience, resources,

cooperations. - Wide network of cooperations in Governments, Embassies, trading companies, distributors, finance,

VCs, traditional corporations, venture start-ups, industry associations - Experience: market-entry, restructuring, M&A, acquisitions, due-diligence !Customers include: - More than 100 investment fund managers - Industrial customers:

- NTT-Communications, SIEMENS, Deutsche Telekom, Cubic, Unaxis (now: Oerlikon), CITI Group, CLSA Asian Markets, Genscape, Google, IKEA, Isabellenhuette, Landis+Gyr, National Instruments, Swisscom, TechnoCom,

- Government - New York Police Department, European Union, TEKES (Technology Research funding

organization of the Government of Finland) !Deep Japanese technology market knowledge - we publish a series of market reports for about 10 years, which are purchased world-wide. You can purchase our reports on Bloomberg: https://www.bmart.com/search?&nuts%5B%5D=WIRE%3AEUT, and via eSellerate: http://store.eSellerate.net/s.aspx?s=STR0576176470 and from http://www.eurotechnology.com/store/


https://www.bmart.com/search?&nuts%5B%5D=WIRE%3AEUT

http://store.eSellerate.net/s.aspx?s=STR0576176470

http://www.eurotechnology.com/store/


GERHARD FASOL PROFILE: HTTP://WWW.FASOL.COM/PROFILE/

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- Worked successfully with Japan’s high-tech sector since 1984 - 27 years. Came first to Japan in 1984 to help build NTT’s first international R&D cooperation on semiconductor lasers

- Entrepreneur in Tokyo since 1996, Eurotechnology Japan KK worked with many large corporate groups (e.g. SIEMENS, NTT, Deutsche Telekom, Asahi Glass...), more than 100 investment fund managers

- Assoc. Professor of Electrical Engineering at Tokyo University. Record of Fasol-Laboratory at Tokyo University: http://www.fasol.com/tokyo_university/

- Elite “Sakigake” (Pioneer) R&D project on Spin-Electronics of Japanese Government Science and Technology Agency. This work was evaluated by US National Science Foundation and US Department of Trade: http://www.wtec.org/loyola/erato/ch7_5.htm

- Co-initiator of spin-electronics device research in Japan, one of the first to start work on spin-electronics in Japan in 1991

- Tenured Faculty member at Cavendish Laboratory/University of Cambridge. - Assoc. Professor of Electrical Engineering at Tokyo University - PhD in Solid-State Physics (Cambridge University, Trinity College, UK) - Diplom-Physiker, Ruhr-University Bochum (Diplom-Thesis on Superconductivity) - Publication list (Books, patents and publications, several publications are specifially concerning

electron-spin and spin-electronics): http://www.fasol.com/profile/publications.shtml - Languages: English, German (native), French, Japanese, and some Swedish


http://www.fasol.com/profile/

http://www.fasol.com/tokyo_university/

http://www.wtec.org/loyola/erato/ch7_5.htm

http://www.fasol.com/profile/publications.shtml


GERHARD FASOL WITH TETSUZO MATSUMOTO, EXEC VP OF SOFTBANK MOBILE CORPORATION

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CONTACT AND MORE INFORMATION

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Contact •Gerhard Fasol PhD •Eurotechnology Japan KK, Tokyo, Japan •http://www.eurotechnology.com/ •Mobile +81-90-8594-6291 •[email protected] •[email protected] !More information: •reports:http://www.eurotechnology.com/store/ •twitter : http://twitter.com/gfasol/ •website: http://www.eurotechnology.com/ •personal site: http://fasol.com





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