Broadband Situation in Japan Past, Present, and Future
Transcript of Broadband Situation in Japan Past, Present, and Future
Broadband Situation in Japan Past, Present, and Future
June 6, 2011
Tatsuo Takita
Chief Consultant
InfoCom Research, Inc.
About Myself
1
Academic Career: 1988.3 Graduated from Keio Gijyuku University, Bachelor in Law 1999.12 Graduated from Oregon State University, College of Business, Master in Business Administration
Business Career: 1988.4 Joined Nippon Telegraph and Telephone Corporation (NTT) 1994.5 International Affairs Department, NTT 1996.3 Assistant Manager, Tokyo Chuo Branch, Corporate Sales Division, NTT 2000.3 Chief Consultant, InfoCom Research, Inc. 2005.7 Strategic Manager, International Office, NTT East 2009.4 Chief Consultant, InfoCom Research, Inc. Research/study regulation, Internet applications/Services, Venture business
Content of Today’s Presentation
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Trend of Broadband Penetration <Past to Present>
Aggressive Price Reduction <Past>
Broadband Service Status - International Comparison <Present>
Broadband User Demographics <Present>
Broadband Usage <Present>
Popular Sites <Present>
An Interesting Case <Present>
What We learnt (Hypothesis) <Present>
ICT Utilization - International Comparison <Present>
To the Future <Present to Future>
Conclusion
Trend of Broadband Penetration <Past to Present>
3
Past to Present: Trend of Broadband Development
4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
CATV 216 784 1456 2069 2578 2964 3310 3607 3782 4111 5315
DSL 0,2 71 2379 7023 11197 13676 14518 14013 12711 11184 9735
FTTH 0 0 26 305 1142 2890 5449 8795 12155 15020 17802
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
CATV
DSL
FTTH
‘000 subscribers
Broadband difusion started from DSL ,and changed to FTTH.
Currently, FTTH is the most popular broadband service in Japan.
Source: MIC (Ministry of Internal Affairs and Communications) As of March of each year
<Year to Year the Number of the Broadband users>
Past: Trend of DSL Increase Dramatic Change
5
0
1000
2000
3000
4000
5000
6000
DSL
FTTH
‘000 subscribers
Source: MIC (Ministry of Internal Affairs and Communications)
The increasing trend changed August / September 2001. New entrant(s) to the market with price destruction drove the penetration.
<The Monthly Number of the DSL / FTTH users From 2001 to 2002>
Aggressive Price Reduction <Past>
6
Past: Trend of ADSL Price Reduction
7
New entrants with low price drove the others’ prices down.
Source: MIC “Trends of ICT Charges and Competition Policy” March 1, 2010
yen NTT East E Access Softbank BB
Past: Trend of FTTH Price Reduction
8
Price reduction started from ADSL. That led to the price reduction of FTTH.
Source: MIC “Trends of ICT Charges and Competition Policy” March 1, 2010
yen
KDDI
NTT West
NTT East
K-Opti.com
Broadband Service Status International Comparison
<Present>
9
Present: Status of Households Broadband Penetration
10
00
20
40
60
80
100
120
Ko
rea
Icel
and
Swe
de
n
No
rway
Net
her
lan
ds
Den
mar
k
Fin
lan
d
Luxe
mb
ou
rg
Un
ited
Kin
gdo
m
Can
ada
(20
08
)
Ger
man
y
Un
ited
Sta
tes
Bel
giu
m
Swit
zerl
and
(2
00
7)
New
Ze
alan
d
Au
stra
lia (
200
8)
Esto
nia
Jap
an
Au
stri
a
Fran
ce
Slo
ven
ia
EU2
7
Irel
and
Spai
n
Po
lan
d
Hu
nga
ry
Cze
ch R
epu
blic
Po
rtu
gal
Slo
vak
Rep
ub
lic
Ital
y
Gre
ece
Turk
ey (
200
7)
Ch
ile (
200
6)
Mex
ico
<Households with broadband access, 2009 or latest available year>
Source: OECD Broadband Statistics 2010
%
Households broadband penetration is not significantly high in Japan
Present: Status of xDSL Coverage
11
0
20
40
60
80
100
120
Luxe
mb
ou
rg
Net
her
lan
ds
Po
rtu
gal
Un
ited
Kin
gdo
m
Bel
giu
m
Ko
rea
Den
mar
k
Jap
an
Fran
ce
Swit
zerl
and
Swed
en
Cze
ch R
epu
blic
Spai
n
Fin
lan
d
Ital
y
Au
stri
a
Ger
man
y
Gre
ece
Icel
and
New
Ze
alan
d
Mex
ico
Au
stra
lia
Hu
nga
ry
Irel
and
No
rway
Can
ada
OEC
D a
vera
ge
Un
ited
Sta
tes
Slo
vak
Rep
ub
lic
Po
lan
d
Turk
ey
<Coverage of xDSL networks (% population or % households or % lines)>
Source: OECD Broadband Statistics 2010
Coverage of xDSL network in Japan is in the highest range.
Present: Status of 3G Coverage
12
0
20
40
60
80
100
120
< 3G Population Coverage>
Source: OECD Broadband Statistics 2010
%
3G population coverage is very high in Japan.
Present: Status of FTTH/B Availability
13
0
10
20
30
40
50
60
70
80
90
100
<FTTH/B Household Availability>
Source: OECD Broadband Statistics 2010
%
FTTH/B Household availability in Japan is extremely high.
Present: Status of Broadband Download Speed
14
20 000
40 000
60 000
80 000
100 000
120 000
Mex
ico
Ch
ile
Irel
and
Luxe
mb
ou
rg
Spai
n
Un
ited
Sta
tes
Isra
el
Gre
ece
Turk
ey
Ger
man
y
Hu
nga
ry
Swit
zerl
and
Can
ada
New
Ze
alan
d
Esto
nia
Po
lan
d
Bel
giu
m
Den
mar
k
Cze
ch R
epu
blic
Un
ited
Kin
gdo
m
Icel
and
Au
stri
a
Ital
y
Fin
lan
d
Au
stra
lia
OEC
D
Net
her
lan
ds
No
rway
Slo
vak
Rep
ub
lic
Ko
rea
Slo
ven
ia
Fran
ce
Jap
an
Po
rtu
gal
Swe
de
n
Average advertised broadband downloadspeed, kbit/s*
Median
Source: OECD Broadband Statistics 2010
Kbps
<Average advertised broadband download speed, by country, kbit/s, September 20>
Average broadband download speed is in the highest range.
Median download speed is the highest.
Present: Status of Fiber Connection
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0% 10% 20% 30% 40% 50% 60%
Ireland
Germany
Finland
Switzerland
Turkey
Poland
Italy
Netherlands
Portugal
United States
Iceland
Hungary
Czech Republic
OECD
Denmark
Norway
Sweden
Slovak Republic
Korea
Japan
Source: OECD Broadband Statistics 2010
<Percentage of Fiber Connections in Total Broadband Subscribers, June 2010>
The percentage of the Fiber Connections is extremely high among the countries.
Broadband User Demographics <Present>
16
Present: BB User Demographics - Gender
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Source: MIC “Trend in Info-Communications Usage 2010”
40,6
45,1
36,3
47
52
42,3
49,3
54,7
44,2
0
10
20
30
40
50
60
Total Men Women
2007
2008
2009
<Broadband Users as a % of Total Men and Women>
60% 80% 100%
Total
Men
Women
85,8
86,3
85,2
14,2
13,7
14,8
BB NB
<Broadband Users as a % of the Internet Users> %
Among the internet users, there is no significant difference in terms of gender.
Among the consumers as a whole, men have higher percentage as broadband users.
Present: : BB User Demographics – Living Area Types
18
Source: MIC “Trend in Info-Communications Usage 2010”
0
10
20
30
40
50
60
Metropolitan Areas Cities Towns/Vilagges
2007
2008
2009
<Broadband Users as a % of Living Area Types> %
As usually presumed, metropolitan areas have the highest percentage for the broadband users.
Towns/villages have comparatively lower percentage, which may lead to digital divide.
Present: Influential Factors for Broadband Usage
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Source: MIC “Trend in Info-Communications Usage 2010”
000
000 000
001 001 001
001
000
-001
-001
000
000
000 000 000
000 000
000 000
000 000
000 000
000 000 000
000
000
000
-002
-001
-001
000
001
001
Men Women 6-12 13-19 20-29 30-39
40-49 50-59 60< 20,000> 20,000-40,000 40,000-60,000
60,000-80,000 80,000-100,000 100,000< Hokkaido Tohoku Kitakanto
Minamikanto Hokuriku Koushinetsu Tokai Kinki Chugoku
Shikoku Kyusyu Metro Areas Cities Towns/Villages
<Factors for Broadband Use with Multivariable Analysis>
“Age” is the most influential factor for the broadband usage, but this may need further study.
Gender Age Annual Income Location Area Type
Metro Near Tokyo Over 6 mil. yen
13 yr to 59 yr
Broadband Usage <Present>
20
Present: Comparison of Internet Usage by the User type
21
00 10 20 30 40 50 60 70
Coporate/Government Web
E-Commerce
Personal Web
Map/Navigation Services
Digital Contents (Free)
Motion picture sites
Mail Magazines
Net Auction
Digital Contents
Banking/Trading
BBS/Chat
Questionnaire
Quize/Prize
File Sharing
Broadband
Narrowband
<Internet Usage for Broadband / Narrowband Users>
Source: MIC “Trend in Info-Communications Usage 2010”
%
Internet Activities are not significantly different between broadband users and narrowband users in Japan.
Present: Difference of usage by the user type
22
21
16
15
15
14
13
13
11
09
09
07
07
07
06
06
00 05 10 15 20 25
Personal Web
E-Commerce
Motion picture sites
Coporate/Government Web
Mail Magazines
Digital Contents (Free)
Map/Navigation Services
BBS/Chat
Net Auction
Banking/Trading
Questionnaire
Digital Contents
Quize/Prize
File Sharing
Source: MIC “Trend in Info-Communications Usage 2010”
<Internet Usage Difference between BB and NB Users > %
The largest difference is “personal web” surfing.
Not so bandwidth-consuming applications.
Popular Sites <Present>
23
Present: Most Popular Sites top 15
24
Source: Alexa “Top Sites in Japan”
<1>
<2>
<3>
<4>
<5>
<6>
<7>
<8>
<9>
<10>
<11>
<12>
<13>
<14>
<15>
An Interesting Case <Present>
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Present: An Interesting Example “Nico Nico Douga”
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Source: http://www.nicovideo.jp/
Japanese original motion picture site.
Launched in 2007
Live streaming started in 2008
“Nico Nico Channel” started in 2008
The number of premium members is more than 1.2 million.
Premium membership fee: approx. USD6.00/month
Premium members can enjoy “fast lane service” to see motion pictures.
Present: “Nico Nico Douga” Business Model
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Source: Financial report of dwango 2011 2nd quarter
Premium Membership
Advertising
Million Yen Revenue
Affiliate Point Program, Others Operating Loss/Profit
Approx. 80% of revenue
From Red to Black
The largest portion of the revenue comes from premium membership. Advertising accounts for rather small percentage (13%).
In 2010, it moved into the “black.”
Present: “Nico Nico Douga” Competitive Advantages
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1. Unique Community
1. Nico Nico Nama Hoso (Live Streaming)
Unique comment feature makes users have sharing experience.
If this is live streaming, it is like twitter and motion pictures at the same time and overlapping.
Comments uploaded by users showing up in the pictures
E-commerce products uploaded by premium members. These are merely links to Amazon or other e-commerce sites. Premium members do not get any fee.
Since this service is live, general user sometimes could not enjoy the live streaming due to system constraints.
This led to the increase of the number of the premium users.
Source: http://www.nicovideo.jp/
What We learnt (Hypothesis) <Present>
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Past to Present: 3G and FTTH
30
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
3G 0 0 0 7186 16830 30353 48329 69909 88097 99631 109057
CATV 216 784 1456 2069 2578 2964 3310 3607 3782 4111 5315
DSL 0,2 71 2379 7023 11197 13676 14518 14013 12711 11184 9735
FTTH 0 0 26 305 1142 2890 5449 8795 12155 15020 17802
0
20000
40000
60000
80000
100000
120000
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
3G
CATV
DSL
FTTH
‘000 subscribers
The increasing trend of FTTH and 3G is almost same.
Source: MIC (Ministry of Internal Affairs and Communications) , TCA(Telecommunications Carriers Association), As of March of each year
<Year to Year the Number of the Broadband users (3G Included)>
Present: Why Choose FTTH
31
65,1
53,1
43,4
34,4
31,1
0 10 20 30 40 50 60 70
Speed
Always-On
Cheaper
Advertisment
Already Equiped
Source: MIC “The result of questionnaire for ICT service monitors 2009 ”
The latest research shows that top 3 reasons for choosing FTTH is: “Speed,” “Always-on,” and “Cheaper than other broadband services”. “
Present: Why FTTH is Cheaper
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DSL service needs basic line charge, but FTTH doesn’t.
Call charge of VoIP over FTTH doesn’t have “distance concept.”
Total Cost of DSL
Total Cost of FTTH
Basic Line Charge DSL Charge
FTTH Charge
=
=
+ Total Cost
Call Charge of “Hikari Telephone” (VoIP over FTTH)
Hikari Telephone to Hikari Telephone/PSTN : Y8.4/3 min. Hikari Telephone to Mobile Phone : Y16.88, Y18.375/60 sec., Y11.34/3 min.
•”Y” stands for Japanese Yen. •The total cost diagram is simplified for the explanation purpose.
Source: NTT East web site at http://flets.com/first/index.html?banner_ID=200001
Present: Hypothesis from Empirical Evidence
33
Timing Issue: 3G and FTTH penetration was somehow related.
Application Issue: Transition needs replacement from one thing to another, and voice is strong application.
Feeling Issue: “Fun” is important. Giving customers more choice may be something good.
ICT Utilization International Comparison
<Present>
34
Present: Status of ICT Utilization
35
6,15
6,11
6,11
6,06
6,03
5,76
5,76
5,73
5,67
5,64
4,87
0 2 4 6 8
Sweden
Singapore
Qatar
Taiwan, China
United Arab Emirates
Luxemburg
Iceland
Korea, Rep.
Malta
Portugal
Japan
Impact of ICT on Access to Basic Services Top 10
Source: World Economic Forum “The Global Information Technology Report 2010-2011”
6,33
5,98
5,88
5,83
5,83
5,82
5,76
5,74
5,69
5,67
5,26
0 2 4 6 8
Sweden
Taiwan, China
Korea, Rep.
Singapore
France
United Kingdom
Norway
Iceland
Canada
United States
Japan (26) (45)
Impact of ICT on New Services/Products Top 10
According to “The Global Information Technology Report 2010-2011” by World Economic Forum, Japan is in the lower range in terms of ICT utilization.
6,16
6,15
5,99
5,74
5,73
5,67
5,66
5,57
5,54
5,54
4,28
0 2 4 6 8
Qatar
Singapore
Sweden
United Arab Emirates
Taiwan, China
Korea, Rep.
Portugal
Estonia
Malta
Austria
Japan (68)
ICT Use and Government Efficiency Top 10
To the Future <Present to Future>
36
Present to Future: Fundamental Principles of “Path of Light” Strategy
37
Source: MIC “Fundamental Principles of “Path of Light” Strategy” August 31, 2010
The Japanese government formulated the strategy to promote ICT utilization.
Pillar1: Incentives to promote foundation of ICT utilization
Pillar 2: Review of rules for fair competition
Pillar 3: Regulatory reform to promote ICT utilization
Fun
dam
enta
l Pri
nci
ple
s o
f “P
ath
of
Ligh
t” S
trat
egy
•Financial support for municipalities to develop broadband facility for ICT in such as medical care, education, administration
•Realignment of frequency for wireless broadband
•Review of dominant regulation such as reinforcing firewall, open access NW
•Deliberate NTT organizational formation from various perspectives etc.
•Thrash out regulations to hinder ICT utilization
•Increase incentives for broadband utilization for municipalities
Conclusion:
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Broadband penetration in Japan was driven mainly by price reduction backed by regulation.
Hypothetically, migration to FTTH related to timing issue, application issue, and feeling issue from empirical evidence. However, remaining migration needs more, and ICT utilization as a whole is still on its way.
Increase of broadband utilization and/ or develop killer application is the key for the future.
FYI: Comprehensive Data book about the Japanese ICT Market
39
CONTENTS Topics: The Latest Trend of ICT Chapter 1: A Big Picture of Info-Communications
Industry Chapter 2: Domestic Info-Communications Market Chapter 3: Diversifying Personal Services Chapter 4: Corporate ICT Market on Its Way to
Recovery
This is an ONLY English book describing ICT market and industry in Japan, that are drastically changing.
Information & Communications in Japan 2011