WW-163 -- The Mobility of Mobile Phone Policy in Japan

J@pan Inc presents the Wireless Watch Newsletter:


Commentary on the Business of Wireless in Japan
Issue No. 163
Thursday June 7, 2007

SUBSCRIBERS: 23,930 as of April 5, 2007


The Mobility of Mobile Phone Policy in Japan
By Arjen van Blokland

In Japan, the Ministry of Internal Affairs and Communications is
amongst others responsible for the telecommunications policy. A
good example was the introduction last year of Mobile Number
Portability (MNP) in an attempt to make it easier for mobile
end-users to switch carriers.

The ministry’s bureaucrats set up study groups to come up with
recommendations for new policies. In 2007 one of the most
interesting study groups focuses on mobile business. Main topics
on the agenda are sales promotions and subsidies by mobile
carriers to attract and retain customers and Mobile Virtual
Network Operators (MVNO).

Surprisingly, this study group consists of an interesting mix of
opinion leaders and important players in the mobile industry. The
members are analysts from Gartner Japan, Merryl Lynch, Nomura,
several university professors and even a journalist. Official
study group observers are coming from the mobile carriers,
content providers, Microsoft, Access, JR East, and the MVNO

The study group will meet eight times in 2007 before publishing
their position document in September. Each member and observer
is invited to present their opinions followed by a Q&A session.
Often comparisons are made between the Japanese and overseas
mobile markets. All presentations and meeting reports are
available online.

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One of the main bottlenecks for further mobile market
liberalization in Japan is the vertical integrated model.
Carriers offer a bundling of SIM locked handsets and services.
In other methods to attract and retain customers, carriers
differentiate through selling heavily subsidized fancy handsets
with nice multimedia services that can only be used on their
network. If you want to switch to another carrier, you can keep
your mobile number but you cannot continue using your handset and
email address.

Removing the SIM-lock will not be the catalyst for more market
liberalization. Handsets would become very expensive and need to
be equipped with multi-mode RF chips that would work on both
W-CDMA and CDMA2000. Furthermore, the content market is so
tied-in with the carriers and their technologies that the whole
business model for content providers and media companies would
need to change as well. According to K-tai Impress, a web
publisher, two-thirds of the people would not buy a new handset
if the price was around 70,000 yen (600 USD). Japanese carriers
claim that once the SIM-locks are removed, the mobile content
service market will be limited to only SMS-messaging.

Members and ministry officials of the study group are talking
about a soft landing – no drastic changes to the current
business models but a gradual break-up of the vertical models
promoted by the current mobile carriers. A wise approach, as this
has lead to a booming mobile economy with a win-win-win model
for carriers, content providers and end-users alike.


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