JIN-203 -- Japan's TV Broadcasters Trail in Race to Go Digital

J@pan Inc Magazine Presents:
T H E J @ P A N I N C N E W S L E T T E R
Commentary on the Week's Business and Technology News

Issue No. 203
Thursday, November 7, 2002


++ Viewpoint: Japan's TV Broadcasters Trail in Race to Go Digital

++ Noteworthy News
- Rakuten Starts Using Virtual Money in Cyberspace
- Panel Refuses to Mediate Dispute over Fixed-Line-to-Keitai Calls
- Monetary Easing Troubles BOJ, Says Asahi Shimbun

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++ Viewpoint: Japan's TV Broadcasters Trail in Race to Go Digital

Digitalization of TV broadcasting is a big national project:
According to the government plan, terrestrial digital broadcasting is
due to start in three major cities -- Tokyo, Osaka and Nagoya -- in
December 2003, and every TV program in Japan will be digitalized by

Japan started satellite digital broadcasting in December 2000, and now
a total of 3.22 million households enjoy digital satellite
broadcasting programs, according to industry sources.

Other plans in the works include offering high-definition programs and
establishing TV shopping networks. And because terrestrial
broadcasting is highly compatible with mobile devices, it's plausible
that TV programs will soon be available on keitai handsets and PDAs.
Sounds good, doesn't it?

But Japan still trails the US, Europe and South Korea in the field of
terrestrial digital broadcasts. Korea Broadcasting System (KBS) and
three other broadcasters started regular terrestrial digital TV
broadcasting in metropolitan areas in November 2001. KBS is now
offering two programs. "This year, we are expanding," a KBS engineer
who was visiting Japan this week told J@pan Inc. "In the case of
Korea, the government is a driving force for digitalization of
broadcasting," he added.

Digital experts say the frequency spectrum is far more crowded in
Japan than in other countries. Analog terrestrial broadcasting has
already used up much of the frequency spectrum available and some of
the frequency spectrum needs to be "moved" elsewhere before
broadcasters starts digitalizing.

According to the Ministry of Public Management, Home Affairs, Posts,
and Telecommunications, the crowded frequency spectrum will cost Japan
180 billion yen to fix, 2.5 times higher than an original estimate.
There has been talk about charging broadcasters more for use of the
frequency spectrum, but nothing has been decided yet.

Japanese broadcasters are spending quite a bit of money in the
project. According to the economic daily newspaper Nihon Keizai
Shimbun, the five major broadcasters together will invest over 50
billion yen on the project over the next few years. Japan has a long
way to go to catch up with other broadcasting giants.

-- Sumie Kawakami

The Nihon Keizai Shimbun (July 8, 2002)

"The Final Showdown" from our May 2002 issue looks at digital technology
in the movie-making business.

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**Rakuten To Start Using Virtual Money in Cyberspace

In Brief: Rakuten, one of Japan's largest e-commerce sites, announced
that it has just introduced virtual money so that users can exchange
goods for points they earn by shopping at Rakuten-registered

Rakuten used the virtual money in a limited campaign during the summer
and decided to make the system permanent because of its popularity. A
limited service starts this month. The company will then extend the
point system to cover all 9,000 registered stores in Rakuten's online mall.

Commentary: Considering how fierce the competition is among online
auction and shopping sites, Rakuten is not doing too badly. In the
latest half-year earnings report (January-June), Rakuten posted 4.3
billion yen in sales, 40 percent higher than a year earlier, with a
historic-high current profit of 100 million yen. It was still
reporting losses of 150 million yen, but that is significantly lower
than the 740 million yen loss reported in the same period of the
previous year.

Yahoo! Japan is still the largest auction site, but Rakuten president
Hiroshi Mikitani is not giving up. He contends that total sales via
Rakuten's virtual market will reach 1 trillion yen within five years.

Press Release from Rakuten (November 1, 2002)

Nikkei Shimbun (October 30, 2002)

Nikkei Shimbun (October 29,2002)

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** Panel Refuses to Mediate a Dispute over Fixed-Line-to-Keitai Calls

In Brief: We ran a story in our latest issue explaining why calling
from a fixed line to a mobile is so much more expensive than
keitai-to-keitai calls. Some fixed-line carriers argue that there is a
conspiracy among mobile carriers to keep charges high.

Here is the latest development: The Telecommunications Businesses
Dispute Settlement Commission, an advisory body to Japan's telecom
ministry, advised the ministry to turn down a request made by Heisei
Denden that it mediate a dispute between the company and mobile
carriers over calls from fixed-line phones to keitai.

Heisei Denden, a fixed-line phone carrier, has requested that mobile
phone carriers NTT Docomo, KDDI and Japan Telecom give
the company a chance to patch through fixed-line-to-mobile calls.
After being ignored by the mobile carriers, the company asked the
ministry to mediate the dispute.

Commentary: The panel reasoned that it was not worthwhile to step in
because Heisei Denden's request for dispute settlement doesn't
meet the appropriate requirements. It avoided discussing the key
question in the dispute: Are mobile carriers being fair?

The Ministry of Public Management, Home Affairs, Posts and
Telecommunications (in Japanese)

"Conspiracy Theories - Some Calls Are More Equal Than Others," from
our November issue (password protected)

**Monetary Easing Troubles BOJ, Says Asahi Shimbun

In Brief: Some Bank of Japan officials are worried that the increased
cooperation between the bank and the government will lead to further
political pressure for additional monetary easing, the Asahi
Shimbun, a leading daily newspaper, said Wednesday.

Some fear the central bank may be required to contribute funds should
the government inject taxpayer money into troubled banks and provide
money to the proposed government-run industrial rehabilitation
organization, the report said.

From Asahi Shimbun (November 6, 2002)

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Written and edited by J@pan Inc staff (editors@japaninc.com)


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