TT-600 -- Networking Your Refrigerator, Smart Power Meters. E-biz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, February 06, 2011, Issue No. 600


- What's New
- Short Takes
- News
- Candidate Roundup/Vacancies
- Upcoming Events
- Corrections/Feedback
- News Credits

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When the world's largest power utility (ranked by assets and
market value), the Tokyo Electric Power Company (TEPCO),
makes a technology announcement, you can be sure that it is
going to be something major which will touch all of our
lives -- particularly since we're not aware of any
competitors within Tokyo.

Well, TEPCO made just such an announcement this last week
when it said that it will roll out 27m smart power meters
to consumers from 2013, preceded by a 90,000-home test run
from this coming October. The company joins many power
companies around the world which are trying out smart power
meters as part of an overall shift to so-called smart grid
power distribution. Combined, the power meters and a smart
grid allow both the monitoring and control of consumer
usage, as well as the better calibrated "on-demand"
production of energy.

This dynamic input-to-output cohesiveness of our energy
system is important now because TEPCO and other Japanese
power companies derive almost 80% of their power from
burning hydrocarbons (oil, coal, LNG, etc.), especially
during peak usage periods such as heat waves and cold
snaps. Therefore, they want to encourage users to go
off-peak by adopting behaviors like doing the washing at
night, switching to energy efficient home appliances, and
charging electric cars after factories close in the
evenings. Balancing out power usage means that more energy
can be sourced from much cheaper "fixed" energy assets such
as nuclear, hydro, and thermal power stations rather than
quick and dirty hydrocarbons.

Another reason for smart power meters is that as
consumer-supplied power from home solar cells and
gas-driven fuel cell systems become more prevalent, and
households adopt en mass electric cars (a certain trend,
just wait for a Middle East crisis to bump up sales), then
power companies will know what incoming energy there is
and how to offset that against the need for oil-fired

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Then thirdly, if there is ever a power outage -- so far an
uncommon event here -- whether because of overload,
accident, or natural disaster, then with intelligent
controls in each consumer's premises, the power company can
switch a broken grid back on in controlled and stepped
stages, without having to worry about power surges caused
by unswitched appliances suddenly starting up again.

The advent of smart power meters is being made possible
thanks to the pending assignment of dedicated wireless
spectrum to the devices by the Ministry of Internal
Affairs and Communications (MIC) in FY2012. The meters are
likely to run on the 915-928MHz band, similar to the US and
Europe. Actually, MIC's ambitions for smart meters extend
well beyond just power. The ministry also wants
standardization of intelligent water and gas metering,
through an initiative dubbed the Ubiquitous Metering
System. These standards are expected to provide a
foundation for the growth of a new export industry for
Japanese makers.

To that end, who is going to get most of this economic pie
appears to already have been decided. Toshiba tied up with
TEPCO several years ago on smart power meters and seems to
be the main vendor to the TEPCO roll-out. 27m smart meters
-- that's a pretty juicy contract. Other players who are
working on other utilities include GE in a tie-up with
Fuji Electric, Hitachi, and Fujitsu, which is scoring
export contracts but not much in Japan at this stage.

As a side note, TEPCO is not the first to adopt smart power
meters in Japan. KEPCO, the utility supplying the Kansai,
started in 2008 and so far has installed about 640,000
meters, with another 200,000 scheduled for FY2011.

So after all the hype about how great smart meters are
going to be, what do we see as their downside?

Firstly, power costings will become more complex, and if
you think your power bills are hard to understand now, wait
til you start getting charged in time bands, locales, types
of usage (iPod charging could be priced differently to
refrigerator power), whether you're a pensioner or
otherwise disadvantaged, and seasons. This could clearly
be ameliorated by the utilities making an effort to create
good quality end-user applications that connect to phones
and other mobile devices, so as to encourage more
consumer interaction with their appliances. As one is
quoted as saying, "We need to make saving power, fun".

Secondly there will be some significant human costs. TEPCO
appears to be employing around 5,500 power meter readers
in Tokyo, a number we picked up after iTron sold a similar
number of hand-held meter reading computers to TEPCO some
years ago. We estimate that the cost savings to TEPCO will
be at least JPY3bn a year, once salaries, facilities, and
management costs are factored in. Not a huge amount, but
in the world of bean counting power companies, a useful
uptick. And for money-losing TEPCO, probably every little
contribution to the bottom line helps right now.

Of course, if you add to TEPCO the other 10 power
utilities around Japan, then throw in dozens of water and
gas utilities as well, we can guess that more than 30,000
meter readers will lose their jobs over the next few years.
This is great bottom-line action for the companies, but for
those readers who are mostly housewives and who are
otherwise unskilled, finding replacement work will be

Lastly, smart power meters offer the potential for more
things to go wrong. On the side of the power companies, the
Toshiba models supposedly allow TEPCO to turn off a
customer's appliances remotely, presumably with the aid of
IPV6-enabled devices -- which although still a few years
away is still a bit disconcerting. For example, if someone
fell behind in payments, whereas previously the requirement
for the utility company has been to maintain basic services,
now they will be able to selectively turn off everything
except heating on a cold day. Thus, no cooking gas, no
lights, no TV or Internet...

Then there is the potential for abuse on the side of
customers. Power meter software hacking has already occurred
in the USA, and there are plenty of capable hackers here in
Japan. Instead of hacking into someone's credit card
account, you could simply have your smart meter say that
you are pumping large quantities of solar or other
alternative power into the grid and have the power company
credit you accordingly... Then what about power meter
viruses? Infected with a reboot virus, plugging in your
shaver on a hurried morning in 2020 could get interesting!


BTW, did you notice that we have hit another milestone --
600 newsletters? There are 48 issues a year, so this
represents around 12 and a half years of monitoring
Japanese business trends. We really appreciate all the
encouragement received over the years for putting Terrie's
Take together, and will continue to do so for the
foreseeable future. Can we ask all readers to mention the
Take to your friends? We'd like to get our subscription
levels back up to 10,000 people.

...The information janitors/



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+++ NEWS

- Nuclear arms hawks gain a supporter -- Tokyo Gov. Ishihara
- New advisory panel for tax and social insurance reforms
- Falling commercial rents hurt Mitsui Fudosan earnings
- Tsutaya's CCC to do management buyout
- eMobile rolls out cheaper, faster iPad solution

-> Nuclear arms hawks gain a supporter -- Tokyo Gov. Ishihara

Shintaro Ishihara, Tokyo's governor for life (he's 78 and
counting) has reaffirmed his outspoken reputation by noting
in a recent speech that if Japan had had nuclear weapons,
then North Korea wouldn't have abducted Japanese nationals
during the 1970s and 1980s. He followed up by intimating
that since the US bombed Libya as punishment for terrorism
(but not for nuclear arms, those came later), Japan is
justified in taking a tougher approach to North Korea.
***Ed: Well, it may be correct that North Korea only
recognizes force, however, Ishihara ignores the fact that
Japan's current democracy is based on non-aggression, and in
particular no nukes. He and the nation's other hawks will
first need to de-program their own citizens before getting
the military might they crave. Better that Japan continue
to lean on the US for their nuclear umbrella, and pay the
very modest "rent" resulting from that policy. Meanwhile,
we think Ishihara definitely needs to retire before he says
something even more outrageous.** (Source: TT
commentary from, Feb 4, 2011)

-> New advisory panel for tax and social insurance reforms

At the beginning of the year, we predicted that Naoto Kan's
government will wise up and will go on the offensive to
start a public discussion of consumption tax, in an effort
to have the general population accept the inevitability of
a massive increase. One step towards doing this was the
establishment of a new tax/social welfare panel to create
reform plans and to test ideas through debate and hearings.
Leading the panel will be Kaoru Yosano, a consumption tax
hawk.***Ed: This is the right way for Kan to win approval,
but we also worry what such a rise might do to the economy.
It will be ugly for the first year or so until people get
used to it -- and the mooted 15% is still better than
many other countries, such as the UK with its 20% tax.**
(Source: TT commentary from, Feb 5, 2011)

-> Falling commercial rents hurt Mitsui Fudosan earnings

Slowed demand for office buildings and a big drop in rents
have slashed the profits of the nation's biggest property
developer by 34% over the last 9 months. Sales were
JPY987.4bn and net profit was JPY33.8bn, down from JPY50bn
a year earlier. The company's office leasing vacancy rate
rose to 4.9% in December 2010, up from 3.2% three months
earlier -- not a good trend. Average office rent in Tokyo
is now JPY17,585/tsubo (3.3 sq. m.), the lowest in six
years. ***Ed: Our take is that this office rent deflation
trend will continue for at least the next 6 months. Yes,
exporters are making record profits, but they account for
only 15% of the economy. Everyone else is doing it
tough.** (Source: TT commentary from, Feb 4,

-> Tsutaya's CCC to do management buyout

Japan's massive Culture Convenience Club, which owns video
rental chain Tsutaya, looks set to go private again, after
a management buyout bid by founder and still-major
shareholder, Muneaki Masuda. Apparently Masuda wants to
wrestle CCC's business into the digital age much more
quickly and is tired of having to address public
shareholder concerns about the strategic investments that
will have to be made. The MBO calls for Masuda and his
supporters to pay around JPY69.6bn. ***Ed: Needless to say,
shares were limit-up after the announcement.** (Source: TT
commentary from, Feb 4, 2011)

-> eMobile rolls out cheaper, faster iPad solution

If you're in the market for an Apple iPad, or already have
one but are disappointed by how terribly slow Softbank's
3G service is, then you should know there is an
alternative. Basically the Softbank service is too slow to
support the main reason companies buy iPads -- for sales
people to show visual materials to customers in the field.
Thus it's interesting to see eMobile do a deal with Apple
whereby they will see the WiFi-only model coupled with a
fast eMobile modem. **Ed: We can tell you that the eMobile
modems are really excellent -- fast, cheap, and portable.
Because they are WiFi, there is no need for a connector
and you can keep the modem in your bag while using it.**
(Source: TT commentary from, Feb 4, 2011)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.


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--------------- Start a Company in Japan ------------------

Entrepreneur's Handbook Seminar 19th of February, 2011

If you have been considering setting up your own company,
find out what it takes to make it successful. Terrie Lloyd,
founder of over 13 start-up companies in Japan, will be
giving an English-language seminar and Q&A on starting up
a company in Japan at The Executive Centre (Tokyo Bankers

This is an ideal opportunity to find out what is involved,
and to ask specific questions that are not normally
answered in business books. All materials are in English
and are Japan-focused.

Date: Feb 19th, 2011 (SAT)
Location: The Executive Centre (Tokyo Bankers Club)

For more details:

Our special thanks for the venue go to The Executive
Centre, Mr. Paul Taylor
TEL: 090-9363-9605/email:

---------------- ICA Event - February 17 ------------------

Speakers: Dr David Sweet & Charles Breen, Specialized Group
Title: Job Search, Recruiting and Training

Details: Complete event details at
(RSVP Required)

Date: Thursday, February 17, 2011
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to
all. Venue is The Foreign Correspondents' Club of Japan.



In this section we run comments and corrections submitted
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amplify our points, by email, to

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