TT-762 -- The Race to Free WiFi, e-biz news from Japan

Japan Travel
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, June 29, 2014, Issue No. 762


- What's New -- The Race to Free WiFi
- News -- Now you can shimmy and sway the legal way
- Web Content/Tech Job Vacancies -- PHP Zend engineer
- Upcoming Events
- Corrections/Feedback -- Comment on Forbes article on Abenomics
- Travel Picks -- Nyuto Onsen in Akita, Rabbit Cafe in Harajuku
- News Credits

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Like Golden Week holiday traffic jams, some things just happen, and so
it is that the Japanese government has come to realize that the
country is almost third world when it comes to providing wifi access
to foreign travelers. Although there is of course a massive wifi grid
throughout Japan (more than 600,000 access points), the ability for
international visitors to access it easily is limited by the fact that
they either need to have phone accounts in Japan, show up in person at
some inconvenient or easy-to-miss service window, or hunt around to
find a free wifi connection. In contrast, locals simply hop on to
their accounts via 3G phone connections, then switch over to wifi to
get more speed or to stay connected cheaply.

The best example of how to make a tourist frustrated is to be had at
Starbucks. Even as the company sets an exemplary standard for
providing free wifi to all customers at 996 of its 1,034 cafes around
Japan, it isn't until a non-resident arrives for a welcome bit of air
conditioning and a latte while browsing the Internet that they realize
to connect they either had to sign up before they left the wifi at the
hotel, or they need to sign up via their Japan registered phone so
that they can get an activation email. The traveler is thus left
fuming at the stupidity of not being able to connect even as Japanese
all around them are logging in with their handy-dandy local phone

It's free after all, why the massive hurdles to use it?

The reason of course is that the provider (an NTT competitor)
supplying Starbucks' connection, and presumably Starbucks is paying
for this, wants to limit the actual usage, and so makes sure that
connection times are forced to end after a suitable period -- in this
case 24 hours. A very similar model is being used, but for just
15-minute timeouts, by the various Tokyo Metro subway stations that
finished rolling out their visitor wifi, MANTA, in April. The MANTA
system is provided by NTT, and is one of many cozy relationships the
company seems to be forming recently with various national and local
government agencies.

The reality of spotty wifi for travelers in Japan is embarrassing and
shows the general penny pinching attitude of the government towards
providing better tourism infrastructure, even as the "Travel Balance"
we referred to in TT-761 proves that overseas visitors to Japan are
now spending more money here than Japanese traveling abroad are. Just
why the government is unwilling to make greater contributions to
improving visitors' experience is beyond us. And it's not just wifi.
The government also needs to be putting more cash into 24x7 (not just
M-F office hours) multilingual call centers for visitor problems,
subsidies for small companies in the tourism industry to improve their
services/language capability/handle foreign payment systems, proper
in-house online sales of national rail and bus travel, and general
marketing as well.

Anyway, on the wifi front, it looks like the situation will change.

[Continued below...]

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at the store, or contact for more

[...Article continues]

In the middle of last month, NTT East announced that in conjunction
with the government, it would offer on a 3-month trial basis free wifi
for ALL incoming travelers, via its 45,000+ access points around the
east and north parts of Japan (NTT East's coverage area). Access will
be via an access number on a card that visitors will need to pick up
at the airport, using their passport as ID. OK, that is not so
convenient, especially if you don't know you have to go to a specific
service counter... Still, access will be for 336 hours, or 14 days,
after which the user is expected to buy further access, or use one of
the other disjointed free wifi alternatives available.

No one is saying what will happen after the trial period ends in
September, but our guess is that there is now enough political
pressure on the government that no doubt there will be some deal
between the two parties to keep it turned on. If we were NTT's
competitors, we'd be pretty unhappy about the situation -- and yet we
haven't heard a peep of complaint from them. How is it that the
government appears to be footing a roll-out of this size without any
public bidding?

Unless, perhaps because the government is not paying for it at all.

We know that the NTT network is not new. They've been building it out
for quite some time now, competing with KDDI, Softbank, and even their
cousin NTT DoCoMo, in trying to figure out a viable business model.
KDDI and Softbank mostly go after individual accounts, and they have
each user paying to get all-you-can-eat access for around JPY1,000 or
so per month over the cost of a phone plan. NTT, however, has taken a
different tack and instead has been trying to convince small merchants
all over the country that if they pay JPY5,000 a month and offer free
wifi, the customers will come.

As far as value propositions go, it's not a bad idea, but the problem
is that Japanese customers already have about as much connectivity as
they will ever need, and so merchants quickly figure out that JPY5,000
is just another cost on their bottom line. For this reason, the NTT
East wifi network, as impressive as it may seem at first glance, is
still only a fraction of the size of those of its competitors. KDDI's
national network has about 240,000 access points and Softbank's over

However, it appears that some time last year someone at NTT had the
revelation that there is in fact one user demographic which is not
only growing rapidly but which is starved of internet connectivity of
any kind and therefore could be attracted to all those merchants
forking out monthly subscription fees -- foreign tourists. So,
suddenly it makes sense that, even as the other carriers continue to
offer paid services, NTT is suddenly rolling out "free" internet to
foreign tourists.

The success of their experiment depends on a number of things
happening. i) the tourists have to get out and about and not cluster
in specific areas. Otherwise the usage levels will be out of balance
and underutilized merchants will still fall off the client list in
disappointment. ii) The tourists will have to buy enough stuff to
warrant the JPY5,000/month. iii) There can't be any competitors with a
better value proposition for the merchants -- JPY5,000/month is
expensive in today's wifi world. iv) There shouldn't be any
competitors offering better convenience and coverage -- in other
words, a service which doesn't require travelers to pick up cards,
deal with overloaded big city free wifi access points, or be limited
by access periods.

Now that the race has started, we think it is only a matter of time
before NTT's competitors decide that they need to be in the race as
well -- then things will get interesting. The big question is who will
be paying for it. Will the government chip in to cover the costs or
one of the other major players? Will another player like Starbucks
appear? Will the convenience store operators figure out an easier way
for foreigners to register with them? Will city mayors decide to act
en mass to get visitors connected? Or will someone simply start
selling SIM cards that tourists can preload even before they travel

The answer is, it will likely be a mix all of these things. Once it
gets going, Japan Inc. is good at competition, and that can only be
good for our international guests.


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+++ NEWS

- SIM-locked phones to become thing of the past
- Thomas Tank Engine alive and well
- Now you can shimmy and sway the legal way
- AirAsia gets heavy-hitting partner
- Jobless rate lowest in 16 years

=> SIM-locked phones to become thing of the past

The Internal Affairs and Communications Ministry says that it is
preparing new rules for the country's wireless phone companies
requiring them to stop locking SIM chips to specific phones, and thus
preventing customers from moving their accounts to new hardware when
and as they please. Although SIM locking theoretically allows telcos
to reduce phone hardware pricing by allowing them to amortize a
subsidized hardware purchase with continued usage of the account, the
Ministry reckons that by allowing users to move their accounts, telco
connection fees will actually fall due to increased competition. The
new rules could take effect from 2015. ***Ed: For international
travelers it also means you will be able to just buy a SIM and not a
whole phone when you are in Japan.** (Source: TT commentary from, Jun 27, 2014)

=> Thomas Tank Engine alive and well

While in the UK there are few replica Thomas the Tank Engines around,
mostly because of the high licencing fees involved they are few and
far between. The expense doesn't seem to have deterred Shizuoka's
Oigawa Line operators, though, and instead they have found the
investment to be well worthwhile. The organization operating the line
reports that trips on its Thomas look-alike steam train are expected
to be fully booked out for the school holidays this year. The replica
engine is not only well made, it takes its passengers on a 40km trip
through a picturesque, unpopulated mountainous area of the prefecture
with a hiss of real steam and thunderous chugging that kids will
remember for the rest of their lives. ***Ed: This is what tourism in
Japan can be. So many small regional towns don't realize that with a
bit of capital and ingenuity, they can bring hordes of visitors back
to their area. It helps that this part of Shizuoka has an old
little-used dam-servicing train line of course...! Nice photos with
this article.** (Source: TT commentary from, Jun 27,

=> Now you can shimmy and sway the legal way

Every country has some antiquated laws. One of Japan's is the need for
a bar or club to have a dancing licence before allowing patrons to get
into the music. No spontaneous shimmying and swaying allowed. This law
dates back to the post-war period when dance halls were seen as
congregation points for prostitution and crime. After a number of
decades of benign neglect by police, about four years ago they started
raiding clubs again, especially those open after 11:00pm, leading to
an outcry over the arrest of one particularly popular club owner. The
government is now saying that it will relax the rules and allow the
kids to have some fun again -- all in the name of the coming 2020
Olympics. ***Ed: Thank goodness for the Olympics! What will they use
as an excuse for changing stupid laws after 2020?** (Source: TT
commentary from, Jun23, 2014)

=> AirAsia gets heavy-hitting partner

You can't keep a good entrepreneur down, and ANA probably made a big
mistake cutting its ties with Tony Fernandes and his AirAsia airlines.
Now Rakuten has said that they will buy a major stake in a new
Japanese subsidiary to be set up by AirAsia in Japan. The deal will be
announced on July 1st, according to the Nikkei. ***Ed: What's
interesting is the speculation that Rakuten will use the new airline
not just for regular passengers, but also to haul freight around the
country as part of its shopping mall logistics infrastructure. The new
airline will apparently be based in Chubu, where it can easily acquire
landing rights. (Source: TT commentary from, Jun 26, 2014)

=> Jobless rate lowest in 16 years

Although a full 1/3 of jobs in Japan are temporary and thus by their
nature underpaid, nonetheless, the nation is reaching a point of
full-employment, and its jobless rate is now the lowest it's been in
the last 16 years, falling to just 3.5% in May. At the same time, the
average household spending for May was down 8% over last year,
indicating that people are working more but spending less -- perhaps a
direct result of the inflation and price rises that are now becoming
evident post the April 1st consumption tax increase. ***Ed: It's too
early to say where the employment demand is coming from, but we do
need to remember that almost 10m workers have now passed out of the
workforce due to mass retirements over the last 3 years (the dankai
generation) and are being replaced with just 3.6m new graduates over
the same 3-year period. So this is probably not so much Abenomics at
work as a demographic coincidence. But you can't blame the government
for wanting to take the credit.** (Source: TT commentary from, Jun 27, 2014)

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



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=> In line with our rant in Terrie's Take TT-671 last week about the
Abe government's manifesto, there has been a lot of media commentary
both for and against the PM's vision for his "third arrow" of reform.
One very good analysis could be found on the Forbes website yesterday,
which you can read here:

We posted a comment to this writer's somewhat upbeat review, pointing
out, as we did in last week's Take that actually the manifesto
involves very little risk and almost no challenge to the status quo of
vested interests who are part of the reason for the government's
bloated budgets and now its perceived need to transfer the tax burden
on to more people. Our comments need to be read in conjunction with
Harner's own:

1. It's hard to say that the government should get out of the way and
let the market work, when the bureaucrats have regulated the ability
and will to innovate out of the population. Kids are taught from their
most tender years not to take risks, so simply opening the market up
would no doubt cause a few predatory types who have been able to
overcome that education to take advantage of everyone else. We have
seen this happen each time major deregulation has happened in the last
3 decades, with either the new sharks or the old ones taking advantage
of the situation. Think back to the telecoms deregulation as a case in
point. Or perhaps to a more extreme example in another but similarly
overregulated society, Russia's oligarchs.

Instead, such shock treatment may be too much and I think it would be
better for the government to stimulate broader groups of potential
entrepreneurs and innovators to rise as a group and create a broader
wave of change that way. In this respect isn't that what crowdfunding
is all about? Making capital available to a broad range of risk
takers, in a market that gathers momentum as more people jump in? Just
I worry about whether the learned fear of risk will be too much for
Japanese crowds or not. If so, and to make a crowdfunding market work,
the government may need to kick in with funds to match those from
private investors. It may even need to offer some sort of risk cap on
investments made -- although this will be difficult within the chaos
of a crowd. It would be an irony if the government had to "educate"
people how to crowdfund, but it is highly possible that the Japanese
model may be different to what is working in the west.

2. My two cents worth, I think Richard Katz is right if he thinks that
the Abe government caved in too easily over the Zen-noh situation. Abe
has many more battles to fight and this opening shot would have been a
huge warning sign to the vested interest traders who suck on the
special flow of funds and privileges given to the farming industry.
Now, by not seizing the strategic advantage he had, there is no reason
for them to not fight back, they have nothing to lose and little to
fear. And there are millions of them (versus maybe 450K farmers).

3. Much like the Zen-noh situation, the most notable thing about Abe's
manifesto is that there really isn't any challenge to any existing
vested interests, and so it's hard to say that his agenda is sincerely
reformist. Instead, he is chipping away at the edges, at soft targets.
i) Women already want to have day care and the ability to go back to
work, so how is that reform?
ii) Foreign housekeepers already want to come here in greater numbers
and since they will be limited to servicing a limited number of the
first soft target (working women), no one is really going to kick up a
fuss about that. That's not reform.
iii) Crowdfunding challenges no one and it's not even clear if it will
work, firstly because crowdfunding may not match the investment
psychology of the average Japanese, and secondly because the Japanese
authorities are probably realizing that the USA JOBs act is less than
perfect and could be very vulnerable to fraud and manipulation. Yakuza
front companies will be all over it I'm sure. So we're talking another
2-3 years before a Japanese version is introduced, and it will
probably be watered down to the point that it doesn't have any real
contributory value to the development of well-capitalized start-ups
producing world-class products and services. Besides, and in keeping
with the main argument here, start-up entrepreneurs don't threaten
anyone and so they are a soft target too.
iv) Then there are the proposed medical funding changes. These have
been on the table for decades, with plenty of Japanese hospitals
wanting to have a shot at mixing public and private charging.
Unfortunately, the JMA has proven easily equal to anything that will
undermine their control of the nation's medical system. We don't see
any softening of that organization at all, and as doctors they will
probably outlive Abe and his government. So if there are to be any
changes in the medical sector, they will probably be for headline
value only and rolled out for other soft targets, like an exemption
for foreigners living in Japan (a carrot to say this is something to
help make the decision of being based here a bit easier), and in
special economic zones only. I think one of the biggest problems of
allowing co-mixing of public and private funding is that the public
itself doesn't understand or want a user pays system, when they have
all been indoctrinated since their school years that it's the birth
right of all Japanese to have equal treatment. Equality is long dead
of course, just witness the inequalities in permanent versus
non-permanent employment, but health is something that hasn't had a
divergence yet, and I imagine that such a major change would take
10-20 years to get used to.

The reality is that Japan's problems are very, very deep and there is
no one cure. Its problems are tied to the very things that previously
made the country so successful: the education system, its history and
habits, population density, lack of natural resources, and the
paternalist governing style of the elites. We need for the population
as a whole to understand that the country is no longer an industrial
economy but rather a knowledge-based one, and that adjustments for
this new reality have to be made at every level. The good thing is
that while the education system has bred risk-taking out of most
people, it has also made the population relatively smart and able to
reason for itself. Therefore, real political change in Japan will come
when the masses perceive that the system is no longer loaded by vested
interests, and that even ordinary citizens can make a difference.

So, if Abe really wants to receive a groundswell of support from the
average person in the street, then he needs to show more leadership by
publicly slaying some big dragons. That will get people talking and
believing that change is upon them, and that in turn will wake up the
desire in a sufficient number of citizens to improve their economic
futures so as to overcome the current tendency to keep one's head down
and make the best of a bad thing.



=> Nyuto Onsen, Akita
At last - somewhere that lives up to the hype!

Wherever you`re heading to next in Japan, the chances are that a visit
to an Onsen, is somewhere on your itinerary. Loved by tourists and
adored by virtually every local, Onsen are an essential part of
experiencing the depth and beauty of Japanese culture. Ironically,
this is one of the very few things about Japan that has never really
appealed to me. Perhaps my previous experiences of visiting
overcrowded and over commercialized spas had given me a rather
negative impression -- until recently. However, this is something
which has changed for the better since going to Nyuto Onsen.

Located in the Towada-Hachimantai National Park in Akita Prefecture,
everything about Nyuto Onsen oozes style and sophistication.
Beautifully set within a peaceful mountain valley covered with acres
of virgin beech forest, this is one place where you can find real
seclusion and an escape from the often suffocating pace of city life.

=> Ra.a.g.f Rabbit Café, Harajuku
Have Tea with Cute Bunnies

Are you looking to experience a cute animal café in Japan, but you are
allergic to cats? Ra.a.g.f is a colorful rabbit café located a few
minutes away from Harajuku or Meiji Jingu-mae station, on the third
floor of a small house. You'll notice the store from the logo in the
street displaying little rabbits. The store first opened in Jiyugaoka
a few years ago, and it became so popular that they opened a new
branch in this hip area. You will usually need to take reservations
before coming as they have many visitors on a daily basis. You won't
need to use your phone to do so, simply walk in and get a ticket with
your name and the reserved time. You usually won't have to wait too
much and the area, full of thrift shops and American bars, is really
interesting to visit. You certainly won't be bored walking around this
Japanese interpretation of Brooklyn!

Once you've entered the shop, you'll immediate notice the cages,
displaying more than 20 rabbits. The smell didn't bother me as much as
other animal cafés I've done, so that's definitely a plus. They have a
lot of space to enjoy their rabbit life and customers can open them
anytime to play with them. The café itself is small and intimate: it
only has three tables or three sets of customers to avoid scaring the
bunnies. You can ask the attendants to take a rabbit with you and pet
him, and prepared to be entertained! They will keep energetically
running around and come back to check you from time to time. You'll
have a lot of fun watching them enjoying themselves around the store.
If you want to attract their attention, you can buy some food to feed
them too for about JPY150, and drinks for yourself are included in the
price, which is JPY700 for half an hour.



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