TT-853 (Tourism Edition) -- Sizing Up the Data SIM Market for Travelers to Japan

Japan Travel
* * * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.

Tourism Sector Edition Sunday, Jun 12, 2016, Issue No. 853

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+++ Sizing Up the Data SIM Market for Travelers to Japan

Quick question: which three things did inbound tourists most want more
information about while traveling in Japan? According to the 2016 Q1
Japan Travel Agency (JTA) survey of almost 10,000 respondents, the
answers were:

* At third place, 33% wanted more information in their own language
about good restaurants.
* At second place, 46.5% were bewildered by Japan's plethora of
transport options and how to use them.
* And in top place, 52.3% of visitors to Japan most wanted to know how
to find a free WiFi connection.

In other words, inbound travelers love timely local information and are
willing to get themselves around, but they also very much need a means
of getting at that information.

Of course this is not news, and many of Japan's municipalities have
either put free WiFi on their most popular shopping streets and tourist
attractions, or are thinking about it. No one knows how many free WiFi
spots are currently available in Japan, but we would guess that among
the three telcos, maybe there are around 60,000 spots (versus an overall
700K paid WiFi spots). This sounds like a lot, but when you realize that
the effective range of the average in-shop WiFi system is often just a
couple of meters outside the front door, then you need a lot more than
60k spots to make WiFi a contiguous and convenient resource for the
average traveler.

Instead, most travelers, and especially repeat travelers, are
sufficiently wed to their smart phones and good data access that they
have already made the mental leap to the next stage in connectivity -
LTE (4G) data via SIM cards. Unfortunately there is no specific data
about just how many visitors are armed with local SIMs each month, but
our guess at the high end is around 500,000 -- or about 30% of all
inbound travelers.

We make this guesstimate based on the fact that the 2016 Q1 JTA survey
showed that 62.3% of the 10,000 people surveyed used an
internet-connected mobile phone to get information while in Japan. So we
feel it is reasonable to expect that around half of them were logging in
through hotel WiFi networks while the other half went to the trouble of
buying a SIM.

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However, for a low-end estimate of data SIMs sold to foreigners every
month, we have a second data source, which is one of the largest SIM
wholesalers in Japan. They told us that they were doing almost half the
market, at 100,000 units a month (mostly to China and Taiwan), so it
seems reasonable to say the low end number is around 250,000 inbound
travelers a month.

Whether the real number is 500k users or 250k, with the average traveler
spending about JPY3,000 per SIM per holiday, this makes the inbound
traveler SIM market worth about JPY750,000,000 to JPY1,500,000,000 per
month, which is not too shabby. Furthermore, over the next three years
we expect the percentage of SIM-toting tourists to double in percentage
while the overall number of travelers should increase by at least 50%,
so that the inbound SIM market 1-2 years from now could be worth as much
as JPY4bn per month.

There are roughly 20 MVNOs and MNOs selling data SIMs to inbound
travelers (versus perhaps a hundred firms selling to Japanese customers)
and all except one are selling pre-paid SIMs. Further, all but two are
selling data only. Why? Well for pre-paid versus post-paid, the
difference lies in the contract required. For post-paid SIMs, and we are
talking about data SIMs, all customers are obliged by law to provide
personal ID and sign a contract, which is not very practical for
tourists trying to buy a SIM at a convenience store. For pre-paid SIMs
the theory seems to be that charging a sufficiently high deposit
relieves the carrier of the potential of fraud. The deposit ranges
between JPY2,500-JPY3,000 per SIM, and explains why pre-paid traveler
SIMs are so much more expensive than domestic post-paid ones.

Then, apart from the price/contracting, there is also the small matter
of a National Police Agency ban on all non-residents (meaning all
foreign tourists, many students, and most trainees) from being able to
buy voice-capable SIMs - as a measure to prevent phone impersonations,
such as the "Ore Ore" scam where gangsters pretend to be the child of
some confused senior citizen and ask the parent to urgently send cash.
While the NPA's intent might be good, the measure completely fails its
objective because: i) most of the scamming historically was done by
Japanese, not foreigners, and they can easily "borrow" the hanko from a
homeless person if they need to get a local untraceable phone, and ii)
we do live in an age where voice over IP is perfectly acceptable, and
where you as a traveler can buy a local Skype phone number in Tokyo for
less than JPY1,000 a month.

Another interesting point is that all but one of the MVNOs selling data
SIMs to foreigners in Japan are piggybacking on NTT DoCoMo's
infrastructure, not KDDI's or Softbank's. Why? We're not sure, but our
guess is that NTT has been losing so much market share in the regular
domestic phone business that it has decided to stake out and own the SIM
sector, including for inbound foreigners. You can easily tell from the
many plans that MVNOs are selling to foreigners that NTT is giving the
MVNOs great flexibility in how they bulk-buy their minutes.

So which MVNO offers the best deal on an inbound traveler SIM? The
answer to this is "It depends". If you want lots of high-speed bandwidth
without interruption or speed throttling, then the clear winner is
bMobile (Japan Communications Inc.) which offers unlimited data for 14
days for JPY2,380. Conceivably you could pull down up to 5GB for this
price, since they allow you to do up to 1GB every 3 days. The next best
"big user" deal is UMobile with up to 6GB (limited to 200MB per day) for
JPY3,500, and given these guys are one of the biggest players, it really
puts the bMobile deal into perspective.

On the other hand, if you simply want a cheap solution to check Google
maps and to do some emergency work email, then buying a 1GB limited SIM
is a better way to go. With 1GB you can view Google maps about 1,300
times - which should be enough to not get lost for a week in Osaka! The
winner for the lowest price SIM is FreeTel with 1GB at JPY1,780,
followed by UMobile offering up to 1.4GB for JPY1,800.

bMobile -
Umobile -
FreeTel -

...The information janitors/


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