Characteristics of the Japanese Mobile Telecommunications Market

As of March 31, 2016, cumulative mobile communication subscriptions in Japan totaled 156.48 million [1], up 4.3% year on year.

The mobile market continues to expand, driven by the shift from feature phones to smartphones and the trend towards single users owning multiple devices.

Furthermore, advances in networks and handsets are making mobile usage environments more convenient, and the scale of the mobile content and mobile commerce markets is increasing. As these trends continue, telecommunications carriers are gradually expanding their operations in domains other than telecommunication services to foster new earnings streams.

Meanwhile, Japan's mobile market environment is changing with the new entry of MVNOs [2], who procure networks from telecommunications carriers that have received bandwidth allocation. As of March 31, 2016, the number of MVNO service contracts stood at 12.69 million [1], up 32.5% from a year earlier, and MVNO's share of the mobile telecommunications market had grown to 7.8%. The number of contracts is expected to continue expanding to meet the target of around 15 million by 2016 set by the Ministry of Internal Affairs and Communications' "Mobile Creation Plan" announced in October 2014.

• [1]

  Source: Official Announcement of Quarterly Data on the Number of Telecommunications Service Subscriptions and Market Shares (FY 2014 Q4 (End of March 2016)), Ministry of Internal Affairs and Communications

• [2]

  MVNO: Mobile Virtual Network Operator

• [3]

  Excluding MVNOs that are MNOs (Mobile Network Operators)

The nationwide FTTH household coverage ratio is more than 90% and "homes passed [4]" is more than 70%, indicating that high-speed broadband environments are essentially in place nationwide.

As of March 31, 2016, fixed-line broadband service subscriptions numbered 37.81 million [1], up 2.8% from the previous fiscal year.

Although fixed-line broadband service penetration has reached around 70%, the market continues to expand gradually, driven by the entry of new operators using the wholesaling fiber access service of NTT East and NTT West that started in March 2015 and sales of discount bundled mobile and fixed-line services by telecommunications carriers.

• [4]

  In regions where the installation of CATV facilities is permitted, households in areas where installation of transit routes is complete

• [5]

  Source: Ministry of Internal Affairs and Communications, Population, Population Trends, and Number of Households based on Residents Register (as of January 1, 2015)

• [6]

  Source: Information NTT East Japan: Overall Management (2015): Telecommunications Facilities: Access Going Optical. As of March 31, 2016, Nippon Telegraph and Telephone East Corporation (NTT East)'s FTTH household coverage ratio is 95% and Nippon Telegraph and Telephone West Corporation (NTT West)'s is 93% (estimated)

• [7]

  Hoso Journal, December 2015 edition (as of September 31, 2015)

Due to the proliferation of smartphones and tablets, along with the increased performance of devices and advances in telecommunications technology, mobile traffic in Japan is growing at a rapid pace, with average monthly traffic recently rising at about 40% year on year.

In particular, average traffic during the peak hours for mobile customers is up by around 50% per year. This situation poses a dilemma for mobile telecommunications companies, which are working to efficiently absorb this increase in mobile traffic while restraining capital expenditures and maintaining stable network operations.

As of March 31, 2016

• [8]

  SoftBank Corp. + W ireless City Planning

• [9]

  Curr ently, a 40MHz section is used for WiMAX 2+ (TD-LTE) and a 10MHz section is used for WiMAX.

• [10]

  TD-LTE

• [11]

  Only in Tokyo, Nagoya, and Osaka