The Japanese Market and KDDI

As of March 31, 2018, cumulative mobile communications subscriptions in Japan totaled 170.09 million [1], up 4.1% year on year.
The mobile market continues to grow, driven by the spread of smartphones and further advances in the trend of single users owning multiple devices.
There has also been significant growth in the number of service contracts for MVNO [2], up 16.0% from a year earlier to 18.40 million. The MVNO share of the mobile telecommunications market has reached 10.6% (7.4% if limited to SIM card contracts) [3], a ratio that is expected to expand further going forward. The entry of a fourth telecommunications operator is also expected in fall 2019, and Japan's mobile communications market is approaching a new stage.
Further, in the IoT field for connecting a wide variety of things with the internet, low power wide area (LPWA) specifications have been established to enable wide-area communications with low power consumption using LTE networks, and the use of IoT is ramping up across a variety of product and service fields.
Note that the scale of the overall market created by the advance of IoT is predicted to expand from ¥930 billion in 2017 to ¥4.04 trillion in 2023 [4], and expected to become the driving force in mobile communications market expansion going forward.

• [1]

  Source: Official Announcement of Quarterly Data on the Number of Telecommunications Service Subscriptions and Market Shares (FY2017 Q4 (End of March 2018)), Ministry of Internal Affairs and Communications

• [2]

  MVNO: Mobile Virtual Network Operator Procure networks from mobile network operators (MNOs) to provide mobile services

• [3]

  Share of MVNO service contracts = Number of MVNO service contracts/number of mobile telecommunications contracts Share of SIM card contracts = Number of SIM card contracts/(number of mobile telecommunications contracts - number of contracts for telecommunications modules provided by MNOs (20.10 million contracts))

• [4]

  Source: Prepared by KDDI based on Outlook for ICT and Media Market Scale and Trends through 2023 from Nomura Research Institute, Ltd.

The nationwide FTTH household coverage ratio is more than 90% [5] and "homes passed [6]" is more than 70% [7], indicating that high-speed broadband environments are essentially in place nationwide.
As of March 31, 2018, fixed-line broadband service subscriptions numbered 39.35 million [1], up 1.9% from the previous fiscal year-end.
Although fixed-line broadband service penetration has reached around 70%, the market continues to expand gradually, driven by sales of discount bundled mobile and fixed-line services and the opening of new markets by new operators using the wholesaling fiber access service of NTT East and NTT West.

• [5]

  Source: Information NTT East Japan: Overall Management (2016): Telecommunications Facilities: Access Going Optical. As of March 31, 2017,Nippon Telegraph and Telephone East Corporation (NTT East)'s FTTH household coverage ratio was 95% and Nippon Telegraph and Telephone West Corporation (NTT West)'s was 93% (estimated).

• [6]

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

• [7]

  Source: Hoso Journal, July 2018 edition (as of March 31, 2018); Ministry of Internal Affairs and Communications: Population, Population Trends, and Number of Households based on Residents Register (as of January 1, 2017)

As the domestic telecommunications business begins to shift toward a stage of stable growth, mobile telecommunications companies are working to secure new sources of revenue, utilizing their domestic telecommunications customer bases to more actively engage in a variety of initiatives aimed at expanding revenue in non-telecommunications fields such as commerce.
In addition to carrier billing, which has become a widespread means of online payment supporting that expansion, telecommunications companies are offering their own credit cards as a method of paying for offline services, creating a system for capturing both online and offline revenue. The move to cashless systems is also accelerating with advances in efforts to offer payments using QR codes.

Due to the proliferation of smartphones and tablets, and the increased performance of such devices, along with increasingly diverse mobile content services and evolution of telecommunications technologies, mobile traffic in Japan continues to grow, with both average monthly traffic and peak traffic rising by about 40% in the most recent year.
This has become an important issue for mobile telecommunications companies as they work to efficiently absorb this ongoing increase in mobile traffic and maintain stable network operations.

Allocation of Bandwidth among Japan's Mobile Telecommunications Operators (As of August 1, 2018)

• [8]

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

• [9]

  Newly allocated by the Ministry of Internal Affairs and Communications on April 9, 2018

• [10]

  Of this 80MHz, 40MHz was newly allocated by the Ministry of Internal Affairs and Communications on April 9, 2018

• [11]

  Only in Tokyo, Nagoya, and Osaka

• [12]

  Partly including 3G