Telecommunications

January 2007

Panel aims at more competitive cell phone market
The government has taken a step toward devising measures to promote competition in the cell phone market. The Ministry of Internal Affairs and Communications on Jan. 22 convened a meeting of the mobile business study group. The panel, chaired by Tadao Saito, a professor emeritus at the University of Tokyo, is set to discuss, not telecommunications services alone, but ways of changing the current structure in which the three carriers - NTT DoCoMo Inc., KDDI Corp. and Softbank Mobile Corp. - control everything from handset development to marketing. Currently, manufacturers produce handsets that are intended for use with a single mobile phone carrier. That is because cell phone-service providers adopt the subscriber identity module (SIM) lock, which prevents SIM cards from being transferred between different carriers' handsets. The study group will consider abolishing the SIM lock and ending sales incentives. Through these measures, the ministry hopes to establish an environment in which handset makers can develop products without constraints. In addition, the study group is expected to press for carriers to open their systems for managing customers and phone numbers, allowing new entrants to the market to offer cell phone services without having to make huge capital investments. A report by the study group is due out in September (The Nikkei Weekly, January 29, 2007)

Telecom Council Recommends Approval of Combination Service
A subcommittee of the Telecommunications Council on Jan. 18 recommended the approval of a combination fixed-line/cellular phone service. Subscribers would receive a number with a 060 prefix; their handsets would function as a cordless phone at home and as a cell phone when away. Since fixed-line per-minute charges are cheaper than wireless fees, the debut of integrated service could trigger a new round of price competition. The Ministry of Internal Affairs and Communications is expected to start opening the door to the 060 prefix as early as this summer. If the service is approved, companies like NTT East Corp. and NTT West Corp., which have watched their fixed-line subscriber bases dwindle, would have an opportunity to move into wireless service. The main selling point of the integrated service would be price. Wireless airtime now costs around 100 yen for three minutes, whereas fixed-line service costs around 8.5 yen for three minutes. If companies offer services that also accommodate data communications, subscribers could lower their communications bills even further. The one drawback is that the handset could be more expensive.(The Nikkei Weekly, January 22, 2007)

Govt To Push For Further Deregulation In Wireless Market
The Ministry of Internal Affairs and Communications plans to push again toward liberalizing the cellular phone market by allowing new entrants to offer wireless services without huge initial costs. The ministry has already decided to require leading cell phone carriers NTT DoCoMo Inc. and KDDI Corp. to open their wireless networks to new entrants. Additionally, the ministry plan requires them to provide newcomers with access to the systems for payments and phone number management. The ministry is also considering lowering fees for using networks owned by DoCoMo and others. DoCoMo currently charges a connection fee of more than 30 yen per three minutes, compared to the roughly 5 yen per three minutes charged by the Nippon Telegraph and Telephone Corp. group for fixed-line phone service. Communications Minister Yoshihide Suga is expected to unveil the proposed new rules at a mobile business study group meeting on Monday. The group will draw up a report as early as this summer. The ministry aims to promote competition in the sector due to complaints that cell phone rates are higher than those for fixed-line phones. The U.K., for example, has promoted the liberalization of the wireless market by enabling new entrants to borrow infrastructure and equipment from others. Japan apparently hopes to intensify competition in its cell phone market, which is currently dominated by DoCoMo, KDDI and Softbank Corp., by creating a market environment in which firms offer various rate plans and services to vie for customers. Although the ministry hopes to revise relevant ministerial ordinances in fiscal 2007, its plan may hit a snag. Existing cell phone service firms are likely to strongly oppose lowering connection fees and the opening up of areas other than communications networks. (The Nihon Keizai Shimbun, January 20, 2007)