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ICT Strategies in Japan- Mainly about Infrastructure -

April, 2010

SATO Kenji

JICA Expert

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15,000,000

20,000,000

25,000,000

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35,000,000

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The Number of Broadband SubscribersThe Number of Broadband Subscribers

Source ： Ministry of Internal Affairs and Communications

TotalTotal31,709,08431,709,084

FTTHFTTH17,195,69617,195,696

(187prviders)(187prviders)

DSLDSL10,134,49110,134,491

(42prviders)(42prviders)

CATVCATV4,300,5944,300,594

(380prviders)(380prviders)

FWAFWA12,75912,759

(40prviders)(40prviders)

Exceeded 30mil.Exceeded 30mil.Dec.2008Dec.2008

FTTH>DSLFTTH>DSLJune2008June2008

DSL DownturnDSL DownturnJune2006June2006

FTTH increase>DSL increaseFTTH increase>DSL increaseMarch2005March2005

Population:127.06 million (as of March 2008)Population:127.06 million (as of March 2008)Household 52.32 million (as of March 2008)Household 52.32 million (as of March 2008)

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Household Coverage Ratios

Broadband

Ultra-Broadband(over 30Mbps)

March 2008

93.9%(47.33 million

households)

79.7%(40.15 millionhouseholds)

March 2006

98.3%(50.83 millionhouseholds)

86.5%(44.71 millionhouseholds)

98.6%(51.59 millionhouseholds)

89.5%(46.82 millionhouseholds)

September 2008

90%

100%

Goals forFY 2010

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Key Drivers for Japan’s Broadband Expansion

1.1. Clear mid/longClear mid/long--term Vision/Policy targets set by the term Vision/Policy targets set by the GovernmentGovernment

2. Introduction of Local Loop Unbundling Rule (Line sharing) and Co-Location Rule

3. Demand-pull market expansion due to wide spread of broadband contents

Large photo files, e-mail with attached files, YouTube, website with Flash function, Peer to Peer file sharing etc.

4. Monthly Flat rate

5. Introduction of attractive new price packages by competitors-Yahoo!BB (8Mbps, ¥ 2,280(Rp200,000)/month, Sep.2001)-K-Opti.com (FTTH/VoIP Combo ¥5,200(Rp500.000) Sep.2004)

6. NTT’s steady Investment in Optical fiber network accommodating wide FTTH expansion- Access Network Opticalization Ratio: 43%(FY2000), 91%(FY2009)

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The Progress of Japan' ICT strategies

2001 2006

Realizing the most advanced IT country in the world by 2005

Realizing a society where anytime, anywhere and by

anyone benefits from IT by 2010

7 leading areas1.Medical 2. Food 3. Life 4. Small and medium entities finance 5. Knowledge 6. Employment 7. Administration service

Continue developing infrastructure

◆IT Basic Law◆Establishment of IT Strategy Headquarters(Director General: Prime Minister)

2010

ee--Japan Japan StrategyStrategy

(January 2001 )(January 2001 )

e-Japan Strategy Ⅱ(July 2003)

IT New Reform Strategy(January 2006)

DevelopInfrastructure

Promote IT Use and Application

Use IT to drive Structural and Social Reform

4 areas1.Broadband Infrastructure-high speed: 30milion household-Ultra high speed: 10milion household

2.e-commerce3.e-government4.Human resource development

15 areas1.Health care 2.Environment 3.safe socirety4.Road traffic 5.e-gov. 6.IT for business management7.Lifestyle 8.Universal design 9.Infrustructure10.Security 11.Education 12.Human resource 13.R&D 14.International competition 15.International contribution

infrastructure → application → solution of social problem

e-Japan Priority Policy Program(March 2001)

e-Japan Priority Policy Program - 2003(August 2003)

e-Japan Priority Policy Program - 2004(June 2004)

Priority Policy Program - 2006（July 2006）

Priority Policy Program - 2007（July 2007）

e-Japan Strategy II Acceleration

Package (February 2004)

IT Policy package(February 2005)

e-Japan Priority Policy Program - 2002(June 2002)

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IT Strategy Headquartersin the Prime minister's Cabinet

(Director General: Prime Minister)

MIC

(Ministry of Internal Affairs and Communications)

<Main Ministry in charge of ICT>

.........

Other Ministries related to ICT<in charge of ICT related matters of each areas ex. Education, welfare, police, etc.>

Structure for promotion in Government

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At the First Stage

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e-Japan strategy (Jan.2001) http://www.kantei.go.jp/foreign/it_e.html

(1) TargetsEstablish one of the world's most advanced Internet networks within 5 years, and enable all the people who need it to have ultra high-speed access networks (30-100Mbps as a standard) at affordable rates. (Aim to provide high-speed constant access networks to at least 30million households and ultra high-speed constant access to 10million households) Enable all the people to have constant access to the Internet at extremely low rates within one year through the use of fixed-line, wireless and other kinds of networks. Promote the shift to the Internet networks equipped with IPv6

(2) Government Actions Establishment of an ultra high-speed network infrastructure and promotion of competition

Introduction of asymmetrical regulations Drastic review of each regulation on telecommunications carriersShift of the government's administrative attitude from prior regulations-oriented to ex-post-facto check approach Stricter supervision over anti-competitive acts by dominant carriers Establishment of a special organ quickly responding to such issues as complaints from users and conflicts among carriers Reinforcement of the function of the Fair Trade Commission to eliminate acts that hinder fair competition Establishment of clear rules to promote just and fair use of telecommunications resources such as optical fibers Examination and implementation of fair and transparent ways of allocation of radio frequency spectrum, including an auction system

Improvement of digital divide Support and promotion of R&D Establishment of the international Internet networks

Points: the first IT strategy of “all Japan”Set targetstargets and Government actionsGovernment actions

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e-Japan Priority Policy Program (version 2001, 2002,…)

(abstract)ii) Promotion of the formation of ultra high-speed network infrastructure

a) Utilization of existing fiber-optic cables (MPHPT) As for telecommunications services only for other telecommunications carriers (wholesale telecommunications service), aside from telecommunications services for general consumers, regulatory frameworks will be created to enable flexible service provision based upon individual contracts between carriers. To this end, necessary measures will be taken, such as the submission to the Diet in CY2001 of a bill to amend the Telecommunications Business Law.

b) Revision of the interconnection rules (MPHPT) Basic Rules for Interconnection will be amended on unbundling8 by designating local IP networks9 that NTT East and NTT West use for 24-hour Internet connection service as a designated telecommunications facility. For that purpose, necessary measures will be taken, such as amending related laws and regulations within CY2001.

c) Ensuring the rights-of-way: facilitation of line construction (NPA, MPHPT, MLIT) Regarding the rights-of-way on utility poles, ducts, conduits, etc. and public space such as roads, rivers, etc., based on the guideline, "Ensuring the rights-of-way" (adopted at the fifth session of the Joint Meeting of the IT Strategy Council and the IT Strategy Headquarters on November 6, 2000), the following measures will be taken:

… And Many Other Measures with Organizations in Charge

Points: Every yearEvery year, Set Detailed priority policies to achieve e-Japan Strategy.Mention concrete measuresconcrete measures and organizations in chargeorganizations in charge

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◆High-speed Internet usage charge and subscribers

0

2000

4000

6000

8000

10000

M ar 2001 M ar 2007

7,800Yen

2,400Yen

Numbers of subscribers: 27.4 times

（Yen） Usage Chargeapproximately 1/3

850,000 subscribers

26,4million

subscribers

OUTCOME 1: Usage Charges were loweredOUTCOME 1: Usage Charges were lowered

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OUTCOME 2: Transmission Speed became HigherOUTCOME 2: Transmission Speed became Higher

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The Number of Broadband SubscribersThe Number of Broadband Subscribers

Source ： Ministry of Internal Affairs and Communications

TotalTotal31,709,08431,709,084

FTTHFTTH17,195,69617,195,696

(187prviders)(187prviders)

DSLDSL10,134,49110,134,491

(42prviders)(42prviders)

CATVCATV4,300,5944,300,594

(380prviders)(380prviders)

FWAFWA12,75912,759

(40prviders)(40prviders)

Exceeded 30mil.Exceeded 30mil.Dec.2008Dec.2008

FTTH>DSLFTTH>DSLJune2008June2008

DSL DownturnDSL DownturnJune2006June2006

FTTH increase>DSL increaseFTTH increase>DSL increaseMarch2005March2005

Population:127.06 million (as of March 2008)Population:127.06 million (as of March 2008)Household 52.32 million (as of March 2008)Household 52.32 million (as of March 2008)

ee--Japan StrategyJapan Strategy ee--Japan Japan Strategy Strategy ⅡⅡ

IT New Reform StrategyIT New Reform Strategy

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At the Present Stage

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By FY2010

Enable all households to access Broadband

Enable more than 90% households to access Ultra Broadband(more than 30Mbps)

IT New Reform Strategy (Jan. 2006, IT Strategic Headquarters)

“By FY2010By FY2010,, infrastructure improvements such as for optical fibers, are promoted in order to eliminate all areas where broadband eliminate all areas where broadband service remains unavailable.service remains unavailable.””

In response to above

Next Generation Broadband Strategy 2010 (Aug.2006, MIC)

Target

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Making Target and Roadmap in each area

Grasp the situation in each areaProposing how to use in each area

Promoting fair competitionInvestment Incentives for

operatorsAid to local governmentsEstablishment of taskforcesPromotion of technologiesPublication of information

Deployment of broadband networksDisclosure about broadband service areasDemand creationInvolvement in taskforces

Measure(1) : Task Sharing

Operators

Central government Local Governments

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Measure(2) : Incentive and Aid Menu

For Operators

Low Interest Loan

Debt Guarantee

Tax Breaks

For Local Governments*

Grant-in-aid for BB (1/3 of total cost)

Special Local Allocation Tax for BB

Local Government Bonds for BB

* Deployed by Local Governments for public use, and open it to operators

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Incentive and Aid Menu (Detail)

Measures for Local Governments Measures for Telecommunications Op

NICT will guarantee 80% of a loan made by a private telecommunications operator from a fund for building broadband facilities such as optical fiber and ADSL for providing telecommunications service.

Interest AidInterest Aid

2. Reduction of Tax Bases for Fixed Asset Taxes (Local Tax)Partial reduction of the tax base for fixed asset taxes is allowed for telecommunications operators building broadband facilities such as optical fiber and ADSL for providing telecommunications service.

Tax BreaksTax Breaks1. Accelerated Tax Depreciation (National Tax)Accelerated tax depreciation is allowed for telecommunications operators building broadband facilities such as optical fiber and ADSL for providing telecommunications service.

Debt Guarantee Debt Guarantee

National Institute of Information and Communications Technology (NICT) will grant a subsidy of interest aid with the maximum interest of 2% for a loan made by a telecommunications operator from a fund for building broadband facilities such as optical fiber and DSL for providing telecommunications service.

Note: Conditions apply for each scheme

1. Local Information and Communications Infrastructure Development Grants (ICT Grant)•Grants equivalent to one third of total project cost will be provided to local governments that will build broadband facilities to address the digital divides.•Budget: 6.2 billion yen (FY2008―April 2008 to March 2009)2. Local Intranet Infrastructure Facility Development Promotion Grants•Grants equivalent to one third of total project cost will be provided to local governments that will build broadband or ultra-high-speed local public networks connecting public facilities such as schools, libraries, and municipal offices.•Budget: 3.4 billion yen (FY2008―April 2008 to March 2009)

Local Governments are allowed to use Special Local Allocation Tax and to issue local government Bonds such as Depopulated Area Development Bonds for a variety of their policy needs, and they may utilize these schemes for building broadband facilities such as optical fiber and ADSL.

Local Government Financial Measures Local Government Financial Measures

Grants/SubsidiesGrants/Subsidies

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Household Coverage Ratios

Broadband

Ultra-Broadband

March 2008

93.9%(47.33 million

households)

79.7%(40.15 millionhouseholds)

March 2006

98.3%(50.83 millionhouseholds)

86.5%(44.71 millionhouseholds)

98.6%(51.59 millionhouseholds)

89.5%(46.82 millionhouseholds)

September 2008

90%

100%

Goals forFY 2010

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For the Future

New Strategy is under Consideration

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(Information)

Joint Symposium on ICT in Next Generation by JICA, MIC and KOMINFO

Held on 31 May 2010