Japan Trends 2011 - Happy New Year [ by eurotechnology.com ]

::: Happy New Year ::: Mobile data revolution :::

2011: Year of dramatic mobile data growth Jan. 13, 2011

Greetings!, HAPPY NEW YEAR - 2011!

2011 we will feel the impact of the mobile data revolution - in Japan revenues from data traffic now exceeds voice revenues for most mobile operators, in most other countries this point is still to come.

Is there some correlation between mobile operator profitability and smart phones?

Smartphones as % of Operating profits increase
total phone sales April-Sep 2010 compared to April-Sep 2009
SoftBank: 70% +37% (US$ 3.8 Billion for 6 months)
DoCoMo: 25% +10% (US$ 6.4 Billion for 6 months)
KDDI/AU: 30% - 1% (US$ 2.98 Billion for 6 months)

SoftBank has now clearly overtaken KDDI in terms of operating profits - while KDDI was the clear winner in the 3G introduction, beating both DoCoMo and Vodafone-Japan, KDDI is now forced into catch-up mode in the smartphone battle.

Exploding mobile data demand means heavy investments in mobil phone base stations ("towers" in US-speak), in Japan about US$ 20 Billion/year. There are several factors determining the provision of mobile data capacity including:
- radio technology (3G, LTE, WiMAX)
- number of base stations
- spectrum band width.

DoCoMo started LTE on December 24, 2010, and the other operators will follow.
In the last months we observed a big jump in base station numbers - and we expect dramatic growth of mobile base station numbers to continue in Japan. This means big business opportunities for companies producing base stations, and components of base stations.

Japan's regulator - the General Affairs Ministry - is now working to make more radio spectrum available, including also the preferred 800MHz band. We explain Japan's radio spectrum in detail in our JCOMM-report, and also in several upcoming newsletters - keep tuned, and download our reports.

HAPPY NEW YEAR - and if your company produces base stations and their components and software or smartphones, you'll have a very good year in JAPAN!

Mobile base station numbers jump

Cellular base station numbers explode with increasing data usage

Mid-2010 numbers of mobile phone base stations started to increase strongly in Japan. Much of this increase is by SoftBank. SoftBank is Japan's smartphone leader. About 70% of SoftBank's phone sales are smart phones.

Find detailed analysis of Japan's base station markets in our JCOMM-report.

Radio spectrum

base stations as a function of spectrum allocation

Radio spectrum distribution of Japan's base stations under review

Radio spectrum is a limited resource. In most countries radio spectrum is sold or auctioned to maximize government income. In Japan radio spectrum is licensed to operators according to policy and by "beauty show". We believe that the absence of spectrum auction fees reduces that tax burden on the telecoms industry, and helps Japan's mobile industry develop. This figure shows the distribution of base stations as a function of radio spectrum on a logarithmic scale. Japan's operators are switching off 2G operations, releasing 2G spectrum for 3G and LTE use. Japan's Government is also planning to make additional radio spectrum available. We are currently preparing detailed reports - subscribe to our JCOMM-report for our analysis of Japan's radio spectrum reforms.

LTE

DoCoMo increases LTE base station numbers (LTE started on Dec 24)

DoCoMo started to offer LTE to customers on Dec 24, 2010. We reported DoCoMo's LTE base stations numbers in our previous newsletter. Several of our readers noticed a slight drop of base station numbers during November 2010 and wondered whether DoCoMo had started to dismantle LTE.... of course this was not the case, and after this temporary decrease in LTE base station numbers - before LTE was offered commercially to customers - of course LTE base station numbers are increasing again - currently there are more than 650. DoCoMo actually has a very aggressive plan for growth of LTE base station numbers. With KDDI, SoftBank and eMobile all switching to LTE, we expect big opportunities for LTE base station vendors in Japan.

::: About us :::

Founded in 1996/1997 in Tokyo, Eurotechnology Japan KK focuses on telecommunications and environmental industries. We work on M&A and help foreign companies grow in Japan, we help Japanese companies globalize, and we have advised about 100 investment fund managers over the years on technology industries. Our founder Gerhard Fasol works with Japan's telecom industry since 1984.
Need more information?
- Watch video clips of live interviews on CNBC,
- follow us on Twitter,
- subscribe to our VIP newsletters,
- purchase or subscribe to our reports,
- or send us email because we need your feedback.

Sincerely,

Your Eurotechnology-Japan Team
Eurotechnology Japan K. K.