0 March ２００８ Yasu TANIWAKI ([email protected]) Director, Telecommunications Policy Division Telecommunications Bureau Ministry of Internal Affairs &

1

March ２００８

Yasu 　 TANIWAKI([email protected])

Director, Telecommunications Policy 　 Division

Telecommunications Bureau

Ministry of Internal Affairs & Communications (MIC), JAPAN

Broadband Competition Policy in JapanBroadband Competition Policy in Japan

2

Broadband Competition Policy in Japan

■Current Status of Broadband Market in Japan

■Outline of “New Competition Policy Program 2010”

■Specific Issues

　　□ Network Neutrality Issues

　　□ Revitalization of Mobile Business

✔

3

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

2,691

3,825

4,731

5,9616,077

6,133 6,022

5,245

5,456

5,636

5,781

5,907

6,028 6,164

6,263

6,285

6,263

6,2236,196

5917

58785745

5808 5678

5602.95239.8

9,147

8,6658,112

7,482

6,678

5,685

49 87138 171 213

433

1,170

9,361

9475

9764

9648 9869

9982.6

'08.1末現在10548.6

2,830.2

1,951

943

1,541

8522

387

2,1482,237 2,422

2,330 2,504

2,576

527.6

830.5

976.7

1060.41209.7

1145.71300

1375.9 1676.6

0

2,000

4,000

6,000

8,000

10,000

12,000

+固定電話（加入電話ＩＳＤＮ）

+移動電話（携帯電話ＰＨＳ）

高速・超高速インターネット加入者数

IP電話

FTTHFTTH11,328,952

FTTHFTTH11,328,952

ＦＷＡＦＷＡ12,585ＦＷＡＦＷＡ12,585

CATVCATV3,827,502

CATVCATV3,827,502

ＤＳＬＤＳＬ 13,133,113

ＤＳＬＤＳＬ 13,133,113　 As　of　Jan.　

2008

【 Number of Telecommunication Service Users 】

（ Unit: 10 thousand ）

Fixed Communications (telephony)

Mobile Communications (telephony)

Broadband service

IP Telephony

Transition in the Number of Japan’s Broadband Subscribers

【 Number of Broadband Service Users 】

　 As　of　Dec.　2007

As　of　Dec.　2007

　 As　of　Dec.　2007

4Tariff for Broadband ServicesTariff for Broadband Services

Note 1: When using BB.excite as the ISPNote 2: When the service can be provided to 8 or more residencesNote 3: Includes basic IP telephone charges as well

Sources: Respective company web sites

NTT East

(100 M)

(1) (2)K-opticom

(100 M)NTT East

(100 M)

(1) USEN (100 M)

NTT East

(47 M)KDDI

(50 M)

(3) (3)Softbank BB (50 M)

KDDI (5 M)

Itscom (30 M)

Itscom (512k)

FTTH (single residences)

FTTH (multiple residences)

ADSL Cable

(yen/month)

(1)

6000

5000

4000

3000

2000

1000

0

5,985

4,900

3,570

2,9803,465

4,2063,969

2,908

4,095

1,050

6,510

4,095

5,200

3,505

5,250

5,9915,754

4,693 4,389

1,344

IP phone chargePSTN phone charge

IP phone chargeinternet charge

5

Source ： ITU Internet Reports 2006 ”digital.life” （ December 2006 ）

Broadband prices (100kbit/s)Broadband prices (100kbit/s) (US dollar)(US dollar)

　　 Japanese　Broadband　Service　in　Global　Comparison

Speed　of　DSLSpeed　of　DSL（（ Mbit/sMbit/s ））

5.12

6.016

6.144

6.144

6.144

8

8.128

8.128

8.192

10.24

12.288

12.288

20.48

24

24

30.72

51.2

51.2

0 10 20 30 40 50 60

Philippines

Germany

Poland

Hong Kong,China

Iceland

Brazil

Portugal

The U.K.

Kazakhstan

France

Italy

Taiwan,Chaina

Netherlands

Finland

Sweden

Singpore

Korea

J apan

1.21

1.08

1.07

1.01

0.93

0.93

0.83

0.69

0.63

0.51

0.49

0.36

0.36

0.34

0.3

0.24

0.23

0.14

0.08

0.07

0 0.2 0.4 0.6 0.8 1 1.2 1.4

Belgium

Brazil

Macao,China

Canada

Bosnia Herzegovina・

Portugal

Hong Kong,China

Lithuania

The U.K.

Germany

United States

Finland

France

Taiwan,Chaina

Italy

Singapore

Sweden

Netherlands

Korea

J apan

6　　 Next Generation Broadband Strategy 2010 (August 2006)

broadband service

super high speed broadband （ＦＴ

ＴＨ）

48.6 million（ 95 ％） 100 ％

42.7 million（ 84 ％） 90 ％

FY２０１０（ Target　set　by　the　

government)

FY２００６（ as of the end of March 2007 ）

Status　of　broadband　service　availability　

47.3 million（ 94 ％）

40.2 million（ 80 ％）

FY２００５（ as of the end of March 2006 ）

As a roadmap to fulfill “Next Generation Broadband Strategy 2010,” “Digital Divide Elimination Strategy,” including concrete measures to eliminate “broadband zero” area, will be released by MIC in June 2008.

(Note) “Broadband availability map,” describing availability of broadband services (ADSL, FTTH etc.) in each town or village, has been provided via the internet.

7




■Specific Issues



✔

8Outline of Japanese Telecom Competition PolicyOutline of Japanese Telecom Competition Policy

Review of competition rules through transparent proceduresReview of competition rules through transparent procedures

Introduction of market principles

Privatization of

NTT--PC

Introduction of market principles

Privatization of

NTT--PC

Reorganization of NTT (1999)

Deregulation of market entry restriction

Abolition of foreign investment regulation (except for NTT and NTT regional companies)

Establishment of interconnection rules (introduction of LRIC model)

Reorganization of NTT (1999)

Deregulation of market entry restriction

Abolition of foreign investment regulation (except for NTT and NTT regional companies)

Establishment of interconnection rules (introduction of LRIC model)

Strengthening of asymmetric regulations

Establishment of USF mechanism

Setting up of Telecommunications Business Dispute Committee

Strengthening of asymmetric regulations

Establishment of USF mechanism

Setting up of Telecommunications Business Dispute Committee

Age of TelephonyEmergence of

Internet

Abolition of Type I and Type II business categories

Drastic deregulation of price and tariff regulations

Abolition of Type I and Type II business categories

Drastic deregulation of price and tariff regulations

From monopolyFrom monopolyto competitionto competition

From “ex-ante” From “ex-ante” regulation to “ex-regulation to “ex-post” regulationpost” regulation

1985 1985 1997 1997 2001 2001

Further promotion Further promotion of competitionof competition

2004 2004

Introduction of competition review mechanism

Introduction of competition review mechanism

Transition to Full IP-based networks

Rev

iew

of

Com

petit

ion

Rul

es c

orre

spon

ding

R

evie

w o

f C

ompe

titio

n R

ules

cor

resp

ondi

ng

to t

rans

ition

to

full

IP-b

ased

net

wo

rks

to t

rans

ition

to

full

IP-b

ased

net

wo

rks

Transition from ＰＳＴＮ to ＩＰ -based networks

9Current Status of Japanese Telecom MarketCurrent Status of Japanese Telecom Market

Number of competitive telecom carriers

April 1985 April 1989 April 1993 April 1997 April 2001 Feb 2008

87 738 1,259 4,726 9,348

Structure of NTT group (reorganized in July 1999)

NTT(Holding company)

NTT East NTT WestNTT regional companies own

93% of all the access lines.

(as of the end of March 2007)

NTT Communication

NTT DoCoMo

Regulated under NTT Law

14,441

10Market Share of NTT East and West 　

９２．５％

７８．９％

Copper&fiber&　ＣＡＴＶ lines

Fixed telephone

（ including ISDN ）

FTTH

FTTH service

９０．６％

６９．０％

（（ share by revenueshare by revenue ））

（（ share by number of lineshare by number of liness ））

(as of the end of March 2007)

９９．９％Copper lines

　

３８．０％ＡＤＳＬ

11

70 8

0

2

4

6

8

10

12

14

16

Mar-99 Sep-99 Mar-00 Sep-00 Mar-01 Sep-01 Mar-02 Sep-02 Mar-03 Sep-03 Mar-04 Sep-04 Mar-05 Sep-05 Mar-06 Sep-06 Mar-07

Development of DSL Service Market and Introduction of Interconnection RulesDevelopment of DSL Service Market and Introduction of Interconnection Rules

DSLDSL

Cable ModemCable Modem

Establishment of collocation and Establishment of collocation and unbundling rules for access networks unbundling rules for access networks of NTT E/Wof NTT E/W

Autumn 2000Autumn 2000Autumn 2000Autumn 2000

Others

Approx. 62.0%

Approx. 38.0%

【 End-Mar. 07 】

NTT E/W(millions)

12Changes in Market Environment and Review of Competition PolicyChanges in Market Environment and Review of Competition Policy

Related to a review of a framework of competition rules to address the transition to IP-based networks, define a road map for deliberation to be implemented by the early 2010s.

“New Competition Promotion Program 2010” (Sep 2006, revised in Oct 2007)

【【 Development of horizontal market integrationDevelopment of horizontal market integration 】】【【 Development of vertical market integrationDevelopment of vertical market integration 】】

(1) Progress of broadband deployment(2) Development of horizontal market integration(3) Development of vertical market integration

Changes in competitive environment

13Outline of “New Competition Promotion Program 2010”Outline of “New Competition Promotion Program 2010”

Comprehensive Review of Competition Rules to Address the Shift to IP Based Networks(Comprehensively implemented by early 2010s)

Review of Dominant Regulations 　

１． Promotion of Facility Based Competition

２． Review of Interconnection Policy

３． Review of Universal Service System

Review of Calculation Method for Interconnection Charges of NTT E&W

Consideration （“ feasibility study” in 2007 to be followed by precise consideration at the Information and Communications Council by the end of 2008)

Promotion of Competition in the Mobile Communication Market (☞ ”Mobile Business Vitalization Plan” in September 2007)

４． Review of Tariff Policy

５． Other Main Policies Study concerning the Network Neutrality principles （ the first SG report in September 2007, followed by the second report by the end of 2008) 　

Review of Dispute Settlement Functions etc.

Promotion to Use Physical Networks Owned by Local Governments etc. 　

Promotion of Diversification of Access Networks （ WiMAX etc. ）

Establishment of Interconnection rules for NGNs (by the end of FY2007)

Introduction of Competition Safeguard System (from FY 2007) 　

Comprehensive review of Dominant Regulations (Implementation will be launched by FY 2010.)

Review of the Price Cap Regulation etc.

✔Status of NTT will be concluded following consideration in 2010.✔Comprehensive legal framework including telecommunications and broadcasting will be concluded by 2010.

14




■Specific Issues



✔

15

Equitable cost distribution of networks(A)

Neutrality of cost sharing models for upgrading the communications networks

Equal access to networks(B)

Neutrality of telecommunications layer with respect to other layers

(1) IP-based networks should be accessible to users and easy to use, allowing ready access to content and application layers.

(2) IP-based networks should be accessible and available to any terminal that meets the relevant technical standards, and should support terminal-to-terminal (or “end-to-end”) communication.

(3) Users should be provided with equality of access to telecommunications and platform layers at a reasonable price.

Basic Framework for Basic Framework for ＮＮ etwork etwork ＮＮ eutralityeutrality

Network neutrality (from the user perspective)

Note: In this case, "the user" refers not just to end users but also includes content providers and other related companies that conduct business using IP networks.

■Changes on network structure　　　　　　（ Transition from PSTNs to IP based networks ）■Progress of market integration such as FMC■Proliferation of new communications such as P2P

Change of Market Structure

Ensuring utilization of networks “with proper cost allocation” （ A ） & “without any discrimination” （ B ）

SG on Network Neutrality (Nov. 2006 – Sep. 2007)

16















17

294.0Gbps(2007.11)

199.4Gbps (2007.11)

269.4Gbps (2004.9)

303.2Gbps (2004.10)

323.6Gbps (2004.11)

721.7Gbps (2007.5)

636.6Gbps (2006.11)

523.6Gbps (2006.5)

468.0Gbps (2005.11)

424.5Gbps (2005.5)

812.9Gbps(2007.11)

339.8Gbps(2007.11)

0

100

200

300

400

500

600

700

800

900

1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

IP Traffic on the Networks (Total Volume)

[Gbps]

○ The total amount of IP traffic in Japan was estimated at 812.9Gbps in Nov 2007, increased by about 2.5 times in 3 years.

○ The total amount of IP traffic in Japan was estimated at 812.9Gbps in Nov 2007, increased by about 2.5 times in 3 years.

Efforts for Grasping Current Status of Internet Traffic in Japan , MIC

Estimated download traffic of broadband users in Japan

Monthly average of daily traffic of Broadband customers (ADSL/CATV/FTTH) of major ISPs in Japan

(ref.1) Monthly average of daily peak traffic exchanged at major IXs in Japan

(ref.2) Monthly average of daily traffic exchanged at major IXs in Japan

18

○ “The traffic flowing into domestic ISPs from foreign ISPs （ Inbound traffic, B3 ）” has been remarkably increasing by twice in 1.5 year. It has exceeded “the traffic exchanged at any place outside domestic major IXs (mainly private peering, B2)” at Nov 2007. 【 left diagram 】

○ In the traffic exchanged among domestic ISPs, the percentage of “the traffic exchanged at domestic major IXs (B1)” has turned upward again.

93.5

77.468.4

54.0

66.247.9

35.9

36.3 38.0

129.0

124.5

107.6

48.253.1

55.1

73.3

94.9

80.9

133.7

116.4

94.5

27.725.3

28.540.1

68.5

57.1

0

20

40

60

80

100

120

140

160

04.5 04.11 05.5 05.11 06.5 06.11 07.5 07.11

B1 B2 B3

70.862.3

31.830.933.0

60.1

48.1

41.6

83.4

108.4

90.5

37.8

41.643.3

77.6

68.1

58.4

113.3

71.2

57.8

14.1 15.416.7

24.139.8

47.8

81.8

0

20

40

60

80

100

120

140

160

04.5 04.11 05.5 05.11 06.5 06.11 07.5 07.11

B1 B2 B3

[Gbps] [Gbps]＜＜ Inbound traffic to domestic ISPsInbound traffic to domestic ISPs ＞＞＜＜ Outbound traffic from domestic ISPsOutbound traffic from domestic ISPs ＞＞

Efforts for Grasping Current Status of Internet Traffic in Japan , MIC

Traffic Exchanged among ＩＳＰ s （ as of Nov 2007 ）

〔〔 BB １１〕〕 the traffic exchanged at domestic major IXs 〔〔 BB ２２〕〕 the traffic exchanged at any place outside domestic major IXs 〔〔 BB ３３〕〕 the traffic flowing into domestic ISPs from foreign ISPs

19

Top

Bottom

P2P traffic has a significant impact on networks rather than streaming and web surfing. Average P2P occupation rate increased by 30% at peak traffic level and by 10% at off

peak level in 6 months period.

Randomly selected day in April 2006Randomly selected day in April 2006

Randomly selected day in November 2005Randomly selected day in November 2005

Occupation rate of bandwidth

Occupation rate of bandwidth

IP Traffic (Downstream)IP Traffic (Downstream)

Others (web, mail etc.)

20

Top

Bottom

P2P occupation rate is higher in upstream than in downstream. P2P traffic occupied no less than approx.50% throughout 24h in Apr.2006.

Occupation rate of bandwidth Occupation rate of bandwidth

Randomly selected day in April 2006Randomly selected day in April 2006

Randomly selected day in November 2005Randomly selected day in November 2005

IP Traffic (Upstream)IP Traffic (Upstream)

Others (web, mail etc.)

21

75% P2P traffic (less than 10% of all users)

Bandwidth Usage and P2P Users

25% Other traffic(more than 90% of all users)

63% Heavy users(10% of P2P users)

37% average users(90% of P2P users)

average user : 550Mbyte

P2P user : 17Gbyte

P2P heavy users: 104Gbyte

Traffic volume

User (ascending sort )

Top 10% among P2P users occupy over 60% of the traffic

Traffic volume

P2P User (ascending sort )

x 30 x 190

10% of all users occupy 60 through 90% of the traffic Distribution of uses in all traffic

Top 10% of P2P users(*) occupy more than 60% of the traffic Bandwidth used by heavy users completely

differs from that used by average users.

P2P users (10%) controls 60 through 90% of the traffic.

(*) the Plala Networks has controlled its P2P bandwidth since November 2003, therefore the latest published data in uncontrolled situation is for 2003.

Measured : 2003/6/30 – 2003/7/1 11:59(*) “the P2P users” are considered as the users whose P2P traffic exceeds over 1 Mbyte within 24 hrs.(Note) The data was provided by Plala Networks) (partly extracted)

22Dispersion of Intelligence in NetworksDispersion of Intelligence in Networks

networks（ meshed

End user as aEnd user as a“private” content provider“private” content provider

Remarkable improvement of computing capability of terminal

equipment such as ＰＣ s

Newly emerging services coordinated between terminal equipment and intelligence in

servers (SaaS, online data storage etc.)

Ubiquitous economy, CGC(Consumer Generated Media), diversity of content delivery mode

including P2P

23Background of Dramatic Traffic IncreaseBackground of Dramatic Traffic Increase

■Broadly usage of P2P-based file exchange, driven by increasing availability for

broader upload bandwidth in response to proliferation of FTTH service

■In addition to increase of rich content including video, many new

business models with CGC (Consumer Generated Content) have emerged.

　 ⇒ Content may flow into the network from a variety of network edges

■Some new factors possibly to making Internet traffic increase.

●Emergence of new communications represented by M2M in line with

progress of ubiquitous economy

●Increase of network utilization including SaaS within firms

●Proliferation of grid computing

24Actions to Be Taken to Cope with Network Congestion Using Ｐ２Ｐ

■Currently unclear if technological innovation can absorb incremental cost due to

increasing traffic.

■For coping with dramatic traffic increase (network congestion), ensuring dynamic

Interaction is required between networks and terminals, allowing networks to

flexibly absorb traffic fluctuating. （☞ network scalabilitynetwork scalability ）。

■Advantage of P2P in allow for improving content delivery efficiency should be

utilized. Flexible choice of content delivery technologies Flexible choice of content delivery technologies such as C/S

model and CDN as well as P2P should be ensured.

　

Field Trials by “P2P Network Experiment Council”(FY07-08)

25P2P Network Experiment Council “P2P Network Experiment Council” was established in August 2007. Result of experiments will be summarized by end-March 2009.

“P2P Network Experiment Council” was established in August 2007. Result of experiments will be summarized by end-March 2009.

■ Purposes・“ P2P Network Experiment Council” was established with the aim of promoting new content delivery businesses using broadband network, and diffusing the use of broadband services to regional areas.・ To achieve the above targets, the council participants exchange their information and views on new network services applying P2P application technologies, support P2P-experiments and P2P-services, and examine the results of experiments.

　　　■ Participants(in　alphabetical　order)

– Bitmedia Inc., BitTorrent K.K., BROTHER INDUSTRIES LTD., DREAMBOAT Co.Ltd., INFOCITY Inc., Internet Initiative Japan Inc., Grid Solutions inc., Japan Broadcasting Corporation, J-Stream Inc., Kadokawa Digix INC., Mandala, NEC Corporation,

NHK ENTERPRISES Inc., NTT Communications Corporation, SOFTBANK BB Corp., TOKYO SHOSEKI CO.LTD., TOYAMA INTERNET SHIMINJUKU, TV Bank Corp., VeriSign Japan K.K.

-MIC (as an observer)

SG on P2P Delivery Model

SportsCulture EducationMovies/Cartoon

FilmsGames

P2P NetworkExperiment Council

SG on Joint Delivery Architecture

P2P Security Guideline Drafting Group

LocalGovernment

A

Content　delivery　service　providers

Content　holders

Telecommunication　carriers,CDN　service　providers,　P2P　service　providers

ISPs,　IXs,　Content　holders Study Group

OnEffectiveDelivery Network

LocalGovernment

B

LocalGovernment

C

LocalGovernment

D

Outline of “Guideline for Packet Shaping (Draft)”(March 2008)

◆ Relation to “Secrecy of Communications” （ Article 6, Telecommunications Business Law ）

◆ Relation to “Fairness in use” （ Article 6, Telecommunications Business Law ）

◆ How to provide users with information about packet shaping

◆ _Further issues to be considered

３． Points at issue

４． ScheduleMarch 17 Public comment （～ April 14 ）　 ⇒ April 2008 Establishment of the Guideline

２． Principle of the Guideline

【 Coverage of the Guideline 】

① 　 Traffic restriction of specific applications (e.g. P2P traffic)

② 　 Traffic restriction or canceling the contract of heavy users whose traffic exceeds a certain threshold

　 In principle, ISPs should increase their network capacity when network traffic has increased. 　

　 Packet shaping is allowed only in an exceptional situation.

Packet shaping should be justified only from an objective criteria.

【 Basic concept 】

Some ISPs practise “Packet Shaping”

Establishing the Guideline as a basic principle regarding

ISPs’ practise of packet shaping

Dramatic Traffic Increase

A few heavy users are occupying most of the bandwidth

Development of broadband

１． Background of the Guideline

Based on the discussion in the “WG on Network Neutrality”, ISPs held a conference in Sep. 2007.　

　（ MIC is participating as an observer. ）

25

3. Coverage of the Guideline3. Coverage of the Guideline3. Coverage of the Guideline3. Coverage of the Guideline■ The guideline covers the following two cases. (1) Traffic restriction on specific applications (e.g. P2P traffic) (2) Traffic restriction or canceling the contract of heavy users whose traffic exceeds a certain threshold.

■ Basic principle means that ISP should increase the network capacity when traffic has increased. Packet Shaping is allowed only in an exceptional situation.

■ Specifically, Packet Shaping must be justified only from an objective criteria, such as when the QoS of general users is degraded by the traffic of P2P applications which occupy bandwidth excessively and continuously.

■ Coping with increase of video content (YouTube, etc.)■ Information sharing systems among relevant players such as ISPs, CPs, etc..■ Cost sharing model (cost allocation among ISPs, additional charges for heavy users etc.)

■ Dramatic traffic Increase / a few heavy users are occupying most of the bandwidth. ■ To tackle these problems, some ISPs currently practise “packet shaping.”

■ Clarifies specific cases when packet shaping is allowed as ISPs lawful pursuit of business.

■ In terms of consumer protection, ISPs are required to provide sufficient information to users regarding their packet shaping policy (terms and conditions of contract, description of tariffs, etc.)

■ ISPs are also required to provide relevant information to CPs and other ISPs.

■ Clarifies specific rules to be followed regarding “fairness in use”.

Guideline for Packet Shaping (Draft)

■ To avoid arbitrary use of packet shaping, the guideline is established as a basic principle regarding the practise of packet shaping by ISPs.2. Purpose and positioning2. Purpose and positioning2. Purpose and positioning2. Purpose and positioning

4. Basic principles4. Basic principles4. Basic principles4. Basic principles

5. Secrecy of communications 5. Secrecy of communications 5. Secrecy of communications 5. Secrecy of communications

6. Fairness in use6. Fairness in use6. Fairness in use6. Fairness in use

7. Disclosure of information7. Disclosure of information7. Disclosure of information7. Disclosure of information

8. Issues for further consideration8. Issues for further consideration8. Issues for further consideration8. Issues for further consideration

1. Background on the deliberations1. Background on the deliberations1. Background on the deliberations1. Background on the deliberations

３

26

■ISPs analyze the header or payload information of the packet when they practise packet shaping*. Such information constitutes “secrecy of communications” （ Article 4, Telecommunications Business Law ） .

■The guideline clarifies requirements and specific cases when packet shaping is legally allowed.

　【 When ISPs restrict use by heavy users 】　＜ Conditions ＞●Justification & necessity for action　・ QoS of general users is degraded by traffic due to specific heavy users occupying the bandwidth

excessively and continuously.　・ Packet shaping is for maintaining network stability and securing QoS for other users.●Validity of means　・ The practise of packet shaping is applied only to specific users whose traffic amount is extremely

excessive.

☞ It is permissible to check the traffic of respective users, for restricting the bandwidth of heavy users or giving them a warning them to decrease their use.

Major points of Guideline （１ /2 ）　

(1)Justification of action (2) Necessity of action, balanced with justification (3) Validity of means

Requirements for action to be allowed legally

　【 When ISPs “restrict” traffic of P2P applications such as “winny” 】　

＜ Conditions ＞●Justification & necessity for action　・ The QoS of general users is degraded by P2P traffic which occupies

bandwidth excessively and continuously.　・ Packet shaping is for maintaining network stability and securing QoS for

other users. ●Validity of means　・ The practise of packet shaping is applied only to specific apps whose

traffic volume is extremely excessive.

　【 When ISPs “shut out” traffic of P2P applications such as “winny” 】　

●Such actions do not satisfy validity of means because ISPs can

maintain their operations by other means such as restricting the

traffic of P2P apps, which is recognized as a lighter restriction than

shutting out the traffic.

Packet shaping may be justified as a lawful action. Difficult to be justified as a lawful action

① 　 Cases when ISPs restrict traffic of specific applications

② 　 Cases when ISPs restrict use of bandwidth for specific users

* In the case where end users agree individually, ISPs can shut out the traffic of P2P applications.

*Cases when the equipment analyzes the data automatically are included.

（１）（１） Relation to “secrecy of communications”Relation to “secrecy of communications”

Packet shaping may be justified as a lawful action.

34

27

（（２）２） Relationship to “fairness in use” Relationship to “fairness in use”

■The Guideline clarifies the rules to be followed when implementing packet shaping in the context of the relationship to “fairness in use” (Article 6, Telecommunications Business Law).

【 Cases when ISPs restrict P2P traffic of specific heavy users 】　＜ Conditions ＞●ISPs must distinguish heavy users’ traffic from general users’ traffic based on objective data.●Based on tariffs, the traffic restriction on heavy users should be limited to an equivalent traffic volume of general users.

【 Cases when ISPs restrict traffic or charge additionally for

specific heavy user groups 】　●Discriminatory practises are applied to users under the same

conditions.

【 Cases when ISPs restrict traffic of specific CPs 】●CPs are also covered by the “fairness in use” principle.

In general, such an action is recognized as not violatingthe “fairness in use” principle.

Except when there is a valid reason, in general, such an action may be recognized as violating the “fairness in use” principle.

（１） Required Information includes 　　　　　　　　　（２） Required measures for providing information include 　◆　 Implementation of packet shaping 　　　　　　　　　　◆　 Clear description in the tariff (addition to model contract ◆ Terms and concrete measures for packet shaping article) 　　　 ◆　 Provision of relevant information on HPs etc.

（１） Required Information includes 　　　　　　　　　（２） Required measures for providing information include 　◆　 Implementation of packet shaping 　　　　　　　　　　◆　 Clear description in the tariff (addition to model contract ◆ Terms and concrete measures for packet shaping article) 　　　 ◆　 Provision of relevant information on HPs etc.

① ISPs should provide sufficient information about their packet shaping policy to their users. 　　

② The information on packet shaping policy is also useful for other ISPs and CPs, affected by this policy. In this context, it is required to disclose this information to other ISPs or CPs as well as to users.

③ ISPs with contracts (e.g., transiting or roaming) are required to share information about their respective packet shaping policies. Peering ISPs (with no contracts) are required to provide the same information to those ISPs as well as to users.

35

Major Points of Guideline （ 2/2 ）　

（（３）３） How to provide information about Packet How to provide information about Packet Shaping Shaping

28

30

CP

ISP-A

ISP-B

Rich content（ video streaming, etc. ）transit

ISP-A　has　an　opportunity　to　compensate　ISP-A　has　an　opportunity　to　compensate　for　the　increasing　equipment　cost　by　for　the　increasing　equipment　cost　by　collecting　from　CPs　and　ISP-B.　collecting　from　CPs　and　ISP-B.　

ISP-B　has　no　opportunity　to　compensate　ISP-B　has　no　opportunity　to　compensate　for　the　increasing　equipment　cost　for　the　increasing　equipment　cost　difficult　to　collect　directly　from　end　difficult　to　collect　directly　from　end　users.　users.　

End user

Relationship between Upper-tier ISP and Lower-tier ISPs

30

31Coping with the Traffic Increase

■Additional charge on heavy users?Additional charge on heavy users? 　　

✔Market mechanism may not work due to several factors such as asymmetry of

information (eg. upper-tier ISP vs. lower-tier ISP), and increasing burden for

enhancing network capacity.

✔It is appropriate to allow for packet shaping without any bit discrimination.

✔User charges are a fixed rate on a best-effort basis.

⇒Possibility to disturb equality of cost burden among heavy users and light users.

✔In general, it is acceptable to collect an additional charge from heavy users.

✔On the other hand, issues to be considered exist:

　　・ acceptable to develop multi-tiered Internet structures (fast lane and slow lane)?

・ possible to find rational price differentiation between heavy users and light users?

→In the meantime, a case-by-case approach should be taken. 　　　

■Equality on cost allocation among ISPs?Equality on cost allocation among ISPs? 　　

■Additional charge for CPs?dditional charge for CPs? 　　

✔Both the CP and ISP markets are competitive.

→Market principle may work.

32















33

Physical network layer

Content and application　　 layer

Platform layer

Communication service　　 layer

Users including Ｍ２ＭHorizontal Horizontal integrationintegration

Vertical

Vertical

integ

ration

integ

ration

a variety of a variety of content and applicationscontent and applications

Co

llabo

rative bu

siness

Co

llabo

rative bu

siness

mo

dels

mo

dels

Bu

siness m

od

el B

usin

ess mo

del

develo

ped

by o

ne sin

gle

develo

ped

by o

ne sin

gle

player

player

　　　　　

　　　　　

A variety o

f intellig

ence aro

ud

netw

orks

A variety o

f intellig

ence aro

ud

netw

orks

Ubiquitous networks

Change of Market Structure and Network Neutrality

34Differences between the Internet and NGNsDifferences between the Internet and NGNs

■Next Generation Networks （ＮＧＮ s ）a) IP-based networks are to be restructured from legacy PSTN networks.b) Networks are controlled by carriers to ensure QoS and security though the functions of SDP (Service Delivery Platform).

■Interneta) No scheme to ensure overall QoS on end-end basis.b) Each NW is interconnected on a multilayer basis and the Internet itself is an open and autonomous network.c) Best effort model to find out best solution through collaboration among anonymous players.

A

B

D

CX

Interconnection with IP

NetworkRestructuring

IP based networks

PSTNs

video Message Video telephony

５

35Freedom to Choose NetworksFreedom to Choose Networks

B

D

C

X

QoS may differ QoS may differ according to according to networknetwork

Interconnection Interconnection among ISPsamong ISPs

SessionControl

AuthenticationSecurity

Charging

Edge node

Core node

Opticalaccess

Otheraccesses

WirelessLAN

collaboration

collaboration

Next Generation Network Internet

ubiquitous network

Networked home Networked home appliancesappliances

TVsTVstelephonestelephones

cell cell phonesphonesPCsPCs

E

A

Tier 1Tier 1

collaboration

Security and authentication Security and authentication system may depend on system may depend on applications used in terminalsapplications used in terminals

Application Application functionfunction

Platform/ServicePlatform/Servicefunctionfunction

NetworkNetwork functionfunction

（（ transmission)transmission)

Core Networks

Access Networks

Application ServersApplication Servers

Content delivery

　

Video phone

･･･････

36Interconnection Rules on Next Generation NetworksInterconnection Rules on Next Generation Networks

■Scope　of　facilities　required　to　be　opened　　✔ In addition to NNI and SNI, additional measures should be taken to ensure openness between different layers, taking care of requests by competitive carriers as well as NTT East and West.　　 ✔ Necessary to let unbundling rules flexible, reflecting characteristics of IP based networks.■Calculation methodology for access charges　　 ✔ Methodology to set access charges reflecting characteristics of IP based networks (appropriate profit level should be achieved for NTT East and West).　　 ✔ Developing charge settlement system between NGN and ISPs■Setting appropriate terms required for interconnection (equivalency between NTT East & West and competitive carriers)■Other issues including measures to ensure openness for video delivery platform, smooth coalition between fixed networks and mobile networks

Issues to be consideredIssues to be considered

Interconnection rules for NGN developed by NTT East/West are currently under discussion at Telecommunications Council.Interconnection rules for NGN developed by NTT East/West are currently under discussion at Telecommunications Council.(The report is expected to be finalized by the end of March 2008.)(The report is expected to be finalized by the end of March 2008.)

Fixed/Mobile phones, networked home appliances , PCs.

NetworkNetwork functionfunction

（（ transmission)transmission)

SessionControl

AuthenticationSecurity ChargingPlatform/ServicePlatform/Service

functionfunction

Application Application functionfunction

Edge node

Core node

OpticalaccessxDSL Other

accessesWireless

LAN

Application ServersApplication Servers

Content delivery

　

Video phone

･･･････

Core Networks

Access Networks

37

Type I designated facilities (fixed) Type II designated facilities （ mobile)

Facilities

Telecommunications facilities (fixed) designated as essential facilities

　　 Telecommunications facilities servinga relatively larger proportion of subscribers Facilities without any essentiality although the number of

providers is limited due to availability of frequency

Criteria Access lines with more than 50% share(designated on a prefectural basis)

Access lines with more than 25% of share(designated on a business area basis)

　

　　Rules for interconnection tariffs (e.g. LRIC)Interconnection

rules

Restrictions

Service regulations

　

Authorization of interconnection tariffs　

　

Notification of interconnection tariffs　

■Restriction of information usage only for specified business■Equal treatment of other companies■Equal treatment of manufacturers, etc.■Firewall with specified carriers

■Restriction of information usage only for specified business■ Equal treatment of other companies■ Equal treatment of manufacturers, etc.

Applied as necessary in case of exceeding25% of the above weight returns

Applied as one

Outline of Dominant RegulationsOutline of Dominant Regulations

NTT East and West NTT DoCoMo etc.

　

Development of interconnection accounts　

Tariff and price (cap) regulation

Access lines and related telecommunications facilities

Base station lines and related mobile telecommunications facilities

38

Market do

mina

nce

bottleneck

Other market dominance

Serviceregulations

Share ofaccess lines

Basic Directions for Reviewing Dominant Regulations

EssentialEssentialfacilityfacility

Caused byCaused byoligopolisticoligopolistic

market market environmentenvironment

Market share + α*

Identify the market having possibility to abuse market dominance* (vertically and horizontally)

Identify the market having possibility to abuse market control power* (vertically and horizontally)

Identify submarkets (converged markets) * (Focus to be shed mainly on the horizontal equivalent competition)

＋

*mark indicates the possibility to take advantage of competition review mechanism.

　　　　　　　　

○ Leverage of market dominance on relevant markets○ Possibilities of collective dominance in collaboration

with allied companies

Add these conceptsAdd these concepts

Conduct restrictions

Interconnection related regulations to open

up bottleneck facilities

Conduct restrictions

Notification oftariff

for interconnection

39Outline of Network Neutrality Issues

Equitable cost allocation of networksEquitable cost allocation of networks Equal access to networksEqual access to networks

Revealing network congestion （ traffic volume doubled in ２ years ）

Easing traffic congestion by taking advantage of Ｐ２Ｐ

technology

Development of “Guideline for packetDevelopment of “Guideline for packet shaping”shaping”

Issues to be considered include:✔scope of facilities required to be opened✔calculation method of access charges✔terms for interconnection by competitive carriers✔other issues including measures to ensure openness for video delivery platform, smooth coalition between fixed networks and mobile networks

Necessary to develop scalable networks to absorb fluctuations of traffic

Necessity for developing cost sharing modelNecessity for developing cost sharing modelon building up additional network capacityon building up additional network capacity

■Additional charge for heavy users （☞ no specific factor to disturb healthy competition. More detail discussion on reasonable differentials between heavy usersand light users etc. ） are to be required.■Additional payment by CPs to ISPs --- not required under the healthy competitive environment in CP and ISP market (dependent on market mechanism)■cost allocation between upper tier ISPs and lower tier ISP (possibility forcost allocation between upper tier ISPs and lower tier ISP (possibility formarket mechanism not working effectivelymarket mechanism not working effectively ））

Field trials on traffic dispersionField trials on traffic dispersionusing using Ｐ２ＰＰ２Ｐ technologytechnology

Basic principles on packet sharing to be specified to avoid disturbing competition,

ensuring confidentiality of communications, proper measures to provide

Information on packet shaping to subscribers etc.

certain level of criteria on packet shaping to be developed

Development of NGNs Progress of Market Integration

Establishment of interconnection Establishment of interconnection rules on NGNs rules on NGNs

developed by NTT East and Westdeveloped by NTT East and West

Review of dominant regulationReview of dominant regulation in correspondence to market in correspondence to market

integrationintegration

Necessity of preventing abuse of market dominanceNecessity of preventing abuse of market dominance（（ ensuring horizontal and vertical fair competitionensuring horizontal and vertical fair competition

Consideration of interconnectionConsideration of interconnection rules on NGNrules on NGN

Issues to be considered include: ✔ Review of threshold definition on market

dominance ✔ Prevention on abuse of market

dominance among plural markets (Collective dominance, leverage of market dominance with other closely related markets)

✔ Establishment of mechanism to prohibit market dominance jointly abused by dominant carriers and related entities

✔ Utilization of competition review system

Consideration of reform of dominant Consideration of reform of dominant regulationsregulations

40Study Group on Internet Policy

New Competition Promotion Program 2010New Competition Promotion Program 2010 　　（（ Revised on 23 October 2007Revised on 23 October 2007 ））

➢ Development of Environments Intended to Ensure Network Neutrality 　　　　 In the transition to IP-based networks, a study shall be undertaken concerning the framework for network neutrality, such as fair

usage of networks (neutrality of the communications layer to the other layers) and fairness in cost sharing for the networks (neutrality of the cost sharing model for increasing network capacity).　　 For this reason, MIC shall, based on the "Study Group on Network Neutrality" report (released in September 2007), continue to　 consider the following regarding several issues over network neutrality.　(b) Consideration of How Network Neutrality and Competition Models should Be　　 While network structures and market environments are changing drastically in front of us, MIC shall establish a new venue　　 for consideration in FY2007 to extract and summarize a wide range of medium-term policy issues related to how network　　 neutrality and the competition model should be, such as the appearance of business models with earnings models that differ

from　　 the existing ones, effects on the competition environment from increasing borderlessness driven by the Internet and the nature of

the Internet governance related to it, how market environments should be developed as IPv4 is transitioning to IPv6, and the direction of business expansion in local regions by entities such as ISPs and CATV operators, and draw a definite conclusion, with 2008 as the 　　 approximate due date. 　

Study Group on Network Neutrality

（ Nov 2006 ～ September 2007 ）

New Competition Promotion Program 2010（ revised in October 2007 ）

Study Group onInternet Policy

（ February ～ December 2008 ）

1st phase 2nd phase☞☞

41

Network neutralityNetwork neutrality

Equitable Equitable cost allocation cost allocation

of networksof networks

Equal access Equal access to networksto networks

Interconnection rules for NGN developed by NTT regional

companies（ to be concluded by the end of

March 2008 ）

Review of dominant regulations

(to be concluded by the end of 2008)

Other relevant matters

Promotion of diversity of access networks

Review of legal frameworkIn correspondence to

emerging new business models

SG on Platform Functions(Feb. – Nov. 2008)

Review on impact on market structure

In the transition to IPv6

Ｐ２Ｐ network experiment（～ FY08 ）

Development of guideline for packet shaping（ Spring 2008 ）

Enhancement of Enhancement of ＣＡＴＶＣＡＴＶ

Development of models Development of models for sharing responsibilityfor sharing responsibility

Consideration Consideration on new business modelson new business models

New competition rules New competition rules in response to borderless internetin response to borderless internet

Business environment for ISPsBusiness environment for ISPs

Internet governance issuesInternet governance issues

Development for smooth Development for smooth content delivery systemscontent delivery systems

Other possible solutions Other possible solutions for network congestionfor network congestion

Issues to be Considered at Study Group on Internet Policy

SG on Network NeutralitySG on Network Neutrality（（ Phase Phase １）１）

SG on Internet PolicySG on Internet Policy（（ Phase Phase ２）２）

Follow-up（ further study ）

Develo

pm

ent o

f overall in

tern

et strateg

y

42




■Specific Issues


　　□ Revitalization of Mobile Business✔

43Number of Mobile Service Subscribers

49 87 138 171 213 433

1,171

2,691

4,731

5,685

6,678

7,482

8,112

8,6659,147

9,64810,170

3,825

0

2,000

4,000

6,000

8,000

10,000

12,000

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

20

40

60

80

100

120

140

160

180

number of subscribersrate of increase from previous year

10,000　people　subscribed（） rate　of　increase（（％））

End of the year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Number of subscribers

49 87 138 171 213 433 1,171 2,691 3,825 4,731 5,685 6,678 7,482 8,112 8,665 9,147 9,648 10,17

0

Rate of increase from previous year

101.6

77.3 58.8 24.3 24.5 103.2 170.4 129.7 42.2 23.7 20.2 17.5 12.0 8.4 6.8 5.6 5.5 5.4

(Unit : 10 thousand subscribers)(Unit : 10 thousand subscribers)

44

（ * ）ＡＲＰＵ（ Average Rate Per User ）

Change of APRU for Mobile Business

（ US$ per year) ARPU ARPUに占めるデータの比率

24

2018

17

14 13 13

6

0

5

10

15

20

25

30

日本

英国

ドイ

ツ

韓国

イタ

リア

フラ

ンス

オー

スト

ラリ

ア

米国

(%)ＡＲＰＵ（２００３）

0

200

400

600

800

1,000

Change of the ratio by service in the whole APRU

6,889 6,245 5,766 5,263 4,902 4,670

1,346 1,607 1,805 1,740 1,867 1,992

7,004 6,769 6,6627,5707,8538,235

0

3,000

6,000

9,000

12,000

15,000

2001 2002 2003 2004 2005 2006 Year

Yen/ person（）

data ARPUvoice ARPU

（ MIC ）

The ratio of the data APRU in the whole APRU

45Market share by main mobile phone operators

（ from MIC)

ＨＨＩ（ * ）share

（ * ）ＨＨＩ（ Herfindahl-Hirschman Index ）　　　 one of the indicator to measure the degree of monopolizing market. Squares the number of each operator’s market share and adds up.　　　 its range is from 0 to 10,000, and means higher degree of monopoly when it close to 10,000.

56.8% 56.9% 57.2% 57.2% 56.9% 56.7% 56.6% 56.3% 55.9% 55.8% 55.5% 55.0% 54.9% 54.8% 54.7% 54.8% 54.6% 54.4% 54.1% 53.8% 53.6% 53.4% 52.8% 52.2%

22.4%22.2%21.7%21.5%21.6%21.7%21.8%21.9%22.2%22.5%23.0%23.7%24.0%24.4%24.8%25.3%25.6%25.9%26.1%26.4%26.6%26.8%27.3%27.7%

15.6%15.5%15.5%15.6%15.8%15.2%15.6%15.9%16.3%16.5%16.7%16.8%17.2%17.4%17.3%17.3%17.2%17.1%17.0%16.9%16.4%16.2%16.0%16.0%

4.5%5.6% 5.3% 5.2% 5.0% 5.0% 4.9% 4.8% 4.6% 4.5% 4.3% 4.2% 4.1% 4.0% 3.8% 3.7% 3.5% 3.6% 3.7% 3.9% 4.1% 4.2% 4.3% 4.4%

37563796382738433855

3989 4000 4023 4024 4001 3993 3983 3966 3941 3943 3924 3903 3897 3902 3901 3926 3915 3896 3875

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01.6 01.9 01.12 02.3 02.6 02.9 02.12 03.3 03.6 03.9 03.12 04.3 04.6 04.9 04.12 05.3 05.6 05.9 05.12 06.3 06.6 06.9 06.12 07.32000

3000

4000

5000

6000

ドコモグループ au (グループツーカーを含む）ｿﾌﾄﾊﾝ゙ｸﾓﾊｲ゙ﾙ（旧ＶＦ）その他（ＰＨＳ／ﾄｺ゙ﾓを除く） (ＨＨＩ右軸）Docomo group au group (including Tu-ka) Softbank mobile (previous Vodafone)

Others (exclude PHS/Docomo)

(right)

46Changes required in Mobile Business

Content application layerContent application layer

Platform layerPlatform layer

Telecommunications service layer

Telecommunications service layer

Network layerNetwork layer

Terminal layerTerminal layer

Mobile Mobile ServiceService

Vertically integratedVertically integratedBusiness modelsBusiness models

Mobile Mobile ServiceService

OpenOpenMobileMobile

BusinessBusinessEnvironmentEnvironment

Mobile terminal

Users

Content &Applications

variety of ubiquities terminals（ including home appliances ）

FixedService

A various ways to utilize telecommunicationsservices including M2M (machine to machine)

Content & Application

ＦＭＣ

Ub

iqu

ities U

biq

uities

Netw

ork

Netw

ork

Business ModelBusiness Model 1.0 1.0 Business ModelBusiness Model 2.0 2.0

Progress Progress broadband broadband

development development and IP transitionand IP transition

47Review of Sales Model for Mobile Business (1)Review of Sales Model for Mobile Business (1)

users

service fee （ rational ） service fee

Cost equivalent to sales Cost equivalent to sales incentives can be recovered from incentives can be recovered from service revenues within a certain service revenues within a certain period of time.period of time.

terminal price

sales Incentive

Role of sales incentives

✔Activating the potential demand for high Activating the potential demand for high end terminals end terminals by providing users with “low price.” ✔Facilitating diversification of servicesFacilitating diversification of services　　 throughthrough bundling terminals and services.

1. Lack of users’ recognition that cost for Lack of users’ recognition that cost for terminals is implicitly financed by service price.2. Rational and equal cost bearing has not been ensured among users. Rational and equal cost bearing has not been ensured among users. 3. increase of cost owed by carriers due to increasing sales incentives consisting of one forth ofincrease of cost owed by carriers due to increasing sales incentives consisting of one forth of APRUAPRU4. Lack of diversity resulted by unifies sales methoddiversity resulted by unifies sales method5. Concerns for fair competition Concerns for fair competition caused by that access charge or wholesale price is calculated based on rate base where sales incentives are included.6. Limitation for diversity of terminal development with only carriers can decide details ofLimitation for diversity of terminal development with only carriers can decide details of terminals.terminals.7. Concerns for letting the terminal market shrink Concerns for letting the terminal market shrink

Matters to be considered

Necessity for revising the current sales modelNecessity for revising the current sales model（ discuss policy to clearly show users the terminal cost and the connection cost ）

cover

Current Current sales modelsales model

Existence of unfairness among

users

Lack of transparency caused by bundling terminal price

and service price

48

Service fee[Monthly]

Terminal price

Sales Incentives

User

Service fee [Monthly]

Separation Plan(separation of terminal fees from

service fees)

Terminal Fee [Monthly]

(equivalent to the sales incentives for

terminals)

Terminal price

(initial cost)

Excluded fromrate base for access charge and/or wholesale price in the telecom business accounting

rule

Period Contract

■ Correction of Correction of inequality on burden of inequality on burden of terminal coststerminal costs

■ Promotion of MVNO entryPromotion of MVNO entry through reductions in access charge and wholesale price

■ Clarification of earnings and Clarification of earnings and expenses related to terminal expenses related to terminal sales sales (implicit pressure to decrease sales incentives)

■ Promotion ofPromotion of terminal terminal diversification diversification through SIM unlock

Current Model New Model

Partial introduction in 2008Partial introduction in 2008Consideration of full-scale introduction Consideration of full-scale introduction

by 2010, at the latestby 2010, at the latest

■The real significance of SIM locks will disappear through the introduction of service period contracts.■However, differences in 3G systems do exist (W-CDMA [Docomo / Softbank] and cmda2000 [au]); thus, SIM unlocks at this time could distort competition.■In principle, SIM unlock is desirable. Looking at the direction of future development for BWA and the terminal market, by 2010, this issue of In principle, SIM unlock is desirable. Looking at the direction of future development for BWA and the terminal market, by 2010, this issue of SIM unlock will be concluded at the timing of 2010.SIM unlock will be concluded at the timing of 2010.

User

Status of SIM unlockStatus of SIM unlock

Review of Sales Model for Mobile Business (2)Review of Sales Model for Mobile Business (2)

Compensated Compensated for sales for sales

incentivesincentives

49

Creation of New MarketsEconomic Revitalization

Users(Enjoy a diversity of services)

■■ MVNOs (Mobile Virtual Network Operators) provide telecommunications service without setting up their own wireless facilities.MVNOs (Mobile Virtual Network Operators) provide telecommunications service without setting up their own wireless facilities. ■ ■ MNO goes beyond simple telecommunications service provision to implement vertically integrated business including content/application MNO goes beyond simple telecommunications service provision to implement vertically integrated business including content/application

layer, represented by music and game distribution, and alliance with financial services.layer, represented by music and game distribution, and alliance with financial services. ■ ■ It is expected players in other areas come as MVNOs into the mobile communications market and build up new business models.It is expected players in other areas come as MVNOs into the mobile communications market and build up new business models. ■ ■ A “win-win” relationship can be built between MNO and MVNO.A “win-win” relationship can be built between MNO and MVNO.

Promotion of New Entries of MVNOs

MNO(incumbent mobile telecom carriers)

MVNO

Wholesale service and/or interconnections

Added Value

(Services and terminals)

MNO(incumbent mobile telecom carriers)

MVNO(Entry from a variety of business categories)

games, e-money and more

Linkage of existing services with mobile services

Service Diversification New Market Creation

Revitalization of the mobile business and achieving service diversificationRevitalization of the mobile business and achieving service diversificationthrough promotion of new entries as MVNO into the mobile marketthrough promotion of new entries as MVNO into the mobile market

Revitalization of the mobile business and achieving service diversificationRevitalization of the mobile business and achieving service diversificationthrough promotion of new entries as MVNO into the mobile marketthrough promotion of new entries as MVNO into the mobile market

Ser

vice

pro

visi

on

50Outline of “Mobile Business Vitalization Plan” (September 2007)

TerminalTerminalLayerLayer

Physical NetworkPhysical NetworkLayerLayer

Communication ServiceCommunication ServiceLayerLayer

Content ApplicationContent ApplicationLayerLayer

Maximize benefit for Japanese users and help give Japan’s ICT industry a comparative advantage

■■Consideration of SIM unlocking (final decision to require for SIM unlock to be made by 2010)Consideration of SIM unlocking (final decision to require for SIM unlock to be made by 2010)

■■Partial introduction of new fee plan (separation plan for service fees and terminal price) in 2008 (final Partial introduction of new fee plan (separation plan for service fees and terminal price) in 2008 (final conclusion to be considered by 2010 at the latest)conclusion to be considered by 2010 at the latest)

■■Clarification of accounting related to sales incentives (revision of ordinances on Telecommunications Clarification of accounting related to sales incentives (revision of ordinances on Telecommunications Business Accounting by the end of FY2007) Business Accounting by the end of FY2007) 　　

■■Reexamination of important explanatory items for consumers relating to terminal price and service fees (reexamination Reexamination of important explanatory items for consumers relating to terminal price and service fees (reexamination “Consumer Protection Guidelines” by the end of FY2007)“Consumer Protection Guidelines” by the end of FY2007)

■■Revision of MVNO Business guidelines* (implemented by the end of 2007)Revision of MVNO Business guidelines* (implemented by the end of 2007)

■■Provision of information on applicability of related legal frameworks for MNOs and MVNOs (starting Provision of information on applicability of related legal frameworks for MNOs and MVNOs (starting within FY2007)within FY2007)

■■Considerations for MVNO acceptance when allocating frequencies for new systemsConsiderations for MVNO acceptance when allocating frequencies for new systems

PlatformPlatformLayerLayer

■■Discussion of measures for strengthening consumer protectionsDiscussion of measures for strengthening consumer protections

■■Consideration of standard tariff for wholesale service provided by MNOs to MVNOsConsideration of standard tariff for wholesale service provided by MNOs to MVNOs

■■Study on business interoperability at platform layer (ID portability etc.) (Study to be launched by the Study on business interoperability at platform layer (ID portability etc.) (Study to be launched by the end of FY 2007)end of FY 2007)

Creatio

n o

f special u

biq

uito

us zo

nes (d

iscussio

n aim

ed at

Creatio

n o

f special u

biq

uito

us zo

nes (d

iscussio

n aim

ed at

imp

lemen

tation

)im

plem

entatio

n)

Discu

ssion

of co

mp

rehen

sive legal system

for co

mm

un

ication

s and

D

iscussio

n o

f com

preh

ensive leg

al system fo

r com

mu

nicatio

ns an

d

bro

adcastin

g (o

ng

oin

g d

iscussio

n)

bro

adcastin

g (o

ng

oin

g d

iscussio

n)

Diversification of Diversification of mobile access mobile access network (ongoing network (ongoing discussion)discussion)

Mobile Business Vitalization Plan

■■Promotion of terminal platform standardization (creation of terminal testbed, etc.)Promotion of terminal platform standardization (creation of terminal testbed, etc.)

ConsumerConsumerInterfaceInterface

51

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Documents

0 March ２００８ Yasu TANIWAKI ([email protected]) Director, Telecommunications Policy Division Telecommunications Bureau Ministry of Internal Affairs &