September 21, 2004,Vol. 15, No. 12 ISSN 1349-7987

Notice

Best regards,
Editorial staff of the "MIC Communications News"

2. Unified efforts of the government as a wholethrough implementation of "e-Japan Strategy" and "u-Japan Strategy"
Against such background, in November 2000, the Basic Law on the Formationof an Advanced Information and Telecommunications Network Society (IT BasicLaw) was enacted as a fundamental rule for an IT nation; and in January2001, the "e-Japan Strategy," aiming to make Japan the world's most advancedIT nation by 2005, was compiled by the IT Strategic Headquarters of thegovernment.  In particular, as for network infrastructures, the "e-Japan"set forth clear goals, such as enabling 10 million households to have accessto the ultrahigh-speed Internet and 30 million households to have accessto the high-speed Internet.
In response to the "e-Japan Strategy," as a result of intensive andunified efforts of the government to take measures to address the priorityareas, including construction of infrastructures, e-commerce, e-governments,human resources development and network environments have been rapidlyprepared.  Subsequently, the actual results of these efforts had temporarilysurpassed the initial target figures, for instance, in 2003, the numberof households having access to the ultrahigh-speed Internet reached 17.7million, and households having access to the high-speed Internet numbered35 million for DSL, 23 million for cable Internet.
As such, since the network environments have improved at an astonishingpace, it was recognized that Phase I of the IT policy had been completedand had entered Phase II.  Thus, the government in July 2003 developeda new national IT strategy "e-Japan Strategy-II, emphasizing IT utilizationand applications while setting forth goals for realizing an "energetic,worry-free, exciting and more convenient" society.

3.    Efforts at MIC
MIC liberalized and introduced competition into the telecommunicationsmarket in 1985.  Since then, MIC has been implementing pro-competitivepolicies, promotion policy measures, technology policy measures, etc. ina comprehensive manner.  In particular, MIC has prepared rules foropening DSL and dark fibers during 2000 through 2001, abolished businessthe classification of Type I and II telecommunications businesses in 2003through the amendment to the Telecommunications Business Law, thereby promotingpreparation of new competitive environments in response to the age of theInternet through  flexible review of regulatory frameworks.
Furthermore, MIC has actively taken i) measures for preparing infrastructures,including support for construction of fiber-optic networks, promotion ofprojects for correcting differences among areas, promotion of terrestrialdigital broadcasting, and ii) policy measures for supporting IT ventures,implementing various pilot projects and promoting IT introduction intolocal communities.  In addition, MIC has been implementing priorityleading-edge R&D and verification experiments by identifying IT asone of the priority areas in the science and technology field.
With respect to a mid- and long-term vision, the Minister for InternalAffairs and Communications inquired of the Telecommunications Council aboutthe Inquiry No. 3 "desirable Internet policy in the 21st century" in 2001;and after receiving a report on the inquiry, MIC in line with the reporthas been setting forth directions of IT policies.  In July 2003, thethird report entitled "Toward a New IT Society originated from Japan" wasreleased.  This report pointed out that a tidal wave for constructinga ubiquitous network is to occur, judging from trends that i) informationhas become indispensable for daily life, ii) information distribution inbusiness has rapidly advanced and been diversifying, and iii) wirelessbroadband services have be en realized.
In addition, the report described that technologies comprising theubiquitous network include internationally superior technologies, suchas mobile terminals and information consumer electronics; thus, it is vitalto create a new IT society originated from Japan based upon Japanese technologicalcompetitiveness through realization of a ubiquitous network society throughthe combined use of diversified infrastructures and content by the generalpublic.

4. Promotion of Phase II of IT Revolution
After such efforts, the Internet user population in Japan has steadilyincreased to 77.3 million at the end of 2003, and the population coveragesurpassed the 60% level.  Specifically, with respect to the broadbandenvironment, broadband services at the highest speed are available at thelowest prices in the world; the number of subscribers to broadband servicesreached 16.19 million as of the end of June 2004.  Japan's infrastructureshave attained the world's highest levels.  In addition, in December2003, terrestrial digital broadcasting was launched in the three majormetropolitan areas of Tokyo, Nagoya and Osaka.  Digital TV units thatare expected to play the core role of information gateway are increasinglypenetrating into households.
On the other hand, in aspects of usage, actual usage rates for DSL,cable Internet and fiber-optic cables are remain a mere 32.0%, 11.2% and6.5% (as of the end of FY2003), respectively.  It can be said thatbroadband platforms are not fully utilized.  During the period ofMarch 2001 through March 2004, however, there were steady achievementsaccording to the field, for instance, the ratio of online procedures forfiling electronic applications/notifications has increased from 1% to 96%;the ratio of Internet transactions to all stock transactions (on a basisof volume of trading) has increased from 6% to 23%.
Without saying, one of the keys to success in preparing infrastructuresin Phase I of IT policies including the "e-Japan Strategy" is the activeeffort of the private sector.  Also, intensive support from the administrationshould be effective.  MIC shall, in promoting Phase II of the IT Revolution,steadily implement adequate policy measures in a timely manner in accordancewith the "e-Japan Strategy II."

5. Next-generation strategy: u-Japan Initiative
MIC will promote Phase II of the IT Revolution for ensuring that Japanwould become the world's most advanced IT nation in 2005.  Furthermore,acknowledging that it is to continue to be the world's most advanced nationafter 2006, MIC has decided to develop a next-generation network strategysetting 2010 as a target year.  Considering the promising future ofubiquitous network technologies, including RFID tags, MIC in March 2004held the "Policy Roundtable for Realizing Ubiquitous Network Society,"and in May 2004 the "Council on Economic and Fiscal Policy (CEFP)" releasedan outline of the "u-Japan Initiative."
The "Basic Policies for Economic and Fiscal Management and StructuralReform 2004" of CEEF described that "in order to prepare a ubiquitous networkenvironment and realize an IT society in which the elderly and the peoplewith disabilities can actively participate, the Government will implementthe "u-Japan Initiative" in its "Part 2 Priority policies for economicrevitalization."  The "u-Japan Initiative" was decided at the Cabinetmeeting on June 4, 2004.
Under the "u-Japan Initiative," the goal is to realize a society inwhich "anyone, anything, anywhere and anytime" can be easily connectedto networks by 2010.  To this end, the government will compile a comprehensivepolicy package as well as develop a specific Action Plan by December 2004. The government will transmit a u-Japan concept through accumulation ofsuccessful business models, thereby actively promote international harmonizationand contributions.

6. Economic effects of the ubiquitous networksociety
The real gross domestic product (GDP) for FY2003 increased by 3.2%over the previous fiscal year.  The growth rate surpassed that ofFY1996 (2.6%) and the forecast of the government (actual growth rate of2.0%).  The nominal GDP also increased by 0.7% over the previous fiscalyear, a positive growth for the first time in two years, showing a steadyeconomic recovery.  The GDP deflator indicating comprehensive pricefluctuation was Ð2.6% in the first quarter of FY2004 (compared to the samequarter of the previous fiscal year), recording a fall for 24 consecutivequarters.  Although long-lasting deflation still remains, trends towardrecovery in production and facilities investments in the business sectorare generating preferable effects on personal consumption occupying a 50%or more share in the real GDP, resulting in significant improvement inconsumer confidence.

Steady personal consumption is founded upon favorable spending on digitalconsumer electronics, such as thin-display TV units, DVD recorders anddigital cameras, the so-called "three sacred treasures."  Performancesin the business sector are supported by capital investment intention andstrong demand for IT-related new production goods, exemplified by value-addedsemiconductors.  Considering these circumstances, the economic recoverythis time is called a "digital boom," indicating that IT is the most importantdriving force in the Japanese economy that requires value-added production.
Should the ubiquitous network society be realized, since any equipmentand devices become part of digital consumer electronics, markets relatingto ubiquitous networks would include a variety of markets, such as thosefor infrastructures, networks, appliances, service content, cashless commerce,etc.  The related industries would come to cover production, commerce,transportation, finance, insurance, etc.  Accordingly, economic effectson related industries through demand for production goods, including partsand components, are expected to be a considerably huge scale.
According to the FY2004 WHITE PAPER "Information and Communicationsin Japan 2004," where promoting preparation of ubiquitous networks, directeconomic effects on related markets would be approximately 87.6 trillionyen per annum in 2010, and the ripple effects on other markets approximately120.5 trillion yen.  Forecasts show that cumulative direct economiceffects and economic ripple effects by 2010 would be 449 trillion yen and611 trillion yen, respectively.

7.  From IT policy to ICT policy
In Japan as well as in the U.S. and Korea, the term "IT," short forinformation technology, is widely used to refer to information and communicationstechnology, including the Internet and cellular telephones.  On theother hand, in Europe, Central/South Americas, Asia and at various internationalorganizations, the term "ICT," short for information and communicationstechnology, has been widely used.
In the ubiquitous network society to be realized, not only "person-to-person"communications but also "person-to-object" and "object-to-object" communicationswould become a reality.  As such, the most significant concept isthat diversified, free and convenient "communications" would be realizedthrough easy connection of any person and objects.  Taking this intoaccount, in order to more expressly identify the significance of communicationsin "information and communications," the term "ICT" is used in the u-JapanInitiative.  In the FY2005 Policy Principles, the u-Japan Initiativeis a main theme for compiling the policy principles.  Thus, from nowon, the title "FY2005 ICT Policy Principles" is employed from this fiscalyear.
In this "FY2005 ICT Policy Principles," considering the outline ofthe "u-Japan Initiative" submitted to CEEF, FY2005 priority policy measuresin the ICT field are compiled according to the following four pillars:

1) Realization of a society in which networks are comfortablyused anytime, anywhere;
2) Realization of a society in which new businesses and services emergeone after another;
3) Realization of a society in which everyone can securely live inpeace; and
4) Realization of a society in which individual power is fully nurtured.

1.    Sales forecasts
The Business Survey Indices (BSIs) in the second quarter (Q-II) andthe third quarter (Q-III) of FY2004 indicate as follows:

• Telecommunications businesses (telecommunications carriers) are still inthe "upward" tendencies of "19.5" for Q-II and "24.4" for Q-III of FY2004,respectively. 
• Private broadcasting businesses (commercial broadcasters) maintain consecutive"plus" since Q-I of FY2004, "2.4" for Q-II and "14.3" for Q-III of FY2004,respectively.
• Cablecasting businesses (cable TV operators) are continuously in the tremendous"plus" tendencies of "52.9" for Q-II and Q-III of FY2004, respectively.

Table 1. Business survey index

Notes: 1. DI: the "percentage points of companies saying thatthe sales amounts are increasing compared to the previous quarter" minusthe "percentage points of companies saying that the sales amounts are decreasingcompared to the previous quarter"
 2. Basically, indices are estimated at the end of the previousquarter for each.  However, indices for Q-II and Q-III in FY2004 areestimated at the end of Q-I in FY2004. 
 3. Figures for "all industries" are those for sales forecastsof large-scale corporations excerpted from the "Business Outlook Survey(April through June 2004)," the Cabinet Office and the Ministry of Finance.

2.    Financial positions 
The Financial Position Diffusion Indices (DI: The "percentage of companiessaying that the financial position are easy compared with the previousquarter" minus the "percentage of companies saying that the financial positionare tight compared with the previous quarter.") for FY2004 Q-II and Q-IIIshow as follows: 

• Telecommunications businesses and private broadcasting businesses continueto be the "easy" tendencies. 
• Cablecasting businesses are to be the "tight" tendencies of "-5.9" and"-11.8."

Table 2. Financial position diffusion index

Notes: 1. Basically, indices are estimated at the end of theprevious quarter for each.  However, indices for Q-II and Q-III inFY2004 are estimated at the end of Q-I in FY2004. 
 2. Figures for "all industries" are those for sales forecastsof large-scale corporations excerpted from the "Business Outlook Survey(April through June 2004)," the Cabinet Office and the Ministry of Finance.

Fig. 2 Trends in financial position diffusion index

3. Forecasts on business conditions 
The Business Survey Indices (BSI: the "percentage points of companiessaying that the business conditions are improving compared to the previousquarter" minus the "percentage points of companies saying that the businessconditions are worsening compared to the previous quarter.") for Q-II andQ-III in FY2004 show as follows:

• With respect to telecommunications businesses, the "upward" tendenciesare strengthening, showing "9.8" and "14.6," respectively. 
• With respect to private broadcasting companies and cablecasting companiescontinue to be the "upward" tendencies. 

Table 3. Index for forecasts on business conditions

Notes: 1. Basically, indices are estimated at the end of theprevious quarter for each.  However, indices for Q-II and Q-III inFY2004 are estimated at the end of Q-I in FY2004. 
  2. Figures for "all industries" are those for sales forecastsof large-scale corporations excerpted from the "Business Outlook Survey(April through June 2004)," the Cabinet Office and the Ministry of Finance.

Fig. 3.  Trends in index for forecasts on business conditions

1)    Urgent matters to be deliberated upon
Upon implementation of radio spectrum reallocation henceforth, MICwill deliberate upon the following three matters and promote effectivefrequency use.

i)    Measures for effective frequency use forfixed wireless systems
ii)    Measures for effective frequency use for radiolocationsystems
iii)    Measures for effective frequency use for satellitecommunications systems

2) Action Plan for follow-up of the evaluation results on the survey inFY2003
With regard to the frequency segments for which MIC is to address theeffective frequency use by priority in the evaluation results of the FY2003survey, MIC will identify the current status and themes to be addressed,develop basic directions as well as specific measures in accordance withthe basic directions.

3.    Schedule
MIC will surely implement specific measures for each frequency segment. With respect to the three urgent matters to be deliberated upon, MIC willdevelop directions within FY2004.
MIC will sequentially review the ÒAction PlanÓ taking into considerationthe evaluation results of the survey on actual radio spectrum use to beconducted every fiscal year and changes, etc. in the environment for theradio spectrum use.