Goin' Mobile Japan

Trendwatch:How much MVNO can do business in Japan?

Disney Japan launched its mobile phone business on March 1 as a MVNO (Mobile Virtual Network Operator) using Softbank’s 3G mobile network infrastructure (See the article on January 22 in the “US Wireless Companies in Japan” section). As you may know, Disney failed with this business model in the US (terminated its mobile business as of December 31, 2007), so why would they do it again? The Japanese mobile market may be different from the U.S. market for Disney. According to Disney Japan, they already have 350,000 registered mobile website users and 75% of them are females between 20 and 30 year old. To target this particular segment of the market, Disney offers not only stylish feminine phone designs but also unique features such as a @disney.ne.jp mail account with Disney’s original graphical express icons. Japan has a unique history in this demographic of the mobile phone market and this segment has been a key driver for the industry, starting from text pagers in the mid ‘90’s. In the next few years we will see how much Disney Mobile Japan will gain market share with their new service offerings.

Disney Mobile (Japanese site)

Other MVNOs in both data and voice communication fields that have entered the market are listed below. The brand names are shown in parenthesis. Please note that MVNOs in data communication are mainly ISPs and that CATV operators run Jupiter Telecommunications.

[Data Communication]

• Japan Communication (b-mobile, Secure PB)
• IIJ (IIJ Mobile)
• NEC (Biglobe)
• Fujitsu (mobile+)
• NTT Communications (Arcstar IP-VPN Mobile Access)
• So-net (bitwarp, bitwarp PDA)
• ACCA Netwroks
• Kyocera (KWINS, KWINS 3G) [Voice Communication]

[Voice Communication]

• Jupiter Telecommunications (J:COM MOBILE)
• NTT Communications (.Phone ubiquitous)

In June 2002, the Ministry of Internal Affairs and Communications (MIC) initially released “MVNO Guidelines” and made amendments in February 2007 (currently, another amendment hearing is in progress) to stimulate the mobile industry and increase competition. The following diagram is described in the guideline.

MNO (Mobile Network Operator) is a mobile infrastructure used by providers such as DoCoMo, KDDI, Softbank, Willcom (PHS), and new entrant EMOBILE. Their business model is purely wholesale so an MVNO needs to enhance their service offerings in order to provide benefits to their subscribers. There is also another third party, if needed by an MVNO, called an MVNE (Mobile Virtual Network Enabler) such as Infhonix and Zero-Sum. MVNEs provide MVNOs with accounting and customer support systems.

Soumu (Japanese site)

In December 2007, MIC licensed the 2.5GHz spectrum for next generation protocols to only two mobile operators; (1) UQ Communications (originally called Wireless Broadband Planning), which develops WiMAX system and was established by KDDI, Intel, JR East, Kyocera, Daiwa Security and Mitsubishi UFJ Bank, (2) Willcom who develops OFDMA based Next-Generation PHS. In the licensing agreement, MIC requires the two operators to provide MVNO services so that other players such as DoCoMo, Softbank, and EMOBLE, who lost the bid for the licensing, will be able to enter the market as a MVNO.

As described in this article in regards to MVNO’s, there could be a little shift in the industry as we see Virgin Mobile’s prepaid business model in the US. But in Japan, specific solutions or feature oriented service offerings may be somewhat unique in that they are also promoted by MIC. It won’t take much time to see the results, possibly within a year or so because of the funding climate and business practices in general. Not all of the new MVNO’s will be successful, but businesses based on a model like Disney Mobile may work in Japan.