1. BEN TURNER
PROF. IRENE WU
COMPARING AND CONTRASTING JAPANESE AND
AMERICAN 3G MOBILE NETWORKS
Japan and the US are both front-runners in establishing high penetration
rates for next-generation mobile phone data usage. However, they are taking
differing paths towards the future, and these paths are being determined by such
factors as cultural demands for applications, telecommunications policy
differences, private-sector innovation priorities, societal and habitual differences,
geography, and population density. This manifests itself in strange ways: the
way a Japanese consumer uses a cellphone is markedly different than the way an
American consumer uses one. Why? Also, why do their respective mobile
phone providers look so different from each other?
In comparing the path of development between next-generation mobile
phone high-speed services in Japan and the US, which is the purpose and scope
of this paper, my goal is to determine the viability of my future business that
would rely on users entering information about themselves through an
application on their mobile phone. Will these countries, in the near future,
develop networks with low latency and high bandwidth to allow for fast,
reliable, cheap data transmission, so my customers can interact at a high
standard of satisfaction with my business? Such a requirement for mobile data
transfer is a little premature for the environment that currently exists, as there is
still a lot of shake-up to be done technologically in the business of providing
high-speed data services. But where will I find the most opportunity? And what
conditions should I look for?
Because I am focused on developing an application that is data-dependent
and which uses Internet-compatible transfer protocols, I am primarily concerned
2. with analyzing the potential of next-generation high-bandwidth networks. High
Internet- and mobile phone- connectivity penetration rates (it is important to
separate the two) in the United States and Japan are good news for consumers
and vindication for sound telecommunications policy in general, but both
countries will need to transition quickly to next-generation technologies that will
allow for a less voice-dependent and more data-dependent culture and
marketplace. Mobile phone service providers are scrambling to upgrade their
backbones, infrastructure, and services in order to respond to customers'
demands, but they are struggling to agree on which path to take and which
standards will be the most robust in the long-run, looking forward.
In the telecommunications industry, the next generation of wireless
technology and standards is loosely called 3G, for "third generation". Prior to
3G, what existed was 2G, more commonly known to be divided into two major
competing standards: CDMA (Code Division Multiple Access) and GSM (Global
System for Mobile [communications]).
I will begin by describing the standards underpinning mobile phone
networks. Then I will describe the mobile climates in each country by listing the
largest providers and which standards they've chosen. Afterwards, I will
analyze and explain how these environments came to be, based on cultural and
CDMA was standardized by the American company Qualcomm under the
names IS-95 (2G) and IS-2000 (3G), and therefore requires for its licensing that
fees be paid to Qualcomm. CDMA is generally associated with allowing far
more users onto each cell tower because it is more tolerant in dividing up the
bursts of short voice traffic into different packets and sending them when
available, as opposed to dedicating all the time in one channel slot on a spectrum
to one user, who rarely requires that whole channel for voice calls. CDMA also is
unencrypted and is therefore less demanding to transmit in aggregate. This,
however, makes it less safe from intrusion.
Wikipedia entry at http://en.wikipedia.org/wiki/Cdma is helpful, but also see the subscriber
statistics at http://www.cdg.org/worldwide/cdma_world_subscriber.asp for more.
3. CDMA 2000: 1XRTT AND EVDO2
CDMA 2000 is a hybrid 2.5G/3G standard, allowing for some degree of
backward compatibility while pushing the network capabilities forward. 1xRTT
and EVDO are variations within the standard, 1xRTT being true 3G and EVDO
Focusing on 1xRTT in particular, it doubles the number of available
channels to 128, from IS-95's 64 channels. This allows the 3G technology to
transmit at a maximum of 144 kilobits/second, compared with the 2G CDMA
IS-95's paltry 14.4 kilobits/second.3 Such a dramatic increase in bandwidth spurs
growth and experimentation in data-heavy applications to be used over such a
CDMA 2000 should be expected to be available where CDMA is, as it is
built on top of existing infrastructure. It cannot be construed as a possible
physical replacement for the 3G GSM competitors in areas where CDMA was not
GSM has enjoyed far greater adoption of its standard than CDMA has,
partly because of countries deciding to make the GSM standard mandatory as
part of their telecom policies. Question the source, but the GSM Association
estimates that 82% of the global mobile market uses GSM. GSM is somewhat
more flexible than CDMA on a practical level for consumers because it allows
one to take out a SIM chip (Subscriber Identity Module), about the size of half a
stamp, carrying all of a subscriber's personal data and his phone number, and
put it in a new handset quickly and without any configuration. In countries
where consumers tend to replace handsets often, or rely more on pre-paid or
A concise history of the evolution of CDMA:
Reader-friendly tables comparing CDMA infrastructure in different countries as well as
statistics on the number of users in different world regions:
4. calling card plans, this versatility is valuable both economically and culturally for
As a product of the network effects of compatibility across many different
countries and standardized use of spectrum, GSM also allows mobile phone
users to travel across countries and use their tri- or quad- band phones
internationally, a feature CDMA phones are not very successful at matching.
While roaming and interconnection rates are still high internationally, these rates
are dropping quickly.
GSM requires more battery power from a handset to operate than CDMA
does. However, it also is far more secure than CDMA, offering a challenge and
password authentication system which remains far more difficult to intrude
upon than CDMA. GSM is far less efficient than CDMA, as it breaks up
spectrum into time-division channel slots that only one user per channel is
granted whether they are using the full slot or not. And finally, GSM has a 35
kilometer hard-locked limit to its range, whereas CDMA's range is unlimited,
depending on the electromagnetic environment and power output of the
W-CDMA6 AND UMTS7
W-CDMA, or Wideband Code Division Multiple Access, is the 3G "air
interface" for the GSM standard. It is the basis for FOMA (Freedom of
Multimedia Access, used in Japan) and for UMTS (Universal Mobile
Telecommunications System, used in Europe), which are considered the actual
3G competitors to CDMA 2000. W-CDMA is not backwards compatible with 2G
GSM, unlike CDMA 2000's 2.5G or 2.75G backwards compatibility with 2G
CDMA, but it has been adopted rapidly in countries with standardized GSM
UMTS supports up to 14 Mbits/second, although right now it may only
transmit at 384 kilobits/second on some handsets and networks. This is
compared to CDMA 2000's 144 kilobits/second.
UMTS has had some difficulty in the US, since the US has allocated
spectrum differently than the international standards. But since most new GSM
Frequently asked questions about UMTS: http://www.umtsworld.com/umts/faq.htm
5. handsets are generally quad-band, this circumvents most incompatibility
problems. UMTS also is regarded as having high power usage and was cited as a
reason for the lack of inclusion of 3G in Apple's iPhone (which went with EDGE,
instead). Both issues will be discussed later in the paper.
MOBILES IN JAPAN AND THE UNITED STATES OF AMERICA
Keeping the two major competing standards in mind, one can now move
on to how each has been deployed differently in Japan and the US. Both
countries are highly-connected to the Internet and to mobile phone networks, but
the US has fallen significantly behind in its rollout of broadband and true 3G
services, for reasons to be explained shortly. Japan enjoys penetration rates of
about 95% for Internet broadband, 75% for mobile phones9, and about 49% for
3G services. The US only has about 57% Internet broadband penetration, but
84% mobile penetration and about 49% for 2.5G to 3G penetration. Within these
statistics, there are many subtleties that make each country unique. So how are
I. JAPANESE TELECOMMUNICATIONS INFRASTRUCTURE
Japan is a small country, particularly relative to the US, with a land area of
375,000 square kilometers. However, its population reached 127.4 million people
in mid-2007. While the numbers vary, this puts Japan's population density at
about 337 people per square kilometer. Contrast this with the US, which has
about 301 million people within a land size of 9.6 million square kilometers.
Thus, the US's population density is only 31 people per square kilometer.
As a result, in terms of building out an efficient telecommunications
network that provides substantial utility both to the consumer and the supplier,
Japan finds it far easier than the US to roll out the newest generations of
technology such as FTTH (Fiber to the Home) for fixed broadband access and 3G
networks for mobile phones. Having a densely-packed population creates
network effects and an efficient clustering bias that encourages rapid adoption of
communications devices. As a result, broadband is much cheaper in Japan than
An executive summary for a report on Japan’s 3G mobile phones:
6. most countries; compare its prices, $0.07 per 100 kilobits/second, with the United
States, where bandwidth costs $0.49 per 100 kilobits/second.
Interestingly, Japan did not use GSM for its 2G standards, instead
inventing its own: PDC (Personal Digital Cellular) and PHS (Personal Handy-
JAPANESE TELECOMMUNICATIONS INDUSTRY BREAKDOWN
Within Japan, there are three major mobile phone providers: NTT
DoCoMo, au (owned by KDDI), and SoftBank Mobile (formerly Vodafone).
A.) NTT DoCoMo10
NTT DoCoMo has over 50 million subscribers and thus controls more than
50% of the Japanese mobile market. NTT DoCoMo decided to use the W-CDMA
standard after employing PDC (Personal Digital Cellular) standard for 2G
service. NTT DoCoMo's 3G service is called FOMA (Freedom of Multimedia
Access), and, having developed FOMA itself, has been able to create a strong
suite of applications for its mobile phones.
For instance, there is imode, which is a platform offering i-appli
(application base for games, weather updates, and news stories, et al), i-area
(location-specific news, weather, and local restaurants/shopping), and i-motion
(allowing users to capture video and upload it to the Internet). Much talked
about has been Osaifu-Keitai, an e-wallet using a mobile phone that's been
adopted by all the major Japanese providers: it lets users treat their phones as a
method for not just making calls, but also for transferring money (using Sony's
RFID FeliCa technology11 and Edy, a contactless technology similar to a SmarTrip
card in Washington, DC), buying tickets, verify their identities, and more.12
B.) au (KDDI)13
Read both NTT DoCoMo’s Wikipedia page at http://en.wikipedia.org/wiki/NTT_DoCoMo and
its English version corporate site at http://www.nttdocomo.com/ for more information.
NTT DoCoMo has an English version of its list of services offered:
7. au is the second-largest provider in Japan, and as of 2006, it had over 24
million subscribers. au is based on CDMA networks and is using CDMA 2000
1xRTT for its 3G networks.
au also offers a diverse suite of services including video distribution (EZ
"Chaku-Uta-Full"), Osaifu-Keitai, and Edy. EZ Navi Walk is a GPS service
allowing users to be guided via map to their destination.
C.) SoftBank Mobile14
SoftBank Mobile is based on a 3G W-CDMA network with over 15 million
subscribers. In the last couple years, it has been growing faster than its
competitors by virtue of its White Plan, which offers flat-rate voice calling. So it
is competing on price and therefore offers fewer services.
JAPANESE HANDSETS AND MOBILE PLANS
In Japan, subscribers can't buy phones without post-paid or pre-paid
plans. Services and features are somewhat built in to the phone as an extension
of the control the providers maintain over the user's experience with his phone.
Japanese phones do not work in foreign countries, and there is only limited
roaming for international phones on Japan's networks. These difficulties and
incompatibilities have a lot to do with the restrictive nature not only of Japanese
providers but of Japanese standards and laws. For instance, you must show
proof of citizenship to purchase a cellphone plan in Japan. If you are a foreigner,
you must have an Alien Registration Card and may be required to purchase
using only a credit card.
JAPANESE MOBILE CULTURE
Japan has a unique mobile culture that has developed out of its dense,
everyday commuter schedule. With a population density of 337 people per
square kilometer, Japan's commuters spend a lot of time on mass transit. But
social etiquette while on mass transit dictates that people not talk or make noise
For an idea of how compatible Japanese phones and networks are with other regions, see:
8. on their cellphones. Therefore, design for cellphones has moved towards
facilitating text messaging, video transmission, and reading data online.16
Partially because of the many Japanese character sets, and partly because
of the expressiveness of Japanese emoticon culture, cellphone design is crucial to
sales. Japanese consumers prefer to be able to use one hand when using their
phone. Another example of importance of design is Japanese reaction to Apple's
iPhone, which is revolutionary within the United States, but garners a
completely different reaction in Japan. One anecdotal story:
"Claude is a 27 y.o. Japanese male I met in my college days. He lives
right outside Tokyo working as a textile designer. He thinks the iPhone
is super sexy. To him, it doesn't look like any other phone out there. He
loves how slim it is and is completely smitten with the multi-touch
interface, but when asked if he'd give up his Sharp branded phone; he
"Claude's typical day starts with him checking his email on his
phone. He gets all his daily tasks and calendaring events this way. He
then syncs it with his computer. He pays for the subway by placing the
phone on a kiosk granting him access past the gates. The commute is
spent watching TV on his phone by rotating the screen. A small
antenna extends up and catches the wireless digital TV signals
(something we will never have here in America). About 45 minutes
later, he's in Tokyo and heads to a vending machine to buy fresh fruit
and water. He places the phone up against a pad. The vending machine
reads his bank information which is tied into his phone. He then places
his thumb on the phone's tiny thumbprint reader to verify his identity.
As he makes his way to the office, he waves the phone near the door
handle to unlock it. During a 10 minute break, he's flips thru a
magazine and sees something he wants to buy. The item has a tiny
stamp size barcode pictogram next to it. He scans the pictogram with
his phone. A receipt and shipping confirmation hits his email minutes
later. As the day ends, he syncs with his work computer and goes
grocery shopping paying for items with his phone. Before heading
home, he heads to a bar his friend has invited him too. He uses the
phone to give him step-by-step directions. The day is finally over and
his phone's battery is nearing the end of its life. He plugs it in and goes
about the rest of the evening relaxing before bed.
"Claude feels the iPhone will sell but only to people who already
have Macs and to people concerned about style. As for the rest of the
country, he thinks asking a Japanese person to give up mobile digital
TV is like asking an American to give up football for soccer. So I asked
him what his next phone would be if not the iPhone. He says he has his
eye on the Sony Ericsson SO903iTV."17
For Japanese mobile users, functionality extends far beyond just using one's
phone to communicate. It includes interacting with one's physical environment
within a densely-packed, technologically savvy city. The cellphone has evolved
into a multifunctional tool in Japan and not just a communicator. While the
iPhone is attractive in a culture that is highly sensitive to style, American
branding, and small form-factor, it cannot, at least in this iteration, displace the
Japanese preference for clamshell phones that facilitate lots of one-handed typing
(the iPhone's touch screen requires two hands and visual recognition of actions
since there is no tactile key-press recognition behavior) and multiple
technologies like Edy and FeliCa.
In terms of fashion, since the Japanese are constantly playing with their
phones out in the open, this may explain the tendency for young Japanese girls
to customize the appearance of their phones more than people would in the US.
The tendency is so great that adding charm chains with lots of baubles to one's
phone is commonplace in Japan, and virtually non-existent in the US.
II. AMERICAN TELECOMMUNICATIONS INFRASTRUCTURE
In the US, CDMA has a slight edge in subscribers, by virtue of
Qualcomm's American headquarters being located there. Verizon Wireless and
Sprint PCS operate on CDMA for 2G. But GSM is also popular, with AT&T
Mobility and T-Mobile as the major providers. This has spurred a lot of
competition not only for features but also on pricing plans, as providers offer
incentives for consolidating one's friends and family onto one provider to
A blog post about Japanese attitudes towards the not-yet-released Apple iPhone.
10. encourage more use on their own networks instead of on competitors'.
AMERICAN TELECOMMUNICATIONS INDUSTRY BREAKDOWN
A.) Verizon Wireless18
Verizon Wireless is the second-largest provider in the US with about 65
million subscribers, and operates solely on a CDMA-based network,
transitioning to CDMA 2000. Verizon Wireless is rolling out V-CAST, its video
distribution channel, to weak results. However, its VZ Navigator service19,
giving a cellphone GPS and directions-based mapping functionality, gives it a
features edge, since GSM chipsets do not yet support true GPS.
B.) Sprint PCS20
Sprint PCS also operates on CDMA and is moving to CDMA 2000 1xRTT.
Last year, it invested a lot of money into upgrading its networks and has
announced as of this year a combined subscriber size of 53.8 million (taking into
account all of its wireless services).
C.) AT&T Mobility21
AT&T Mobility is the largest provider in the US with 70.1 million
subscribers operating on a GSM (2G) and UMTS (3G) network. AT&T uses
EDGE for its data transferring protocol. AT&T has struggled lately, but
experienced a sudden swell of subscribers thanks to its exclusivity contract with
Apple to market the iPhone for its network.
T-Mobile has 29.8 million subscribers on a GSM (2G) and UMTS (3G)
network, also. T-Mobile tends to compete on low pricing and high-quality
11. AMERICAN HANDSETS AND MOBILE PLANS
Like Japan, American providers exhibit a lot of control over the features
available on mobile phones in US markets. Plans are bundled with handsets and
unlimited text messaging and data plans are expensive, albeit available. Users
are tied into phones by contractual limits that require paying contract violation
fines to break. Even pre-paid SIM cards require purchasing into one provider --
it is not easy to swap out SIM chips or add minutes between different providers.
AMERICAN MOBILE CULTURE
Most Americans do not live in densely-populated areas like the Japanese
do. While certain cities such as San Francisco and New York probably strongly
resemble the growth path of mobile phones in Japan, much of America is spread
out and facilitates a culture of driving. The requirement of one's attention while
driving leads American behavior towards voice calls as opposed to active typing
on a mobile phone. Americans are also much larger consumers of Bluetooth and
Convergent devices have struggled in the US until lately with the
Research in Motion BlackBerry and the Apple iPhone. The BlackBerry has been
incredibly successful for corporate users as it offers push e-mail support with
most of the major enterprise e-mail server platforms available. The iPhone offers
a touchscreen PDA with visual voicemail (select which voicemail to listen to,
instead of having to listen to an automated program), cleaner text messaging,
MP3/iTunes support, and more. Both devices rely on EVDO (2.5G data transfers)
and BlackBerry supports 3G. The iPhone will not support 3G until its next
The iPhone is seen as breaking the hold providers have had both on the
feature sets of the handset as well as the service available over wireless. Apple
negotiated an exclusivity contract with AT&T in exchange for being able to
develop its own applications and its own handset. Apple also agreed to take
over initial billing and sign-ups, and AT&T had to implement visual voicemail
A blog post detailing Japan’s and South Korea’s edge in handset development, but the lags in
certain features’ development: http://analytica1st.com/analytica1st/2006/10/abi-research-
japanese-and-south-korean.html Also see http://analytica1st.com/analytica1st/labels/Other.html
for more posts related to Japanese mobile development.
12. on its network. This has been the first real excitement in the US mobile market in
ANALYSIS OF STRUCTURAL DIFFERENCES
It has been written that hardline bandwidth is much cheaper in Japan than
the United States. But this has not manifested itself in customer plan pricing.
While Japanese broadband costs are $0.07 per 100 kilobits/second versus $0.49 in
the US, Japanese mobile providers earn far more per user in the ever-important
metric ARPM, Average Revenue Per Minute. Japan's companies earn $0.25 per
minute versus only $0.04 per minute in the US.
Part of this difference can be explained by market concentration. In the
US, there are over 10 providers with over 1 million subscribers. In Japan, there
are only four. Okay, the US has a much larger population, so what else? But in
the US, the top two companies control only 51.7% of the market, while in Japan,
the top two control 78.6% of the market. The third largest competitor in Japan,
SoftBank Mobile, has made huge in-roads by offering much cheaper flat-rate
plans. So competition in Japan may drive companies' revenues down in the
But Japan's vastly superior broadband density does not manifest itself in
the same way in wireless density, and this is a key distinction that causes a lot of
confusion in comparing the two countries. In Japan, for wireless, more spectrum
has been allocated to private interests than in the US, with 347MHz compared to
294MHz. Considering the US has more than double Japan's population, there is
far more wireless room for
Japanese providers to
innovate and introduce
services for Japanese
consumers than in the US.
However, at the same time,
both countries diverge QuickTime™ and a
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standards for spectrum
distribution, making their
services and phones mostly
incompatible abroad. Is
Japan's wireless spectrum
13. allocated to the parties most willing to invest in operationalizing it?
While the US has less spectrum and a lower population density, it also
serves 828,000 subscribers per MHz of spectrum allocated compared to Japan's
297,000. The US, with its users more spread out, will seek to build out networks
that emphasize long-range Figure 1: See Footnote #25.
capability and large
capacity of subscribers per tower and per MHz of spectrum, in order to reduce
build-out costs. The FCC in the US has also been more successful in
experimenting with spectrum auctions, which have raised large revenues for the
government and which have generally provided spectrum to those purchasers
who will make the most use of it -- compare this with the poorly designed and
timed auctions in Europe during the dotcom bust, or the beauty pageants typical
Another explanation for differences between Japan and the US in the
wireless sector could be that Japanese users are utilizing more data-intensive
services than Americans do, and that ends up costing them more. The US is still
dominated both in usage and perception by the idea that Americans only care to
make voice calls and don't care as much about text messaging or Internet
accessibility. This claim is dubious and could be a symptom of over-expensive
pricing plans for data services in the US. That said, Americans certainly use far
more voice minutes than the Japanese: an average American consumer uses 823
minutes of call time while a Japanese individual uses only 140.
Just as the FCC in the US has largely taken a hands-off approach towards
technology, letting the market create its own winners and losers and then
regulating successful methods, the executive administration and Congress have
not made national telecommunications infrastructure upgrades a priority.
Contrast this with Japan, with its 2010 Competition Promotion Program24. This is
an active attempt to transition Japan and Asia towards the future of telecom, IP-
based services through a national and regional strategy. Asia has placed priority
on building up informational access and is therefore looking forward to a world
awash in data and advanced communications services. High penetration of fiber
in Japan and a move by wireless providers towards 4G already are some
examples of Japan's taking initiative in the telecommunications sector.
A good PowerPoint slideshow of how Japan is tackling next-generation networking issues:
14. ANALYSIS OF COMPETITION WITHIN TELECOM SECTORS
So what does all this mean? Which environment is "better" for consumers,
companies, or future software developers such as myself?
The United States has more competitive wireless access. US wireless costs
consumers less, and there is less market concentration and more competitors.25
Services are similarly priced across wireless standard and company. Barriers to
entry can be somewhat high as spectrum is controlled mainly by AT&T and
Verizon, even more so after the 700MHz FCC auction recently. Since there are
GSM and CDMA standards, however, there is room to compete within this
limited spectrum. American consumers can expect to have access throughout the
country on any network.
Said David Pogue, technology editor at the New York Times:
"I also remember hearing friends on the Palm Treo team tell me
what a nightmare it was to sell their early phones to the American
carriers, who traditionally wield veto power and design control over
every feature of the phone. The Treo team had all kinds of great
ideas for improving the design and software of cellphones—but
those carriers turned up their noses with a “we know what’s best”
Reed Hundt, former FCC chief, was more blunt:
"[The U.S.] is the last market in the world that people choose to
bring a new wireless product to. ... Not second or third--the absolute
last. ... Right now the policy of the FCC has been to encourage
AT&T and Verizon to become the twin Bells that dominate the
wireless business. They're allowed to buy all the spectrum they can
find. ... This is the only country in the world where the rule is the
big guys can buy all of it... It's very hard for innovators to get into
the market, in terms of content or software or hardware."27
Blog post with an excellent table describing the US’s advantage in provider plan pricing:
David Pogue gathers his reflections from attending a telecom conference abroad:
Interview with Reed Hundt: http://crave.cnet.com/8301-1_105-9883241-1.html
15. American providers often absorb the cost of handsets, offering decent
phones to new customers for free. Feature sets and applications on phones are
based on proprietary, restricted operating systems. Functionality is extremely
limited as Americans prefer to purchase based on service and access instead.
The BlackBerry and iPhone are challenging the assumption that Americans won't
pay a premium for data services, push e-mail, and more data. But for now,
Americans prefer mainly to use voice services and so do not demand convergent
devices as phones.
American broadband is an entirely different matter. Broadband costs more
in the US but Americans are used to using broadband at home, work, and school.
In between, they are typically driving or outside of wireless access, and do not
use wireless data services as much as the Japanese.
Japan's mobile culture emphasizes functionality over service access.
Japanese cellphones are truly multi-functional devices, offering ways to make
automatic transactions, identify oneself, and distribute video. Applications on
Japanese mobile phones are diverse and competitive, and there are several
popular standards developed by major companies such as Sony's FeliCa. The
handset market is very competitive, rewarding those who assist Japanese in
maintaining their mobility. Socially, Japanese prefer not to use voice and rely on
text messaging and e-mail on their phones more.
Japanese providers are more concentrated than in the US. It costs more to
use a mobile phone in Japan, but more features are offered. SoftBank Mobile is
just beginning to gain momentum in driving down rates with its flat-rate plan.
Japan is ramping up its networks to be capable of supporting more and
more advanced and bandwidth-intensive applications. A lot more power is in
the hands of application developers and new entrants, although providers still
largely control the software packages on their phones.28 At least structurally, a
service such as the one I wish to develop, requiring a flexible application
programming interface and low-latency data transfers, should make more sense
on Japanese networks. This is especially so since Japanese phones are
convergent devices and I will attempt to collect data not just through user input
but by collecting externals from the phone's metrics; as an example, I would be
“ABI Research: Japanese and South Korean Mobile Handsets Leading the World in Mobile TV,
Digital Imaging, and Display Innovation”: http://analytica1st.com/analytica1st/2006/10/abi-
16. interested in collecting the data about when a user walked through a turnstile at
a sporting event or subway, or facilitating the ways users interact with each other
using RFID/FeliCa technology.
It is of my opinion that American innovators are losing faith in the US
telecommunications environment as the most obvious place to start a new
business or experiment with new ideas. Online innovation is becoming
increasingly clustered and isolated within pockets in California, particularly
Silicon Valley and San Francisco. Intense debate over net neutrality pits the
providers of broadband (which would eventually include mobile providers as
they seek to contain content distribution channels over cellphones) against
innovators. At this point, the FCC has made no clear ruling but has hinted that
perhaps Comcast, the major complainant against net neutrality, has overstepped
its bounds. Congress, showing its lack of understanding in online issues, seems
partial to voting against net neutrality. Regulation is a cursed word in the US
except when it comes to morality, so the Internet's days as a large sandbox may
become tenuous in the US. It is up in the air at this point.
The FCC, historically, does not have a good track record of actively
promoting competition (save for spectrum auction design) but instead passively
discourages anti-competitive behavior. My belief, that a telecommunications
upgrade program to spur telecom infrastructure in the US as a new kind of
digital Renaissance is needed for the US to remain competitive, is not a strong
political view for others. This digital Renaissance will require pro-competition
policies for the providers and a digital user's codification of protected behaviors
online: the right to access and produce information, the right to freedom of
application use across networks and providers, an expectation of net neutrality
in transferring data, and privacy from domestic surveillance except on the basis
of court-approved wiretapping. While these rights stray from the topic of the
paper, they are important for providing an environment conducive to the success
of the Internet not just in the US but worldwide.
As far as policies encouraging markets go, if the US cannot keep its online
innovators and entrepreneurs, then I believe the government will have failed in
promoting active pro-competition and pro-business practices.
But by no means is the US market a lost cause. Where the US is superior
is in its online application development. Much of the movement towards web
applications and centralized databases with multi-access web interfaces is being
done in the US. By rolling out more bandwidth and more access to the Internet,
the major US providers may be sealing their own fate. If the Apple iPhone does
17. manage to break the stranglehold on innovation as it has been anticipated to,
then as soon as subscribers can access any web site online at a fast speed, then
web apps will make any provider-supplied applications non-competitive.
This will not break a stranglehold on hardware additions to American
phones, so American subscribers may not see FeliCa or Edy any time soon, but it
will go a long way towards citizens always being connected -- a necessary
prerequisite for the long-term success of my company.
It is unlikely that regulators will step in or that the government will pass a
bill encouraging online innovation and infrastructure development, so the US
market will have to continue to compete its way out of its problems. Compared
with an active Japanese program to get everyone online29, though, the US is in
danger of growing far slower, and therefore losing its edge as the chief
innovating country on the Internet.
Good PowerPoints showing the priorities for Japanese telecommunications governance bodies: