Presentation at TPRC48 on Feb. 18, 2021 (JST)

1. Japan’s New Framework for Net Neutrality
The Journey So Far and Future Challenges
Toshiya JITSUZUMI, D.Sc.
Professor, Chuo University
Dean, Graduate School of Policy Studies
jitsuzumi@tamacc.chuo-u.ac.jp
T. JITSUZUMI@TPRC48（Feb. 17-19, 2021）
Agenda
1. Japan’s approach to NN in 2007 and in 2019
2. Challenges we are facing now
3. Policy recommendations for its light-touch approach

2. Japan’s light-touch approach to NN
T. JITSUZUMI@TPRC48（Feb. 17-19, 2021）
Net neutrality is assured when three freedoms for
CONSUMERs are guaranteed:
1. freedom to access content and applications
2. freedom to choose terminals
3. freedom from unfair fees
Two basic viewpoints
I. fairness in network cost sharing
II. fairness in network use
This approach was complemented by the Packet Shaping Guideline, the
Anti-DoS/DDoS Guideline, and the existing TBA; and ultimately supported
by the competitive fixed broadband ecosystem.
Net neutrality is assured when four freedoms for
USERs are guaranteed:
1. freedom to access content and applications
2. freedom to provide content and
applications
3. freedom to choose terminals
4. freedom from unfair fees
Five basic viewpoints
I. fairness in network use
II. fairness in network cost sharing
III. transparency for consumers
IV. market competitiveness, and
V. innovation and network
investment
This proposal called for 3 rules to be drafted:
a. one for bandwidth control
b. one for priority control
c. one for zero-rating and sponsored data
If these three rules were to be introduced as
legally binding ones, the MIC would have to
adopt a heavy-handed approach.
Instead of writing new laws or regulations,
the MIC chose to maintain its light-touch
approach, by adopting two guidelines that
clarify the operation of existing laws and
regulations.
• Revised Packet Shaping Guideline
• Zero-rating Guideline
Broadband ecosystem
in the 2000s
NTTEW
Network
Layer
ISP Layer
Competitive
Network
Operators
Over-the-Top
Layer
Independent
ISPs
Online Platforms
MNOs
Online Platforms
Fixed Operators
Broadband ecosystem
in the 2010s and beyond
MVNOs
Content
Providers
Application
Providers
Content
Providers
Fixed market in Japan Fixed market in the US
B2C ISP
market
Wholesale
market
Access
market
Source: Broadband markets in Japan and the US. Adapted from “Japan's Co-Regulatory Approach to Net Neutrality and Its Flaw:
Insufficient Literacy on Best-Effort QoS,” by T. Jitsuzumi, 2011, Communications & Strategies, 84(4), 93-110. Adapted with permission.
The 2007 package worked
remarkably well.
However, due to the decreasing
competition in the market and
the increasing dominance of
online platform players, the MIC
needed to find a new remedy.
Since the turn of the century, network congestion had become an everyday
problem and had allowed dominant network operators to behave anti-
competitively and jeopardize net neutrality.

3. Four challenges that may undermine its light-touch approach
T. JITSUZUMI@TPRC48（Feb. 17-19, 2021）
Across the entire broadband ecosystem, the MIC had not been sufficiently successful in its efforts to maintain competition. If anything, the
oligopoly of the market structure is steadily increasing.
1. Restore competition in the mobile market.
◦ The unbundling communication service from handset sales results in high handset prices, which
discourages users from renewing their contracts.
◦ MVNOs occupy 10+% of the market and are not a competitive threat yet.
◦ The fourth MNO, Rakuten Mobile, has failed to occupy a significant market share.
2. Respond to the accelerating trend of oligopolization by MNOs.
◦ KDDI and NTT have expanded their dominance in the mobile market via in-group M&A.
3. Reconcile competition policy with governmental demands for lower prices.
◦ Lowering MNOs’prices reduces MVNOs’ability to compete against the “big three.”
4. Control the behavior of online platforms.
◦ Currently, we have to face two layers of SMP in the broadband ecosystem.
Unless these challenges can be adequately addressed, the MIC will be forced to
shift from its light-touch approach to an approach in which micromanagement is
the primary tool.

4. 2 sets of policy proposals for its light-touch approach
Its light-touch approach is becoming increasingly difficult to sustain. However, given the speed of technological developments and the
changes in business models, it is unlikely that the government will be able to adequately micromanage relevant stakeholders.
T. JITSUZUMI@TPRC48（Feb. 17-19, 2021）
Policy suggestions for rationalizing the policy-making process
◦ It is necessary to capture the views of ordinary consumers for
the optimal allocation of policy resources.
1. to conduct regular surveys to obtain empirical data
2. to devise ways to invite more public participation and comments
3. to improve the education to enable the public to understand NN
◦ As an alternative measure, it is worth considering forming
interest groups for broadband service users and asking them to
submit comments that reflect consumer preferences.
Policy suggestions targeting network and platform layers
1. The MIC should declare that it will increase its monitoring of dominant operators and actively intervene in cooperation with the JFTC.
2. The MIC should increase the freedom to provide services to render non-dominant operators more competitive in the market.
◦ Some zero-ratings are not free from problems. However, every opportunity needs to be provided, unless the side effects are too grave.
3. The MIC or other bodies of the Japanese government, should promote competition in the online platform market.
◦ For example, creating data portability rights, realizing the DFFT, and facilitating data transaction will create room for new entrants.

5. Japan’s New Framework for Net Neutrality
The Journey So Far and Future Challenges
Toshiya JITSUZUMI, D.Sc.
Professor, Chuo University
Dean, Graduate School of Policy Studies
jitsuzumi@tamacc.chuo-u.ac.jp
T. JITSUZUMI@TPRC48（Feb. 17-19, 2021）
Summary and Conclusion
Japan’s net neutrality policy appears to be at a major turning point. The light-tough
approach, which is premised on the existence of sufficient competitive pressure, is
becoming increasingly difficult to sustain in the long term. Moreover, the sole reliance on
MIC’s policy tools is becoming increasingly difficult given the influence of online platform
operators.
As a result, addressing the issue of net neutrality in Japan is a matter of maintaining
appropriate competitive conditions within the broadband ecosystem that have come to
have two SMP layers: one is the network layer and the other is the online platform layer.
Moreover, when designing a policy framework, we must incorporate a mechanism to
carry out periodic policy reviews based on empirical data regarding consumer
preferences and facilitate the use of a public comment process of ordinary consumers.