Comm J Market Notes
#52, December 2007
WiMAX in Japan
The Nikkei newspaper broke the news that the Ministry of Information and Communications has selected broadband wireless licencees, with formal announcement expected December 21. Willcom Ltd, and a group led by KDDI, will receive the licenses.
The announcement caps a whirlwind process. In December 2006, the MIC allocated bandwith, and qualified the candidate technologies – WiMAX, Next-Generation PHS, and 1 or 2 others. Then this spring, it set policy for licensee selection, giving everyone a surprise by announcing that incumbent 3G operators could not own more than 33% of a bidding entity. KDDI, who had been considered the front-runner due to their early start in WiMAX standards and testing, seemed out of the game due to their existing CDMA 3G network. The likely licencees appeared to be 2 marginal players - ACCA, an ADSL wholesale operator, and Willcom, Japan’s only remaining PHS operator. It seemed the Ministry wanted to protect PHS, a Japanese-made technology, though it has only 5% share of Japan’s mobile market, and little penetration beyond Japan and China.
But, the incubment 3G operators bounced back, forming consortiums that diluted their ownership to less than 33%. KDDI joined with Toyota, Kyocera, Intel. ACCA brought in NTT DoCoMo. Softbank and new 3G operator Eaccess got together.
In Japan, frequency is not auctioned, but allocated free of charge. The selected operators are, however, monitored carefully for compliance to their roll-out plan. Both KDDI group and Willcom have undertaken to invest $1-2 Billion over the next 5 years. In the case of KDDI, Japan will be an interesting proving ground for WiMAX.