This document summarizes some key issues in recent ICT policies in Japan. It discusses competition in broadband markets, net neutrality, and platform regulation. It notes that Japan's approach so far has not been heavily regulatory and has focused on guidelines and disclosure requirements rather than direct rules. The document also provides background on Japan's policies and progression to becoming a broadband society, current state of broadband infrastructure and markets, broadband usage trends, and increasing stress on networks. It concludes with MIC's proposals for a universal broadband service program.

1. Some issues in recent ICT policies in Japan
Toshiya Jitsuzumi, D.Sc., MBA
Professor, Chuo University
T. JITSUZUMI@MIC Japan's ICT Capacity Building Workshop Tokyo, 2022/8/3)
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2. Competition, net neutrality, platform regulation
T. JITSUZUMI@MIC Japan'sICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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3. Efficiency and market dynamism in the broadband ecosystem
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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4. Efficiency and market dynamism in the broadband ecosystem
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Competitive market

5. Factors that influence the performance of the BB ecosystem
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Content and Application
Online Platform
Network
Handsets or Terminals
Fair and efficient transaction that will be
guaranteed the competitive market.
Such markets have to satisfy the following
conditions:
• “perfect” information
• Inclusiveness
• No externality
• No public goods
• Sufficient competition in each layers
Competition guarantees the proper
functioning of the inter-layer market.
Following conditions will generate sufficient
competitiveness:
• No natural monopoly
• Level playing field among players
• Proper pricing of necessary inputs
• Low-enough switching cost
• No entry barriers
• Premissionless innovation

6. Factors that influence the performance of the BB ecosystem
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Content and Application
Online Platform
Network
Handsets or Terminals
Factors that may impede competition
at each layer
• Economies of scale
• Economies of scope
• Network effect
• Entry barrier
• Switching cost
• Intellectual property
• Monopoly of important inputs
• Innovation that requires permission
Factors that may impede fair transaction
• Power balance between players
• Market dominance at each layer
• Vertical integration
• Externalities
• Transaction cost
• Information asymmetry
• Insufficient transparency
• Improper literacy

7. When a certain layer is monopolized or oligopolized, …
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Content and Application
Online Platform
Handsets or Terminals
Monopolistic Network
Net neutrality
problems
Content and Application
Network
Handsets or Terminals
Calls for platform
regulation
Monopolistic Online Platform

8. Status quo of the broadband “network” markets in Japan
Mobile broadband
◦ Network w/ ISPs
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Fixed broadband
◦ All broadband
◦ Fixed ISP
◦ FTTH
HHI=2,724
HHI=1,860
HHI=2,226
HHI=1,982
Source: MIC 2021

9. Status quo of the broadband “platform” markets in Japan
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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0 1,000 2,000 3,000 4,000
Rakuten
Amazon Japan
Yahoo! Shopping
ZOZOTOWN
au PAY market
B yen
2022 sales of TOP5 e-commerce malls
Source: statcounter, MakeShop
Browser Market Share on Mar 2022
Search Engine Market Share on Mar 2022
Mobile Vendor Market Share on Mar 2022
iOS
65.63%
Android
34.37%

10. Japan’s approach is not micro-management oriented, so far.
To net neutrality
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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To platform issues
◦ In recent years, digital technology-based trading has dramatically
been improving users’access to markets, and digital platforms, in
particular, have been playing a significant role in such trading.
Meanwhile, some concerns have been raised over digital
platform markets, such as transparency and fairness.
Article 6 (Fairness in Use) of the
Telecommunications Business Act (TBA)
No telecommunications carrier shall
engage in unfair and discriminatory
treatment with regard to the provision of
telecommunications services.
General provisions applicable to the entire
telecommunications industry
Non-legally binding guidelines
• Guidelines for Traffic Shaping (2008)
• Guidelines for Zero-rating Services (2020)
• Guidelines on Consumer Protection Rules
of the TBA (2020)
Act on Improving Transparency and Fairness of Digital
Platforms (TFDPA) (2020)
• The Act stipulates necessary measures for digital platforms to
disclose terms and conditions and other information, secure
fairness in operating digital platforms, submit a yearly report
on the current situation of business operation, and conduct
self-assessments.
• In addition, the Act requires the government to encourage
digital platform providers and their customers to facilitate
mutual understanding.
Act on the Protection of the Interests of Consumers
Who Use Trading Digital Platforms (2022)
• The Act Specifies the obligation of effort of the transaction
digital platform and establishes the consumer's right to
request disclosure of the seller's information

11. What might be next in the realm of broadband competition debate?
In the very near future, we will need to discuss how to
make the network slicing that will be enabled by 5G
operate compatible with the principles of net neutrality.
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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There is a need to establish certain rules for
interventions, if needed, to guarantee the
appropriateness of the various types of information
circulating on the Internet.
Source: http://www.strategies.nzl.com/assets/articles/2020/Fig-1.jpg, https://www.christchurchcall.com/share-image.jpg, https://gijn.org/wp-content/uploads/2017/12/Fact-Checking-Verification.png

12. Deploying broadband
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Source: http://kouwa-cc.co.jp/images/06.jpg

13. Economic impacts of broadband speed (ITU 2020)
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Source: ITU (2020) “How broadband, digitization and ICT regulation impact the global economy:
Global econometric modelling November 2020,” https://www.itu.int/dms_pub/itu-d/opb/pref/D-PREF-
EF.BDR-2020-PDF-E.pdf
All studies conclude that broadband speed has an impact on
GDP, while the range of contribution varies.
Impact of speed
Impact of penetration
The findings based on cross-country data:
1. Developed countries with high penetration of fixed
broadband enjoy a “return to scale” effect.
2. The impact of mobile broadband is driven by a
“saturation” or “diminishing returns” effect.

14. Broadband “availability” and “penetration” in Japan
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Source: Created using the data from MIC’s
White Paper 2021
(https://www.soumu.go.jp/johotsusintokei/w
hitepaper/r03.html), MIC’s press releases
on Jun. 18, 2021 and on Mar. 18, 2022,
and the data of MIC
(https://www.soumu.go.jp/main_content/00
0801102.pdf)

15. Policies that have contributed to Japan becoming a broadband society
Stages Policies
1st stage: Development of ICT infrastructure
• e-Japan Strategy (2001)
2nd stage: Promotion of ICT utilization • e-Japan Strategy II (2003)
• New IT Reform Strategy (2006)
• i-Japan Strategy 2015 (2009)
• New Strategy in ICT (2010)
3rd stage: Utilization of digital data • Declaration to be the World’s Most Advanced IT Nation (2013)
• Basic Act on the Advancement of Public and Private Sector Data
Utilization (2016)
• Declaration to be the World’s Most Advanced IT Nation (2017)
• Digital Government Strategy (2017)
• Digital Government Strategy (2017)
4th stage: Formation of a digital society
• Declaration to be the World’s Most Advanced Digital Nation - Basic
Plan for the Advancement of Public and Private Sector Data Utilization
(2018)
• Vision for a Digital Garden City Nation (2021)
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Because development of ICT infrastructure
progressed ahead of the schedule, not only
infrastructure development but also many
measures for ICT utilization were implemented.
The focus was on the development of ICT
infrastructure.
Utilization of various digital data was
promoted and measures were taken toward
creation of a “society that utilizes public and
private sector data.”
Until the 3rd stage, the goal was to become
the world’s most advanced “IT nation,” but in
2018, the goal was set to become the world’s
most advanced “digital nation.”
Source: Created based on MIC’s White Paper 2021 (https://www.soumu.go.jp/johotsusintokei/whitepaper/r03.html)
a total of 5.7 trillion yen
to be spent in the
FY2021 and in FY2022.

16. Broadband usage in Japan
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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+
distance-learning
teleworking
Source: MIC’s White Paper 2021
(https://www.soumu.go.jp/johotsu
sintokei/whitepaper/eng/WP2021/
2021-index.html)
The use of digital technologies is far-ranging in everyday life.
• Most used services are “Internet shopping,” “payment /
settlement” and other consumption-related services. These are
followed by “map/navigation” that is used when travelling,
“information search/news” for information gathering and “video
distribution” for entertainment, etc.
• Only 6.3% of the respondents do not use any such services.

17. Dramatic increase in broadband usage
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Source: MIC’s White Paper 2021
(https://www.soumu.go.jp/johotsusintokei/whitepaper/eng/WP2021/2021-index.html)
With the increase in hours of being at
home under the COVID-19 pandemic,
Internet traffic has sharply increased.
Traffic had been increasing around 20%
annually, but in 2020 it increased more
than 50% over the previous year
(Figure 2-1-3-5)

18. Increasing stress on Japan’s broadband infrastructure
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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Measurements (Nov. 2021-Mar. 2022) by MIC's proprietary app.
The median "actual speed" of broadband with "advertised speed" of 1Gbps or
higher was 199.1 Mbps; with ad speed of 1Gbps, 193.7 Mbps; and with ad
speed of less than 1Gbps, 94.6 Mbps.
https://www.soumu.go.jp/main_con
tent/000821464.pdf
N
Average
Median
S.D.
25% percentile
75% percentile
legend
Average
Median
Less than 1Gbps 1Gbps Over 1Gbps
Less than 1Gbps 1Gbps Over 1Gbps

19. MIC’s proposals for “universal broadband service”
As for broadband services, the volume of usage is growing year by year, and “maintenance of existing
infrastructure” is becoming increasingly important in addition to “expanding/upgrading broadband
network.”
Designate a certain broadband services as “universal service” and establish a subsidy system or a
universal service fund to ensure the stable provision of broadband services in unprofitable areas.
T. JITSUZUMI@MICJapan's ICT CapacityBuildingWorkshop Tokyo,2022/8/3)
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◦ According to the MIC’s study group:
◦ Based on the concept of beneficiary-pays, it is
appropriate that the subsidy should be borne by
broadband service providers.
◦ OTT service providers are also beneficiaries.
However, it is appropriate to continue to consider
whether or not to collect contributions from OTT
service providers, referring to overseas examples.
◦ On June 13, 2022, a necessary amendment to
the TBAwas enacted. It is envisioned that the
costs required to maintain broadband (approx.
22.7B yen per year).