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Japan’s data-centric mobile operator, EMOBILE, has moved to keep its competitive advantage over its larger rivals by launching what it claims is the country’s fastest mobile network. The fast-growing operator commercially launched Japan’s first ever HSPA+ network last year and earlier this month announced it is to double the peak speeds theoretically possible on the network to 42Mb/s using Ericsson kit. The full commercial launch of the network – in metropolitan areas such as Tokyo, Tokai and Osaka – will take place by year-end. This is roughly around the same time that market-leader NTT Docomo intends to ramp up its own presence in the mobile data space via the commercial launch of its LTE network. EMOBILE is expected to migrate to LTE shortly after.
Launched in March 2007, EMOBILE is a subsidiary of Japanese broadband (ADSL) provider eAccess, which was one of three companies granted new mobile licenses by the Japanese government in 2005. It has subsequently carved out a niche in delivering mobile broadband services via dongles and PC datacards and has steadily increased data speeds on its HSPA network over the past few years in a bid to keep it ahead of its more established rivals. According to the latest Wireless Intelligence data, EMOBILE only controlled a 2 percent share of the Japanese market at the end of 2Q10 but took a 12 percent share of the new customers added during the quarter. It also accounts for around 11 percent of the country’s HSPA connections. It has grown its connections base by 52 percent year-on-year, according to our data; none of its competitors managed double digit growth over the same period.
All four of the Japanese operators have been awarded LTE licenses, though Docomo and second-placed KDDI are planning the most aggressive early rollouts. Docomo’s rollout – expected to be switched on first in Tokyo in December – is set to be one of the first major deployments of the next-generation network technology in the world. Docomo expects initial LTE services to be accessed via datacards, with handsets arriving in 2011. KDDI – currently a CDMA operator – is planning commercial launch of LTE in 2012.
The availability of new high-speed mobile networks is likely to be a key factor in shaping the technologically advanced – but highly saturated – Japanese mobile market over the next few years. After several years of gradual decline in its market share, Docomo has managed to maintain its market share at around the 50 percent mark in recent quarters. According to recent data from the Telecommunications Carriers Association of Japan, the market-leader recorded the most net new subscriber gains in the fiscal year ended 31 March 2010 – the first time it had led the market in four years. SoftBank Mobile – which had topped the list in each of the two previous years – was beaten into second position, followed by KDDI and EMOBILE.
Despite this setback, SoftBank still remains Japan’s best performing operator in terms of subscriber growth, taking a 45 percent share of net additions in 2Q10 and growing its connections base by 8 percent year-on-year. The operator’s strong quarterly performance appears linked to the success of the iPhone, which SoftBank offers on an exclusive basis in Japan. According to figures from Tokyo-based MM Research Institute, SoftBank sold 1.7 million iPhones in the fiscal year ending in March, accounting for roughly 72 percent of all smartphones sold in Japan during the period. The iPhone still only accounts for about 5 percent of the country’s overall handset market but its recent success suggests that Japanese consumers are beginning to warm to the iconic Apple device following an initial lukewarm reception. SoftBank also launched the iPad and the new version of the iPhone (iPhone 4) during the quarter.
The revival at Docomo – coupled with ongoing growth at SoftBank and EMOBILE – has put pressure on second-placed KDDI. Operating revenue at the operator’s mobile business declined by 2.5 percent in the year ending in March, while operating income declined by 3.5 percent.
Matt Ablott, Senior Editorial Analyst
EMOBILE’s latest upgrade to its high-speed 3G network is an attempt to maintain its unique position in the Japanese market, where it is positioned more as an ISP than a mobile operator. The latest upgrade also means that the operator has attempted to double peak download speeds every year since its inception. Due in part to its highly-developed fixed broadband market, mobile broadband has been less of a focus for the larger operators in Japan, which has allowed EMOBILE’s data-centric business model to flourish. But all this could change when its larger rivals begin switching on their first LTE networks, which are likely to be accessed initially only by data-only dongles and datacards. EMOBILE looks set to be the only Japanese operator to deploy HSPA+ ahead of migrating to LTE (Docomo has already said it will skip the upgrade). However, EMOBILE is banking on HSPA+ being more than a short term solution. Even in a relatively small geographic market such as Japan, nationwide LTE coverage will take time and will be initially limited to the main urban centres. In the meantime, EMOBILE should be able to offer Japan’s fastest network speeds in most local markets using HSPA+. Although the first in Japan, EMOBILE is one of several Asian operators to deploy HSPA+. Others include Indosat in Indonesia, SmarTone in Hong Kong and Australia’s Telstra.
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Net Adds (%)
Japan mobile connections, Q2 2010
Source: Company data, Wireless Intelligence