Report: Wireless Fueling Japanese Net Boom

A report released Tuesday by Japan’s Ministry of Posts and Telecommunications (MPT) shows that the number of Japanese going online doubled in 1999, with more than one-third of the new Net surfers gaining access via wireless technology.

The Japanese government’s survey found that one in five Japanese — or about 27 million people — now have Internet access, and that some 10 million of that total are logging on via handheld connections. However, the phenomenal growth — driven in part by the explosive growth of Internet-ready mobile phone sales in Japan — is considered to be a conservative estimate because the Japanese government tends to understate Internet usage.

E-Commerce Boom

According to the MPT survey, two out of every three Japanese now own mobile phones, and the number of wireless subscribers has already overtaken the number of wired users. Additionally, the report projects that about 80 million Japanese will be using some form of mobile Internet service by 2005.

This trend could translate into Japanese e-commerce skyrocketing 20-fold by 2005 from its 350-billion-yen level (3.3 billion US$) in 1999, the report says. Nonetheless, the figures pale in comparison to U.S. e-commerce, which was estimated to reach $340 billion in 1999.

Open Telecommunications Dispute

The potential e-commerce windfall via wireless Internet access could explain why Japan has been so reluctant to open its telecommunications market to foreign countries.

Japan and the United States are at odds over cuts to interconnection fees that Nippon Telegraph and Telephone Corp. (NTT) charges its competitors for use of its networks.

Japan has proposed cutting NTT’s access charges by 22.5 percent over four years, but the United States has insisted on deeper cuts over a shorter period of time. The U.S. has set a July 28th deadline to decide whether it will file a complaint with the World Trade Organization (WTO) over the issue.

End in Sight?

However, some Japanese politicians recently hinted that Tokyo is prepared to make concessions in the dispute. Hiromu Nonaka, secretary general of the ruling Liberal Democratic Party, called upon NTT last week to quickly reduce access fees, suggesting the company fund the cut by unloading part of its stockholdings in its rapidly growing subsidiary NTT DoCoMo, Inc.

Posts and Telecommunications Minister Eita Yashiro said late last month that Japan will examine the possibility of making a bigger cut in the access fees because of better-than-expected profits at NTT’s regional carriers.