Japan to open up 3G market

September 27, 2004

Japan's Ministry of Internal Affairs and Communications said it would allow more players to enter the 3G mobile phone industry that could see new operators begin services in 2006.

Ministry sources say that the frequencies currently used for public services could be opened up for private-sector mobile companies as early as fiscal 2005.

It is expected that part of the 1.7GHz band will be reserved exclusively for 3G mobile services, enough to provide services to 15 million subscribers. The opening up of the frequencies would likely lead to a rise in competition and a decline in service fees in Japan, which has only three 3G mobile operators. New entrants will be able to deploy networks using either WCDMA or CDMA2000 technologies.

The ministry will determine in October on the qualifications and number of companies eligible to apply for a 3G mobile license. If the allocation of the new band takes place next fiscal year, the actual service could start in fiscal 2006, the sources said.

Softbank Corp is likely to apply for the new band. The company is already seeking to provide 3G service in the 800MHz band using CDMA2000 technology but its application is likely to be rejected because the ministry intends to allocate that frequency to NTT DoCoMo and KDDI.

On Monday, Softbank president Masayoshi Son said the company intends to take legal actions if the government does not allocate it 3G bandwidth. Son said earlier this month the government's plan to reallocate the bandwidth to incumbent players as "unfair" that favours existing companies and blocks new service providers entering the mobile phone business.

Setting up 3G service in the 800Mhz band would be attractive for Softbank, as it would require less capital expenditure than alternative higher frequency ranges.