# General Remarks

Ubiquitous networks are information and communications networks through which users can freely use networks, terminals, and digital contents with a sense of security anytime and anywhere without being aware of the presence of the networks. They enable “person-to-person,” “person-to-goods,” and “goods-to-goods” communications at any place and realize seamless and universal communications.

Ubiquitous network society where ubiquitous networks have fully diffused has the potential to integrate dispersed social components through the networks, because ICT will penetrate all social and economic activities. Thus, an advance of ubiquitous networks is expected to contribute to promoting an accumulation of knowledge and technology in all social and economic aspects, to changing the existing social and economic systems, and to accelerating technological progress which is the source of economic dynamism.

This White Paper features “ubiquitous economy,”— or the social and economic characteristics which are brought by the development of ubiquitous networks toward achieving ubiquitous network society (u-Japan) by 2010. It examines the mechanisms by which an advance of ubiquitous networks changes Japan's social and economic systems and creates economic dynamism from the following two viewpoints: “economic performance toward achieving ubiquitous network society” and “an impact of ubiquitous networks on social and economic activities.”

## 1 Economic performance toward achieving ubiquitous network society

The current situation of ICT industries suggests that, although the industries experienced a business recession with the collapse of the ICT bubble, the process of “creative destruction” is still ongoing, based on the technological innovations in the ICT field including the emergence of new businesses using the Internet.

At the same time, ICT use has also been spreading among individuals and households with the development of ubiquitous networks, but obvious improvements in productivity have yet been observed at the macro level. Impacts from the development of ubiquitous networks are expected to emerge in the following social and economic activities at the micro level first, rather than at the macro level.

## 2 Impact of ubiquitous networks on social and economic activities

Unlike in the 1990s when the development of ICT and networks were observed mainly in businesses and industries, it will be in all fields, including individuals and households in ubiquitous network society. This will have a possibility of creating new direct contact points between businesses and individuals or between suppliers and consumers, which may have great impacts on social and economic activities as well as mutual relationships, such as (1) an achievement of diverse information distribution societies, (2) an elimination of information mismatching, and (3) an improvement in productivity and human capital.

## (1) Achievement of diverse information distribution societies

It is expected that user needs will expand with the advance of convergence between communications and broadcasting. Also, “the Long Tail phenomenon” (achieving sales of products with low and diverse demand) will emerge in network transactions between suppliers and consumers due to new trends including Web 2.0, which will cultivate niche markets and satisfy diverse user needs. Furthermore, with the rise of consumer-generated media (CGM) such as blogs and social networking services (SNS), knowledge and various opinions will be increasingly provided or returned to the society as all types of entities will become able to send out information at a low cost.

## (2) Elimination of information mismatching

With the decrease of users’ information search costs due to the development of Internet personal ads, portal sites, and search engines, as well as the implementation of effective marketing by using these tools of companies, attempts will be made to eliminate mismatching between information suppliers and information seekers. This is expected to contribute to greater user satisfaction, stronger business competitiveness, more efficient markets, and globalization of transactions.