Figure 1-3: Ripple Effect of Broadband on the Economy (Value of production induced in the respective industries in 2007)

Size of the broadband-related market: 10.2 trillion yen

When such growth of demand pertaining to broadband diffusion is estimated by categorizing the broadband-related markets into (1) device/system construction markets, (2) network market, (3) platform market, (4) content/application markets, and (5) B2C e-commerce market, the size of the broadband-related markets is expected to increase from 2.0 trillion yen in 2002 to 10.2 trillion yen, which is about 5.1 times, in 2007. As for the production inducement effect of broadband diffusion on various industries, the ripple effect of broadband on overall industries is estimated to become 18.1 trillion yen in 2007 (Figures 1-2 and 1-3).

## (iii) Trends in broadband rates

The continuing fall of broadband rates is one of the causes for the rapid broadband diffusion. When rates for DSL and cable Internet services in various countries are compared by converting them into rates per 100 kbps, the rates in Japan are found to be the lowest in the world (Figure 1-4).

## (iv) International comparison of the status of broadband diffusion

In an international comparison of the status of broadband diffusion, Japan ranks third in terms of the number of subscribers, following 18.7 million subscribers in the United States and 9.86 million subscribers in the Republic of Korea, indicating the soaring number of subscribers in Japan (Figure 1-5).

## (2) Full-fledged diffusion of IP telephones

Use of IP telephones has suddenly increased with the

Ripple effect on the economy 18.1 trillion yen

Source: “Survey on Utilization of IT in Business Management.”

diffusion of broadband. Following the launch of IP telephone services using dedicated IP networks as the relay networks in April 2001, IP telephone services that use broadband circuits as the access circuits began to be provided in full fledge in 2002 and 2003.

According to an intention survey of broadband users, the number of subscribers to IP telephones using broadband circuits was estimated to be approximately 2.27 million as of the end of 2002. The number of subscribers may exceed 20 million by 2007, growing by about 10 times to approximately 22.73 million persons (Figure 1-6).

## (3) Steady diffusion of the Internet

The Internet user population is constantly increasing in Japan. The Japanese Internet user population as of the end of 2002 was estimated to be 69.42 million (a 24.1% increase over the previous year), increasing by 13.49 million in one year. The Internet penetration rate exceeded half the population for the first time at 54.5%, indicating that at least one out of two persons in Japan is using the Internet (Figure 1-7).

## (4) Development of the mobile Internet

The number of subscribers to the mobile Internet (Internet connection services using cell phones) in Japan exceeded 60 million in only four years from the start of the services in February 1999, reaching 62.46 million at the end of fiscal 2002 (Figure 1-8). The proportion of mobile Internet subscribers among the total number of cell phone subscribers was 82.6%, more than 80%, as of the end of fiscal 2002 (Figure 1-8).

Looking at the status of mobile Internet diffusion in