### b. KDDI Group

KDDI is committed to its Telehouse business, which is involved in data centers, primarily overseas. Having expanded into 13 overseas countries and regions, 24 cities, and more than 46 operational sites (including data centers in Japan), KDDI is furthering area expansion through partnerships with local enterprises. Telehouse is a global brand used by both Japanese enterprises and many local enterprises. In July 2014, the Group announced Telehouse Europe, its local affiliate in Europe, would invest approximately 135 million pounds (roughly 24 billion yen) to construct a new large-scale data center in London, England.

Through similar efforts like this, KDDI is capturing more customers and improving profits with its data center business in China and North America and, thereby, expanding its overseas earnings. Its consolidated overseas business for the year ending in March 2015 increased substantially, with operating revenues of 320.6 billion yen (up 21.6 percent year on year) and an operating profit of 16.8 billion yen (up 47.3 percent year on year).

c. Fujitsu

Fujitsu provides IT system consulting, solutions and system integration for construction, and infrastructure services, particularly outsourcing. The company's global expansion has focused on outsourcing, deploying data centers in 16 countries and about 100 locations, mostly in Japan and Europe, and rolling out global standardized cloud service platforms (such as IaaS, PaaS, and SaaS) in Japan, Australia, Singapore, the United States, the United Kingdom, and Germany. Given the rising demand to link local U.S. subsidiaries with head offices in Japan, driven by the globalization of Japanese enterprises, Fujitsu opened two new data centers on the east and west coasts of the United States in May 2014 and launched the provision of outsourcing services and private cloud (hosted) services. In this way, the company continues to strengthen its global service hubs and systems.

### 4. Communications layer: Trends in Japan's ICT industry

Japan extended high-quality mobile communications infrastructure services early on, even on a global level, under a system of three groups—NTT Group, KDDI Group, and SoftBank Group. As the voice service market shrinks, these groups have been striving to expand the high-added-value data communications service market. Looking at the groups' actual average revenue per user (ARPU) shows that while voice ARPU has plummeted, this drop is being compensated by strong increases in data ARPU (Figure 5-2-4-1).

Figure 5-2-4-1 Transitions in mobile ARPU (voice and data) over the last five years for the three domestic mobile carriers [yen per month]

(Source) Prepared from "Competition Evaluation 2013," MIC

### 5. Communications equipment layer: Trends in Japan's ICT industry

“Data communications equipment” accounts for the largest percentage of Japan’s exports of communications equipment by value. It is followed by “base stations.” The “data communications equipment” category consists of digital transmission equipment and fixed-line communications equipment (including fixed-line wireless and satellite systems). Although export values had been on a downward trend until around 2012, all product categories rebounded in 2014 (Figure 5-2-5-1).

Demand is anticipated for the build-out of backhaul networks in conjunction with the increasing sophistication and resilience of mobile communications networks through the establishment of base stations. A typical example of a backhaul network is a transmission network that joins core network nodes, such as mobile base stations with control stations or exchanges. Ordinarily, backhaul networks use fiber-optic lines or other fixed wired connections or fixed wireless connections. An example of a backhaul product in Japan is Pasolink, a fixed network wireless transmitter from NEC that relies on the company's stock of microwave transmission technology and miniaturization technology. Pasolink enjoys a large share of the global market.

Territories that have not built optical fiber lines or other large-capacity line infrastructure and territories too expansive to lay fixed lines have selected Pasolink equipment to drastically slash installation costs. In fact about two-thirds of the almost 150 countries where Paso-