# Chapter 1 Telecommunications Liberalization and Growth of the ICT Industry

○Since the telecommunications liberalization, Japan’s ICT industry has experienced three major transformations: from “the age of the telephone” to “the age of the Internet and the mobile phone” and on to “the age of broadband and the smartphone.”

## 1985 – 1995 Age of the Telephone

• Many new carriers entered the communications market. The added competition drove down prices and diversified services.

• Policy issues included expanding new participation in various markets, establishing competition conditions between new common carriers (NCCs) and NTT, examinations of the state of NTT, and international trade problems (for example, U.S.-Japan discussions on car phone methodologies).

1890	• Telephone switchboard businesses start
1952 '53	• Nippon Telegraph and Telephone Public Corporation established • Public Telecommunications Law enacted • Kokusai Denshin Denwa Co. Ltd. established • Eliminated backlog in subscriber telephones
1985	• Telecommunications liberalization • Nippon Telegraph and Telephone Corporation established
1987 '88 '89	• Long-distance NCCs enter the long-distance phone market • Mobile communications NCCs start entering the market • International NCCs enter the international phone market • Satellite NCCs start satellite phone services • U.S.-Japan discussions on car phone methodologies
1990 '91 '92 '93 '94	• Telecommunications Council final report on the state of NTT and policy measures established • NTT Docomo established • Long-distance NCCs complete nationwide networks • Long-distance NCCs implement end-to-end fees • Commercial Internet services start • Restrictions lifted on sales of mobile phones

## 1995 – 2005 Age of the Internet and the Mobile Phone

• Growth of the Internet caused huge structural changes in the information and communications industry. Mobile phones exploded in popularity and their functions grew increasingly sophisticated.

• Policy issues included establishing interconnection rules for fixed-line communications, introduction of asymmetric regulations, relaxing regulations on market entry and fees, promotion of ICT applications (from infrastructure development to application promotion), and establishing usage environments.

1995 • PHS services launched

1996 • Public-private-public connections permitted

1997 • Complete liberalization of international public-private connections

1998 • Agreement on WTO basic telecommunications negotiations

• KDD law abolished

• Introduced connection accounting

1999 • Switched from a fee licensing system to a reporting system

• Reorganized NTT

• Mobile Internet services start

• Act on Prohibition of Unauthorized Computer Access enacted

• ADSL services start

2000 • IT Strategy Council established

• U.S. and Japan governments agree on NTT connection fees

• Introduction of the Long-Run Incremental Cost (LRIC) model

• IT Basic Law enacted

• e-Japan Strategy established

• Asymmetric regulations and universal service system introduced

• National Broadband Initiative (policy to establish broadband by FY 2005)

• Provider Liability Limitation Law enacted

• Provision of FTTH services starts

• Act on the Protection of Personal Information enacted

• Abolished distinction between Type 1 and Type 2 carriers

• u-Japan Policy (general policy on establishing a ubiquitous-networked society by 2010)

## 2005 – present Age of Broadband and the Smartphone

FTTH and 3G/ LTE became widely accepted and IP networks increased. Smartphones appeared and immediately soared in popularity.

Policy issues included promoting ICT-driven growth strategies, aiding global expansion of the ICT industry, responses based on the Great East Japan Earthquake, assurance of equality between competing carriers and NTT East and West, promotion of competition in mobile communications, and consumer administration.

○In the almost 30 years since the telecommunications liberalization, sales by telecommunications carriers have increased about 4 times and the ICT industry's market has expanded by about 2.4 times. The ICT industry has also been a consistent contributor to our economic growth. ○Competition among telecommunications carriers has slashed communication charges.

Sales by telecoms (total sales in the domestic market and international market)

Size of the ICT industry's market

ICT industry's contribution to economic growth

Transitions in communication charges

International comparison of mobile phone charges