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APRICOT 2005 Asia Broadband Summit http://www.rbbtoday.com/ What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical

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SLIDE 1

Feb.22, 2005 Feb.22, 2005 Feb.22, 2005 Feb.22, 2005 Hiroshi Fujiwara,Ph.D Hiroshi Fujiwara,Ph.D Hiroshi Fujiwara,Ph.D Hiroshi Fujiwara,Ph.D President CEO, Internet Research Institute,Inc. President CEO, Internet Research Institute,Inc. President CEO, Internet Research Institute,Inc. President CEO, Internet Research Institute,Inc. Vice Chairman, Internet Association of Japan Vice Chairman, Internet Association of Japan Vice Chairman, Internet Association of Japan Vice Chairman, Internet Association of Japan

What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan?

http://www.rbbtoday.com/

APRICOT 2005 Asia Broadband Summit

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SLIDE 2

Summary

～ ～ ～ ～What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? What is the Economical Effect of Broadband in Japan? ～ ～ ～ ～ The commercialization of the Internet began at the end of The commercialization of the Internet began at the end of The commercialization of the Internet began at the end of The commercialization of the Internet began at the end of the 20th century. This coincided with the "lost decade" in the 20th century. This coincided with the "lost decade" in the 20th century. This coincided with the "lost decade" in the 20th century. This coincided with the "lost decade" in Japan, a lengthy period of economic stagnation. Following this Japan, a lengthy period of economic stagnation. Following this Japan, a lengthy period of economic stagnation. Following this Japan, a lengthy period of economic stagnation. Following this period, Japan's Government has moved to a policy of period, Japan's Government has moved to a policy of period, Japan's Government has moved to a policy of period, Japan's Government has moved to a policy of structural reform, however has this really been effective? The structural reform, however has this really been effective? The structural reform, however has this really been effective? The structural reform, however has this really been effective? The answer to that question may not be known for some time answer to that question may not be known for some time answer to that question may not be known for some time answer to that question may not be known for some time however recently the Cabinet created a task force to review however recently the Cabinet created a task force to review however recently the Cabinet created a task force to review however recently the Cabinet created a task force to review and report on the economic effects of the national IT policy. and report on the economic effects of the national IT policy. and report on the economic effects of the national IT policy. and report on the economic effects of the national IT policy. The majority of the task force was comprised of economic The majority of the task force was comprised of economic The majority of the task force was comprised of economic The majority of the task force was comprised of economic researchers however as the lone task force representative of researchers however as the lone task force representative of researchers however as the lone task force representative of researchers however as the lone task force representative of the Internet industry in Japan. I will talk in this session on t the Internet industry in Japan. I will talk in this session on t the Internet industry in Japan. I will talk in this session on t the Internet industry in Japan. I will talk in this session on the he he he Economic Effects of IT Policies on Broadband Penetration in Economic Effects of IT Policies on Broadband Penetration in Economic Effects of IT Policies on Broadband Penetration in Economic Effects of IT Policies on Broadband Penetration in Japan. Japan. Japan. Japan. In particular, the talk will look at the successes and issues of In particular, the talk will look at the successes and issues of In particular, the talk will look at the successes and issues of In particular, the talk will look at the successes and issues of IT IT IT IT-

  • based society infrastructure development, IT applications,

based society infrastructure development, IT applications, based society infrastructure development, IT applications, based society infrastructure development, IT applications, and IT economic impact, offering suggestions for answering and IT economic impact, offering suggestions for answering and IT economic impact, offering suggestions for answering and IT economic impact, offering suggestions for answering

  • utstanding questions.
  • utstanding questions.
  • utstanding questions.
  • utstanding questions.
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SLIDE 3

Status of Broadband Subscribers in Japan and the world

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SLIDE 4

3 3

日 付 平均 40M以

上

24M以

上

12M以

上

8M以上 1M以上 1/7 2,003円/

月

2,254円/

月

2,155円/

月

2,014円/

月

1,950円/

月

1,644円/

月

12/2 4 2,361円/

月

2,759円/

月

2,663円/

月

2,439円/

月

2,348円/

月

1,598円/

月

12/1 7 2,364円/

月

2,759円/

月

2,663円/

月

2,439円/

月

2,348円/

月

1,612円/

月

12/1 2,368円/

月

2,759円/

月

2,663円/

月

2,439円/

月

2,348円/

月

1,633円/

月

12/3 2,370円/

月

2,759円/

月

2,663円/

月

2,439円/

月

2,348円/

月

1,639円/

月

11/2 6 2,437円/

月

2,838円/

月

2,738円/

月

2,512円/

月

2,420円/

月

1,679円/

月

11/1 9 2,437円/

月

2,838円/

月

2,738円/

月

2,512円/

月

2,419円/

月

1,678円/

月

11/1 2 2,437円/

月

2,838円/

月

2,738円/

月

2,512円/

月

2,420円/

月

1,679円/

月

資料提供： 資料提供： 資料提供： 資料提供：http://www.kakaku.com/bb/news.htm

A v e r a g e P r i c e

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SLIDE 5

4 4

資料提供： 資料提供： 資料提供： 資料提供：http://www.kakaku.com/bb/news.htm

日付 平均 </FONT< td> ホーム </FONT< td> マンション

(LAN)

マンション

(VDSL)

1/7 3,156円/月 4,199円/月 2,664円/月 2,604円/月 12/24 3,086円/月 4,240円/月 2,496円/月 2,523円/月 12/17 3,089円/月 4,240円/月 2,496円/月 2,530円/月 12/10 3,139円/月 4,240円/月 2,496円/月 2,681円/月 12/3 3,158円/月 4,297円/月 2,496円/月 2,681円/月 11/26 3,420円/月 4,323円/月 2,883円/月 3,054円/月 11/19 3,487円/月 4,524円/月 2,883円/月 3,053円/月 11/12 3,489円/月 4,530円/月 2,883円/月 3,054円/月

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SLIDE 6

5 5

DSL Subscribers by Region DSL Subscribers by Region DSL Subscribers by Region DSL Subscribers by Region

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SLIDE 7

6 6

DSL Subscribers by Region DSL Subscribers by Region DSL Subscribers by Region DSL Subscribers by Region

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SLIDE 8

7 7

European Union (EU) countries currently make up the largest regional DSL population worldwide, adding more than 9.25 million subscribers in the first three quarters of this year, to reach 26.5 million. with 11 countries in the top 20. The Netherlands achieved 15.52% penetration of phone lines, France 15.45% and Italy 13.41% , with the UK, at 9.49% , moving into the top 20 for the first time. Middle East and Africa recorded DSL subscriber growth of 59.5% in the first three quarters of 2004, led by Israel, now with 600,000 and Turkey, with almost 200,000. Asia Pacific added almost four million subscribers, with two countries reaching the DSL Forum¹s first stage target for a global mass-market for broadband DSL (20% of all phone lines): South Korea (28.88% ) and Taiwan (22.14% ). Six countries now have greater than five million subscribers, and another seven countries have over a million.

* Source: DSL Forum and Point Topic

DSL Promotion Topics in the world DSL Promotion Topics in the world DSL Promotion Topics in the world DSL Promotion Topics in the world

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SLIDE 9

Economical Effect of Broadband Policy Economical Effect of Broadband Policy Economical Effect of Broadband Policy Economical Effect of Broadband Policy

from from from from Report Report Report Report＃３ ＃３ ＃３ ＃３ Task Force on Structural Reform Task Force on Structural Reform Task Force on Structural Reform Task Force on Structural Reform

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SLIDE 10

9 9

T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s

  • The cheapest and fastest network infrastructure has been arranged.

Broadband subscribers have increased rapidly since 2001.

  • Internet access thru Cellular Phone is projecting in Japan and Korea.

T h e T h e m e s T h e T h e m e s T h e T h e m e s T h e T h e m e s

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  • How to promote new participants for Cellular Phone Market and Effective

Allocation of radio spectrum.

Action Action Action Action

  • Competition is the most important.

1 . 1 . 1 . 1 . W

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SLIDE 11

10 10

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t h Japan Korea Belgium Singapore

USA Germany UK France

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SLIDE 12

11 11

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* * * *ITU Internet Reports 2003 ITU Internet Reports 2003 ITU Internet Reports 2003 ITU Internet Reports 2003

Japan Korea Belgium Singapore USA Hong Kong Finland Denmark

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SLIDE 13

12 12

  • Growth Curve Shift from ADSL to FTTH

in 2004 or 2005

Broadband Subscribers in Japan

Total （ （ （ （as of end of Aug.） ） ） ） (＊ ＊ ＊ ＊increase per month） ） ） ） ADSL: 12,549,000 (220,000/mo.） ） ） ） FTTH: 1,601,000 (100,000/mo.） ） ） ） CATV: 2,768,000 ( 30,000/mo.） ） ） ） Total: 16,918,000

To 25-30million households in 2008

Source: NRI

(1,000 households) Cable Internet (end of FY)

Total 19M subscribers/2004 end!

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SLIDE 14

13 13

24.4 24.4 24.4 24.4 30.9 30.9 30.9 30.9 25.3 25.3 25.3 25.3 22.4 22.4 22.4 22.4 21.7 21.7 21.7 21.7 20.2 20.2 20.2 20.2 87.0 87.0 87.0 87.0 89.5 89.5 89.5 89.5

20 20 20 20 40 40 40 40 60 60 60 60 80 80 80 80 100 100 100 100 Japan Japan Japan Japan Korea China China China ChinaSingapore

Singapore Singapore SingaporeTaiwan

Taiwan Taiwan Taiwan Italy Italy Italy Italy Canada Canada Canada Canada Australia Australia Australia Australia

* * * * S e p t . , 2 3 S e p t . , 2 3 S e p t . , 2 3 S e p t . , 2 3

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SLIDE 15

14 14

ＮＴＴ ＮＴＴ ＮＴＴ ＮＴＴ DoCoMo DoCoMo DoCoMo DoCoMo 56% 56% 56% 56% ａｕ ａｕ ａｕ ａｕ 22% 22% 22% 22% Tuka Tuka Tuka Tuka 4% 4% 4% 4% Vodafone Vodafone Vodafone Vodafone 18% 18% 18% 18%

* * * * Sept.2004 Sept.2004 Sept.2004 Sept.2004

Market Share Market Share Market Share Market Share

1 1 1 1 2 2 2 2 3 3 3 3 4 4 4 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 1 1 1 1

J a p a n J a p a n J a p a n J a p a n U S A U S A U S A U S A U K U K U K U K F r a n c e F r a n c e F r a n c e F r a n c e G e r m a n y G e r m a n y G e r m a n y G e r m a n y

Cellular Phone Price Comparison Cellular Phone Price Comparison Cellular Phone Price Comparison Cellular Phone Price Comparison

Status of Cellular Phone market

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SLIDE 16

15 15

T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s

  • 96% of Internet Users have answered the net made the society mor

96% of Internet Users have answered the net made the society mor 96% of Internet Users have answered the net made the society mor 96% of Internet Users have answered the net made the society more e e e convenient. convenient. convenient. convenient.

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SLIDE 17

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  • r

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r s T r a n s a c t i

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F a s t I n f

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v e n i e n t V e r y C

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v e n i e n t C

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v e n i e n t C

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v e n i e n t C

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s

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s

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s

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a t a l l N

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  • conduct a survey of a 1120 of people

conduct a survey of a 1120 of people conduct a survey of a 1120 of people conduct a survey of a 1120 of people

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E v a l u a t i

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E v a l u a t i

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c

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e n i e n c e c

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e n i e n c e c

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e n i e n c e b y I n t e r n e t b y I n t e r n e t b y I n t e r n e t b y I n t e r n e t

slide-18
SLIDE 18

17 17 ＜ ＜ ＜ ＜N

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E d u c a t i

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E d u c a t i

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E d u c a t i

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E d u c a t i

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M e d i c i n e M e d i c i n e M e d i c i n e M e d i c i n e

G

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e r n m e n t G

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e r n m e n t G

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e r n m e n t G

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e r n m e n t F i n a n c i a l F i n a n c i a l F i n a n c i a l F i n a n c i a l T r a n s a c t i

  • n

T r a n s a c t i

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T r a n s a c t i

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T r a n s a c t i

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S h

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p i n g S h

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p i n g S h

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p i n g S h

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m u n i c a t i

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m u n i c a t i

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V e r y C

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v e n i e n t V e r y C

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v e n i e n t V e r y C

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v e n i e n t V e r y C

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v e n i e n t C

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v e n i e n t ＜ ＜ ＜ ＜F u t u r e F u t u r e F u t u r e F u t u r e ＞ ＞ ＞ ＞ 5 8 . 5 % 5 8 . 5 % 5 8 . 5 % 5 8 . 5 % 6 5 . 4 % 6 5 . 4 % 6 5 . 4 % 6 5 . 4 % 5 5 . 3 % 5 5 . 3 % 5 5 . 3 % 5 5 . 3 % 8 7 . 3 % 8 7 . 3 % 8 7 . 3 % 8 7 . 3 % 5 2 . 9 % 5 2 . 9 % 5 2 . 9 % 5 2 . 9 % 4 8 . 1 % 4 8 . 1 % 4 8 . 1 % 4 8 . 1 % 5 . 8 % 5 . 8 % 5 . 8 % 5 . 8 % 3 7 . 2 % 3 7 . 2 % 3 7 . 2 % 3 7 . 2 % 3 1 . 8 % 3 1 . 8 % 3 1 . 8 % 3 1 . 8 % 3 5 . 7 % 3 5 . 7 % 3 5 . 7 % 3 5 . 7 % 3 2 . 2 % 3 2 . 2 % 3 2 . 2 % 3 2 . 2 % 2 9 . 6 % 2 9 . 6 % 2 9 . 6 % 2 9 . 6 % 2 8 . 4 % 2 8 . 4 % 2 8 . 4 % 2 8 . 4 % 1 1 . 5 % 1 1 . 5 % 1 1 . 5 % 1 1 . 5 % % % % % 2 % 2 % 2 % 2 % 4 % 4 % 4 % 4 % 6 % 6 % 6 % 6 % 8 % 8 % 8 % 8 % 1 % 1 % 1 % 1 %

C a t e g

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C a t e g

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e n i e n c eI n t e r n e t I n t e r n e t I n t e r n e t I n t e r n e t

  • conduct a survey of a 1120 of people

conduct a survey of a 1120 of people conduct a survey of a 1120 of people conduct a survey of a 1120 of people

E d u c a t i

  • n

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E d u c a t i

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E d u c a t i

  • n

M e d i c i n e M e d i c i n e M e d i c i n e M e d i c i n e

G

  • v

e r n m e n t G

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  • n

T r a n s a c t i

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T r a n s a c t i

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T r a n s a c t i

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p i n g S h

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A c q u i s i t i

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V e r y C

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v e n i e n t V e r y C

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v e n i e n t V e r y C

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v e n i e n t V e r y C

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v e n i e n t C

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v e n i e n t C

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v e n i e n t C

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v e n i e n t C

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v e n i e n t

slide-19
SLIDE 19

18 18

I T u t i l i z a t i

  • n

i n M e d i c i n e I T u t i l i z a t i

  • n

i n M e d i c i n e I T u t i l i z a t i

  • n

i n M e d i c i n e I T u t i l i z a t i

  • n

i n M e d i c i n e D i g i t a l i z a t i

  • n
  • f

a m e d i c a l D i g i t a l i z a t i

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a m e d i c a l D i g i t a l i z a t i

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a m e d i c a l D i g i t a l i z a t i

  • n
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a m e d i c a l r e c e i p t r e c e i p t r e c e i p t r e c e i p t

Korea Korea Korea Korea（ （ （ （2002.10 2002.10 2002.10 2002.10） ） ） ） ・ ・ ・ ・On On On On-

  • line

line line line ７２．５％ ７２．５％ ７２．５％ ７２．５％ ・ ・ ・ ・Magnetic Magnetic Magnetic Magnetic ３．８％ ３．８％ ３．８％ ３．８％ Japan Japan Japan Japan（ （ （ （2003.12 2003.12 2003.12 2003.12） ） ） ） ・ ・ ・ ・On On On On-

  • ine

ine ine ine ０．０％ ０．０％ ０．０％ ０．０％ ・ ・ ・ ・Magnetic Magnetic Magnetic Magnetic ７．２％ ７．２％ ７．２％ ７．２％

29.2 29.2 29.2 29.2 92.0 92.0 92.0 92.0 100.0 100.0 100.0 100.0

20 20 20 20 40 40 40 40 60 60 60 60 80 80 80 80 100 100 100 100

Japan Japan Japan Japan USA USA USA USA Korea Korea Korea Korea

(%) (%) (%) (%)

I T u t i l i z a t i

  • n

i n E d u c a t i

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I T u t i l i z a t i

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i n E d u c a t i

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I T u t i l i z a t i

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i n E d u c a t i

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I T u t i l i z a t i

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i n E d u c a t i

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I n t e r n e t C

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n e c t i v i t y a t e a c h I n t e r n e t C

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n e c t i v i t y a t e a c h I n t e r n e t C

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C l a s s r

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C l a s s r

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IT Utilization Status in Medicine and Education

slide-20
SLIDE 20

19 19

1 2 3 4 5 6 7 8 9 １ C a n a d a ２ S i n g a p

  • r

e ２ U S A ４ A u s t r a l i a 1 1 J a p a n 2 2 S

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2 1 2 2 2 3 2 4 1 7

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e r n m e n t G

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e r n m e n t G

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e r n m e n t （ （ （ （2 4 2 4 2 4 2 4 ） ） ） ）

IT Utilization Status in Government

slide-21
SLIDE 21

20 20

T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s T h e R e s u l t s

  • Labor Productivity: Improved 0.9% by IT since

Labor Productivity: Improved 0.9% by IT since Labor Productivity: Improved 0.9% by IT since Labor Productivity: Improved 0.9% by IT since （ （ （ （Total Improvement : 1.1% Total Improvement : 1.1% Total Improvement : 1.1% Total Improvement : 1.1% ⇒ ⇒ ⇒ ⇒80 80 80 80％ ％ ％ ％ by IT) by IT) by IT) by IT)

T h e T h e m e s T h e T h e m e s T h e T h e m e s T h e T h e m e s

  • Labor Productivity should be improved by IT investment!

Labor Productivity should be improved by IT investment! Labor Productivity should be improved by IT investment! Labor Productivity should be improved by IT investment! Enterprises have not utilized IT yet. Enterprises have not utilized IT yet. Enterprises have not utilized IT yet. Enterprises have not utilized IT yet. 。 。 。 。

A c t i

  • n

A c t i

  • n

A c t i

  • n

A c t i

  • n
  • Structural Reform of Organization, and IT basic education,etc.

Structural Reform of Organization, and IT basic education,etc. Structural Reform of Organization, and IT basic education,etc. Structural Reform of Organization, and IT basic education,etc.

３． ３． ３． ３．H

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i c a l E f f i c i e n c y i m p r

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i c a l E f f i c i e n c y i m p r

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i c a l E f f i c i e n c y i m p r

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e d b y I T ? b y I T ? b y I T ? b y I T ?

slide-22
SLIDE 22

21 21

Improvement by IT investment I m p r

  • v

e m e n t b y N e t w

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k i n g E f f e c t I m p r

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e m e n t b y N e t w

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k i n g E f f e c t I m p r

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e m e n t b y N e t w

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k i n g E f f e c t I m p r

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k i n g E f f e c t I m p r

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y n

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y n

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  • b

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  • 1

% 1 % 1 % 1 % % % % % 1 % 1 % 1 % 1 % 2 % 2 % 2 % 2 % 3 % 3 % 3 % 3 % 4 % 4 % 4 % 4 % 5 % 5 % 5 % 5 % 1 9 8 1 9 8 1 9 8 1 9 8

  • 8

5 8 5 8 5 8 5 8 5 8 5 8 5 8 5

  • 9

9 9 9 9 9 9 9

  • 9

5 9 5 9 5 9 5 9 5 9 5 9 5 9 5

  • 2

2 2 2 0 2 2 2 2

  • 3

3 3 3 I T E f f e c t I T E f f e c t I T E f f e c t I T E f f e c t

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1 1 1． ． ． ．Assuming Assuming Assuming Assuming Kob Kob Kob Kob-

  • Douglas

Douglas Douglas Douglas type production function, it is dissolved as follows. type production function, it is dissolved as follows. type production function, it is dissolved as follows. type production function, it is dissolved as follows.

△ △ △ △(Y/L)/ (Y/L)= (Y/L)/ (Y/L)= (Y/L)/ (Y/L)= (Y/L)/ (Y/L)=β β β βNonIT

NonIT NonIT NonIT×

× × ×△ △ △ △( ( ( (K K K KNonIT

NonIT NonIT NonIT/L)/ (

/L)/ ( /L)/ ( /L)/ (K K K KNonIT

NonIT NonIT NonIT/L)+

/L)+ /L)+ /L)+β β β βIT

IT IT IT×

× × ×△ △ △ △(K (K (K (KIT

IT IT IT/L)/ (K

/L)/ (K /L)/ (K /L)/ (KIT

IT IT IT/L)

/L) /L) /L)＋△ ＋△ ＋△ ＋△TFP/TFP TFP/TFP TFP/TFP TFP/TFP

Y: Y: Y: Y: Value added portion Value added portion Value added portion Value added portion, L: , L: , L: , L: labor Investment labor Investment labor Investment labor Investment, , , , K K K KNonIT

NonIT NonIT NonIT: non

: non : non : non-

  • IT capital stock, K

IT capital stock, K IT capital stock, K IT capital stock, KIT

IT IT IT: IT capital stock

: IT capital stock : IT capital stock : IT capital stock

β β β βNonIT

NonIT NonIT NonIT,

, , , β β β βIT

IT IT IT :non

:non :non :non-

  • IT capital distribution and IT capital distribution ratio respec

IT capital distribution and IT capital distribution ratio respec IT capital distribution and IT capital distribution ratio respec IT capital distribution and IT capital distribution ratio respectively tively tively tively 2 2 2 2． ． ． ．T F P i m p r

  • v

e m e n t r a t i

  • h

a s b e e n d i v i d e d i n t

  • n

e t w

  • r

k T F P i m p r

  • v

e m e n t r a t i

  • h

a s b e e n d i v i d e d i n t

  • n

e t w

  • r

k T F P i m p r

  • v

e m e n t r a t i

  • h

a s b e e n d i v i d e d i n t

  • n

e t w

  • r

k T F P i m p r

  • v

e m e n t r a t i

  • h

a s b e e n d i v i d e d i n t

  • n

e t w

  • r

k

  • e

f f e c t a n d t h e

  • t

h e r s . e f f e c t a n d t h e

  • t

h e r s . e f f e c t a n d t h e

  • t

h e r s . e f f e c t a n d t h e

  • t

h e r s .

slide-23
SLIDE 23

22 22

0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.3 0.4 0.4 0.4 0.4 0.5 0.5 0.5 0.5 0.6 0.6 0.6 0.6 0.7 0.7 0.7 0.7 0.8 0.8 0.8 0.8 Non Non Non Non-

  • IT capital

IT capital IT capital IT capital ＩＴ ＩＴ ＩＴ ＩＴ capital capital capital capital

R e i n f

  • r

c e m e n t E f f e c t

  • f

P r

  • d

u c t i

  • n

P

  • w

e r b y I T c a p i t a l R e i n f

  • r

c e m e n t E f f e c t

  • f

P r

  • d

u c t i

  • n

P

  • w

e r b y I T c a p i t a l R e i n f

  • r

c e m e n t E f f e c t

  • f

P r

  • d

u c t i

  • n

P

  • w

e r b y I T c a p i t a l R e i n f

  • r

c e m e n t E f f e c t

  • f

P r

  • d

u c t i

  • n

P

  • w

e r b y I T c a p i t a l （ （ （ （M a r g i n a l p r

  • d

u c t i

  • n

p

  • w

e r M a r g i n a l p r

  • d

u c t i

  • n

p

  • w

e r M a r g i n a l p r

  • d

u c t i

  • n

p

  • w

e r M a r g i n a l p r

  • d

u c t i

  • n

p

  • w

e r ） ） ） ）

* * * * E s t i m a t e d V a l u e b y E s t i m a t e d V a l u e b y E s t i m a t e d V a l u e b y E s t i m a t e d V a l u e b yKob Kob Kob Kob-

  • Douglas

Douglas Douglas Douglas type production function type production function type production function type production function

slide-24
SLIDE 24

23 23 【 【 【 【Japan Japan Japan Japan】 】 】 】 Very Effective, 3.5 Very Effective, 3.5 Very Effective, 3.5 Very Effective, 3.5 Effective Effective Effective Effective 49.6 49.6 49.6 49.6 Not effective Not effective Not effective Not effective 10.1 10.1 10.1 10.1 Others 21.6 Others 21.6 Others 21.6 Others 21.6 Not so effective Not so effective Not so effective Not so effective 15.2 15.2 15.2 15.2 【 【 【 【USA USA USA USA】 】 】 】 Very Effective, 22.3 Very Effective, 22.3 Very Effective, 22.3 Very Effective, 22.3 Effective, Effective, Effective, Effective, 47.6 47.6 47.6 47.6 Not effective, 11.4 Not effective, 11.4 Not effective, 11.4 Not effective, 11.4 Not so effective, Not so effective, Not so effective, Not so effective, 18.7 18.7 18.7 18.7

C

  • m

p a r i s

  • n

a b

  • u

t I T i n v e s t m e n t e f f e c t f

  • r

e n t e r p r i s e s C

  • m

p a r i s

  • n

a b

  • u

t I T i n v e s t m e n t e f f e c t f

  • r

e n t e r p r i s e s C

  • m

p a r i s

  • n

a b

  • u

t I T i n v e s t m e n t e f f e c t f

  • r

e n t e r p r i s e s C

  • m

p a r i s

  • n

a b

  • u

t I T i n v e s t m e n t e f f e c t f

  • r

e n t e r p r i s e s J a p a n / U S A J a p a n / U S A J a p a n / U S A J a p a n / U S A

slide-25
SLIDE 25

24 24

（ （ （ （P r

  • d

u c t i v i t y P r

  • d

u c t i v i t y P r

  • d

u c t i v i t y P r

  • d

u c t i v i t y ： ： ： ：l

  • w

I T a n d l

  • w

O r g a n i z a t i

  • n

= 1 ) l

  • w

I T a n d l

  • w

O r g a n i z a t i

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= 1 ) l

  • w

I T a n d l

  • w

O r g a n i z a t i

  • n

= 1 ) l

  • w

I T a n d l

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O r g a n i z a t i

  • n

= 1 ) 1 1 6 . 1 1 6 . 1 1 6 . 1 1 6 . 1 7 . 2 1 7 . 2 1 7 . 2 1 7 . 2 9 3 . 3 9 3 . 3 9 3 . 3 9 3 . 3 1 . 1 . 1 . 1 . 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 2 1 2 1 2 I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T l

  • w

I T l

  • w

I T l

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I T l

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I T l

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I T l

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I T l

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I T l

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O r g . h i g h O r g . h i g h O r g . h i g h O r g . h i g h O r g . l

  • w

O r g . l

  • w

O r g . l

  • w

O r g . l

  • w O

r g . h i g h O r g . h i g h O r g . h i g h O r g . h i g h O r g . l

  • w

O r g . l

  • w

O r g . l

  • w

O r g . l

  • w

P r

  • d

u c t i v i t y b y O r g a n i z a t i

  • n

a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y O r g a n i z a t i

  • n

a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y O r g a n i z a t i

  • n

a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y O r g a n i z a t i

  • n

a n d I T r e l a t i

  • n

1 2 3 . 5 1 2 3 . 5 1 2 3 . 5 1 2 3 . 5 1 1 1 . 5 1 1 1 . 5 1 1 1 . 5 1 1 1 . 5 1 7 . 2 1 7 . 2 1 7 . 2 1 7 . 2 1 . 1 . 1 . 1 . 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 2 1 2 1 2 1 3 1 3 1 3 1 3

P r

  • d

u c t i v i t y b y H u m a n c a p i t a l a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y H u m a n c a p i t a l a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y H u m a n c a p i t a l a n d I T r e l a t i

  • n

P r

  • d

u c t i v i t y b y H u m a n c a p i t a l a n d I T r e l a t i

  • n

I T I n v e s t m e n t E f f e c t a b

  • u

t O r g a n i z a t i

  • n

R e f

  • r

m a n d H u m a n C a p i t a l I T I n v e s t m e n t E f f e c t a b

  • u

t O r g a n i z a t i

  • n

R e f

  • r

m a n d H u m a n C a p i t a l I T I n v e s t m e n t E f f e c t a b

  • u

t O r g a n i z a t i

  • n

R e f

  • r

m a n d H u m a n C a p i t a l I T I n v e s t m e n t E f f e c t a b

  • u

t O r g a n i z a t i

  • n

R e f

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m a n d H u m a n C a p i t a lI s s u e s I s s u e s I s s u e s I s s u e s

（ （ （ （P r

  • d

u c t i v i t y P r

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u c t i v i t y P r

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u c t i v i t y P r

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I T a n d l

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O r g a n i z a t i

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O r g a n i z a t i

  • n

= 1 ) I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T h i g h I T l

  • w

I T l

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H u m . h i g h H u m . h i g h H u m . h i g h H u m . h i g h H u m . l

  • w

H u m . l

  • w

H u m . l

  • w

H u m . l

  • w H

u m . h i g h H u m . h i g h H u m . h i g h H u m . h i g h H u m . l

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H u m . l

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slide-26
SLIDE 26

25 25

Ⅰ． Ⅰ． Ⅰ． Ⅰ．I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e

  • A

l r e a d y a r r a n g e d W

  • r

l d A l r e a d y a r r a n g e d W

  • r

l d A l r e a d y a r r a n g e d W

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l d A l r e a d y a r r a n g e d W

  • r

l d

  • c

l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e . Ⅰ． Ⅰ． Ⅰ． Ⅰ．I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e I T I n f r a s t r u c t u r e

  • A

l r e a d y a r r a n g e d W

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l d A l r e a d y a r r a n g e d W

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l d A l r e a d y a r r a n g e d W

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l d A l r e a d y a r r a n g e d W

  • r

l d

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l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e . c l a s s I T i n f r a s t r u c t u r e .

S u m m a r y

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T a s k f

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c e # 3 S u m m a r y

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T a s k f

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c e # 3 S u m m a r y

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T a s k f

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c e # 3 S u m m a r y

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T a s k f

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c e # 3

Ⅱ． Ⅱ． Ⅱ． Ⅱ．I T U t i l i z a t i

  • n

I T U t i l i z a t i

  • n

I T U t i l i z a t i

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I T U t i l i z a t i

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w

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l d N

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w

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l d N

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w

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l d N

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w

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l d

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l a s s y e t c l a s s y e t c l a s s y e t c l a s s y e t

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i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e

  • O

b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

Anxiety for personal information and security Ⅱ． Ⅱ． Ⅱ． Ⅱ．I T U t i l i z a t i

  • n

I T U t i l i z a t i

  • n

I T U t i l i z a t i

  • n

I T U t i l i z a t i

  • n
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  • t

w

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l d N

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w

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l d N

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w

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l d N

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w

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l a s s y e t c l a s s y e t c l a s s y e t c l a s s y e t

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i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e B i g s p a c e i n G

  • v

e r n m e n t , E d u c a t i

  • n

, a n d M e d i c i n e

  • O

b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

O b s t a c l e s f r

  • m

Anxiety for personal information and security Ⅲ． Ⅲ． Ⅲ． Ⅲ．E c

  • n
  • m

i c a l E f f e c t

  • f

I T E c

  • n
  • m

i c a l E f f e c t

  • f

I T E c

  • n
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i c a l E f f e c t

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I T E c

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i c a l E f f e c t

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I T

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n

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g h p

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s i b i l i t y

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p r

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e m e n t b y I T E n

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g h p

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T E n

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g h p

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T E n

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g h p

  • s

s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T I n v e s t m e n t . I n v e s t m e n t . I n v e s t m e n t . I n v e s t m e n t .

  • S

t r u c t u r a l R e f

  • r

m

  • f

E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

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E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

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E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

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E n t e r p r i s e s a r e r e q u i r e d .

  • N

e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

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l e f

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I T N e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

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l e f

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I T N e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

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l e f

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I T N e c e s s a r y t

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d u c a t e t h e t a l e n t e d p e

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l e f

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I T Ⅲ． Ⅲ． Ⅲ． Ⅲ．E c

  • n
  • m

i c a l E f f e c t

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I T E c

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i c a l E f f e c t

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I T E c

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i c a l E f f e c t

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I T E c

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i c a l E f f e c t

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I T

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n

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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g h p

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T E n

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g h p

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T E n

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g h p

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s i b i l i t y

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p r

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u c t i v i t y i m p r

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e m e n t b y I T I n v e s t m e n t . I n v e s t m e n t . I n v e s t m e n t . I n v e s t m e n t .

  • S

t r u c t u r a l R e f

  • r

m

  • f

E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

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E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

  • f

E n t e r p r i s e s a r e r e q u i r e d . S t r u c t u r a l R e f

  • r

m

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E n t e r p r i s e s a r e r e q u i r e d .

  • N

e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

  • p

l e f

  • r

I T N e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

  • p

l e f

  • r

I T N e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

  • p

l e f

  • r

I T N e c e s s a r y t

  • e

d u c a t e t h e t a l e n t e d p e

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l e f

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I T

slide-27
SLIDE 27

Market Trend of Internet Business by Broadband

slide-28
SLIDE 28

Market 2002 2003 2008 CAGR Broadband Market ADSL 1,752 2,824 3,064 9.8% FTTH 127 453 3,593 74.6% CATV 1,114 1,354 1,157 0.6% Public Wireless LAN 10 430 112.2% Sub total 2,993 4,641 8,244 18.4% Telecom Market Wide Area Ethernet 540 1,150 6,052 49.6% Traditional Leased Line 10,368 9,000 5,618

  • 9.7%

IP-VPN market 1,093 2,159 4,642 27.3% Cellular Phone 66,581 69,629 76,265 2.3% Sub total 78,582 81,938 92,577 2.8% Broadcast Market BS Digital 611 927 3,514 33.9% CS Digital 1,810 2,059 3,376 11.0% CATV 1,699 1,883 2,152 4.0% Terrestrial 217 11,801 122.4% Sub total 4,120 5,086 20,843 31.0%

  • Prediction of each IT Market【

【 【 【Japan】 】 】 】

（ （ （ （unit:100M Oku¥:closed to M$） ） ） ）

Source: NRI Total 91,665 Total 12,1664

slide-29
SLIDE 29

28 28

・ ・ ・ ・Saturation of long-distance carriers/member management-type ISP market: ¥750 billion market ⇒ ⇒ ⇒ ⇒Acceleration of re-structuring ・ ・ ・ ・Access carriers will take the lead ⇒ ⇒ ⇒ ⇒DSL: will peak in 2005-2006: ¥350 billion market Yahoo!BB (35％ ％ ％ ％ share) and NTT East/West (37%) lead the market *Outlook: escalation of competition to provide additional services to users ⇒ ⇒ ⇒ ⇒FTTH: Growing market from 2008 as well: to become a ¥350 billion market Share: NTT East/West: 65%, Usen: 20％ ％ ％ ％, Electric power: 15％ ％ ％ ％ *Outlook: Provision of additional FTTH-unique services the key to growth ⇒ ⇒ ⇒ ⇒CATV: peak in 2004: 2.5 million households, ¥140 billion market

ISP Market Outlook【 【 【 【Japan】 】 】 】

slide-30
SLIDE 30

29 29

Internet Data Center Market【

【 【 【Japan】 】 】 】

100000 200000 300000 400000 500000 600000 700000 800000 900000 1000000 2002 2003 2004 2005 2006 2007 2008 Supply area 784000 960000

Unit: square meters

Based on NRI forecast data

  • Approx. 100 companies

have entered the market Demand forecast

iDC-type, carrier-type, and data processing-type companies currently in battle for survival: 1-2 companies in each genre will be the winners!

slide-31
SLIDE 31

30 30

Trends in B2C e-Commerce Market Size【

【 【 【Japan】 】 】 】

20 40 60 80 100 120 140 160 2002 2003 2004 2005 2006 2007 2008 Total Other Autos & real estate

Unit: ¥100 billion

2.7 trillion 4.7 trillion 6.7 trillion 8.6 trillion 10.6 trillion 12.3 trillion 14.2 trillion Source: Ministry of Economy, Trade and Industry; ECOM

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Breakdown of B2C e-Commerce Market【

【 【 【Japan】

】 】 】

Category B2C Market Size Mobile Commerce Segment PC-related 1970 50 Travel 2650 400 Entertainment 1920 1300 Books/Music 620 150 Clothing/Accessories 1330 100 Food/Drink 1300 140 Hobbies/Furniture 1090 210 Autos 5770 150 Real estate 6100 160 Other goods 1390 150 Finance 1160 100 Services 1550 300 Total 26850 3120

Unit: ¥100M

Sources: Ministry of Economy, Trade and Industry; ECOM

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Internet Advertising Market【

【 【 【Japan】 】 】 】

500 1000 1500 2000 2500 2002 2003 2004 2005 2006 2007 2008 Advertising

Source: Dentsu

Unit: ¥100M

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Net Auction Item Share【

【 【 【Japan】 】 】 】

Name of Service Share Yahoo! 81.5 ％ ％ ％ ％ ⇒ ⇒ ⇒ ⇒Total dealings in 2003: more than ¥500 billion BIDDERS 15.0 WANTED 2.2 Guruguru 0.7 Other 0.5

Source: NRI

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34 34

Search engine-type portals: Yahoo! holds the dominant position on a worldwide level ⇒ ⇒ ⇒ ⇒Portals lead the advertising market: to become a ¥200 billion market E-commerce: logistics-type Amazon.com to become profitable Steady growth of Rakuten “virtual mall” Possible entry of existing distribution companies ⇒ ⇒ ⇒ ⇒to become a ¥3 trillion market Net auction: US’s e-bay and Japan’s Yahoo! Japan are dominant ⇒ ⇒ ⇒ ⇒Total dealings: to become a ¥1 trillion market

E-Commerce Market Outlook【 【 【 【Japan】 】 】 】

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35 35

Online Game Market Size Forecast【

【 【 【Japan】 】 】 】

200 400 600 800 1000 1200 1400 1600 2002 2003 2004 2005 2006 2007 2008 Total Cellular Phone Mobile PC Stand-alone

Source: NRI

Unit: ¥100M

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36 36

e-Book Market Size Forecast【

【 【 【Japan】 】 】 】

50 100 150 200 250 2002 2003 2004 2005 2006 2007 2008 Rich-type Light-type Total

Source: NRI

Unit: ¥100M

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Music Distribution Market Size Forecast【

【 【 【Japan】 】 】 】

100 200 300 400 500 600 700 800 900 2002 2003 2004 2005 2006 2007 2008 A la carte-type Single-type Total

Source: NRI

700 million 1. 5 billion 5.9 billion 15.1 billion 35.1 billion 66.5 billion 88.3 billion

Unit: ¥100M

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Video Distribution Market Size Forecast【

【 【 【Japan】 】 】 】 500 1000 1500 2000 2500 2002 2003 2004 2005 2006 2007 2008 Image dist.

Source: NRI

2.8 billion 9.6 billion 25.2 billion 57.0 billion 103.0 billion

  • 169. 0 billion

246.0 billion

Unit: ¥100M

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e-Learning Market Size Forecast【

【 【 【Japan】 】 】 】

200 400 600 800 1000 1200 1400 2002 2003 2004 2005 2006 2007 2008 Total Self-learning Company training

Source: NRI

27.1 billion 46.6 billion 67.3 billion 88.3 billion 106.5 billion 120.4 billion 130.5 billion

Unit: ¥100M

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Mobile Pay-to-View Content Market Size Forecast【

【 【 【Japan】 】 】 】

500 1000 1500 2000 2500 3000 3500 4000 2002 2003 2004 2005 2006 2007 2008 Total Data services Entertainment

203.6 billion 263.9 billion 290.5 billion 322.5 billion 349.2 billion 367.4 billion 370.6 billion

Unit: ¥100M

Source: NRI

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Web Content Market Outlook【

【 【 【Japan】 】 】 】

  • Online games: to become a ¥140 billion market

⇒ ⇒ ⇒ ⇒Existing game software vendors, or S. Korean vendors?

  • E-books: to become a ¥22 billion market

⇒ ⇒ ⇒ ⇒ “eBOOK” (Matsushita, Toshiba) vs. Sony

  • Music distribution: to become a ¥88 billion market

⇒ ⇒ ⇒ ⇒JASRAC, Recording Industry Association of Japan hold the key to growth

  • Image distribution: to become a ¥250 billion market

⇒ ⇒ ⇒ ⇒Movie distributors, video rental companies, and newcomers on even terms

  • E-learning: to become a ¥110 billion market

⇒ ⇒ ⇒ ⇒Somewhat flooded with competitors; but companies with strong corporate services may come out on top

  • Mobile web content: to become a ¥370 billion market

⇒ ⇒ ⇒ ⇒Key: moving from mobile-only world to tie-ups with Internet

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42 42

110,385 112,572 109,286 106,629 105,769

Source: "Current Status and Issues of the Content Industry," August 2002, METI

  • The major content industries together comprise a ¥10 trillion market. The domestic market has

matured, resulting in a leveling off of market size.

  • With respect to the individual markets, the broadcast market has grown, but the game, music and

publishing markets have shrunk.

Market Outlook : Shift of Content to Networks Market Outlook : Shift of Content to Networks

This market will shift to a ubiquitous network environment

Change in Domestic Content Market Size

27,503 28,562 27,785 28,312 29,977 24,256 25,029 25,293 24,848 24,688 26,564 26,374 25,415 24,607 23,966 21,379 21,167 19,626 18,350 17,082 5,390 5,607 6,030 5,661 5,925 5,293 5,833 5,137 4,851 4,131 20,000 40,000 60,000 80,000 100,000 120,000

1996 1997 1998 1999 2000 年

億円

Games Movies Music Publishing Newspapers Broadcast