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Summary

The major Japanese mobile network operators (MNOs) have aggressive 5G rollout plans. The Japanese Ministry of Internal Affairs and Communications (MIC) has promised coverage in rural areas, and infrastructure sharing will be the necessary compromise to deliver advanced 5G services while controlling costs. Partnerships are forming between KDDI and Softbank and NTT DoCoMo and JTOWER.

The MIC's goals and guidelines

On December 28, 2018, the MIC issued its guidelines for infrastructure sharing. Its key goal is timely and ubiquitous rollout of 5G across the entire country. The MIC, recognizing that 5G investments in rural areas are generally not cost effective, has issued infrastructure-sharing guidelines to balance policy goals and capex.

Mobile operator deployment plans

Licenses for 5G services and spectrum were awarded to NTT DoCoMo, KDDI, Softbank, and Rakuten Mobile in April 2019 based on their five-year 5G network deployment plans. These plans include information on infrastructure investment amounts, base transceiver station (BTS) deployment, deployment projections, and nationwide coverage targets (see Table 1).

Table 1: Five-year 5G network deployment plans

Mobile operator

5G capex

Number of BTSs to be deployed by spectrum

Nationwide coverage target

Approach

Projected launch

NTT DoCoMo

$7.2bn

3.7GHz, 4.5FGHz

8,001

97.0%

Leverage 4G

1Q20

28GHz

5,001

KDDI

$4.2bn

3.7GHz, 4.5FGHz

30,107

93.2%

Leverage 4G

1Q20

28GHz

12,756

Softbank

$1.9bn

3.7GHz, 4.5FGHz

7,355

64.0%

Leverage 4G, Massive MIMO

1Q20

28GHz

3,855

Rakuten Mobile

$1.7bn

3.7GHz, 4.5FGHz

15,787

56.1%

Greenfield 5G, vRAN

2Q20

28GHz

7,948

Source: MIC and Ovum

Mobile operator infrastructure-sharing plans

On July 3, 2019, KDDI and Softbank announced plans to establish a joint construction management company that would design and manage the construction of base stations in the rural areas shared by the two operators. On July4, NTT DoCoMo and JTOWER announced plans to establish a company that will develop infrastructure-sharing solutions. Rakuten Mobile has formed a strategic partnership with KDDI to reuse KDDI's network outside of the Tokyo, Osaka, and Nagoya regions while it builds out its own network.

Network infrastructure, including the land or building on which BTSs are built, the towers, and the number of BTSs deployed, have always been the most important competitive differentiators for the MNOs. Thus, the abovementioned announcements for infrastructure-sharing partnerships seem odd, despite the strong enthusiasm for 5G in the market. The MNOs will undoubtedly continue to compete with their network infrastructure, but to deliver 5G services quickly and ubiquitously, infrastructure sharing needs to be positioned more strategically and proactively by the MNOs. The MNO that builds out and provides seamless nationwide 5G services the soonest will be best positioned to quickly gain market share in the next generation of Japan's mobile market.

Appendix

Further reading

5G: Regional and Global Approaches to a Technology Step Change, GLB007-000092 (July 2018)

5G: Impact and Opportunities, GLB008-000001 (January 2019)

Author

George Hoffman, Principal Analyst, Service Provider Technologies, Asia Pacific

george.hoffman@ovum.com

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