Ericsson is building Softbank's LTE network in Tokyo, Osaka and Nagoya

Japanese operator Softbank Mobile has selected Ericsson to build its LTE network. The Swedish vendor will also upgrade, expand and perform systems integration of Softbank’s existing packet core network as part of its largest LTE contract in Japan.

The LTE network will cover Japan’s three major cities: Tokyo, Osaka and Nagoya, which account for 70 per cent of the country’s total data and voice traffic, according to Ericsson.

“During 2012, many new smartphones, notebooks and tablets with LTE capabilities will be launched in Japan,” said Jan Signell, president of Ericsson Japan. “This will lead to a strong increase in consumer demand for higher data speeds and throughput – a demand that Softbank Mobile will be able to meet thanks to the state-of-the-art LTE network that we will rapidly deploy.

Ericsson also revealed that that it has now signed 45 LTE evolved packet core contracts in 23 countries on five continents.The firm expects to hold 25 per cent of all “essential patents” related to LTE, pending patent approval, which would make it the technology’s largest single patent holder.

The company will deliver services directly to customers in both markets, rather than teaming up with local partners, as its newly acquired licences allow the carrier to own infrastructure facilities in each of the countries.

In Singapore, Telstra can own and operate voice and data networks, systems and facilities infrastructure within the country, after it secured a ‘Facilities Based Operator’ licence offered by the Infocomm Development Authority of Singapore. The licence will also allow Telstra to build the local backbone required to support its plans for new cable submarine capacity to Singapore.

The company is now also able to own and operate large scale telecoms circuits and facilities in multiple sites in Japan, after Telstra Japan K.K., has been approved by the Ministry of Internal Affairs and Communications for a ‘Registration Type’ licence.

The company was also recently awarded three licences in India, to provide customers with international long-distance telecommunications and ISP services. Within the next six months, it will begin offering services in seven cities with a network tailored to suit the individual needs of local business.

Mumbai and Chennai will be Telstra’s Indian international gateways connecting into its international backbone network, providing customers with direct routes into networks in Europe and Asia.

“For international customers, Telstra will now have greater control over its services. Specifically customers will enjoy access to a more comprehensive suite of connectivity and managed services, better network performance, complete monitoring, local contract billing capabilities, and in-country service centre support,” said Tarek Robbiati, group managing director for Telstra International Group.

“In addition, Telstra will have greater control over network architecture design, and be in a strong position to optimise performance, multi-level resiliency, redundancy and reliability.”

Telstra CEO David Thodey recently told delegates at an event in Melbourne that the operator no longer sees itself as an Australian company, and wants to begin being recognised as part of the Asia community.

Nonetheless, the development is still potentially highly significant, since it signals the first major entry of one of the big US “over the top” (OTT) players into a region that has the kind of high-bandwidth broadband networks that make the OTT guys drool.

Announcing the launch of the service, Hulu CEO Jason Kilar said that the company selected Japan as the first part of its Asia Pacific expansion strategy because of the high demand from Japanese consumers for video content.

Hulu, jointly owned by NBC Universal, News Corp., Walt Disney and Providence Equity Partners, launched its Japanese service on Sept. 1 with a relatively simple business model: For a flat fee of ¥1,480 (US$0.19) a month, subscribers get access to all of Hulu’s movies and TV dramas, which can then be viewed on some connected TVs as well as PCs, tablets, games consoles and even mobile handsets.

Hulu has entered into an exclusive mobile marketing partnership with mobile market leader NTT DoCoMo. Although the companies have not released full details of the deal, DoCoMo has said that it will use its LTE networks to stream Hulu content to tablet users.

A tough nut to crack

Although Hulu might be correct in assessing Japan as the best launch-pad for its Asia Pacific adventure, the company must also be savvy enough to realize that succeeding in Japan will be tough.

Even the country’s powerful private terrestrial broadcasters – Nippon TV, TV Asahi, TV Tokyo, Fuji TV and Tokyo Broadcasting System – have failed to excite much user interest in their online-video offerings on either a subscription-based or ad-supported basis.

Having grown frustrated with their dismal online offerings, the normal fierce rivals have teamed up with advertising giant Dentsu to launch a new service that will enable viewers to watch their content on connected TVs, with the five broadcasters making a total of 6,500 programs available at a cost of about ¥300 per one-hour episode.

But it is not only local broadcasters that are eager for a piece of the online-video pie. Sony launched a local version of the Qriocity video-streaming service in January, offering just 200 local programs priced between ¥500 and ¥1,000 per viewing, though the service has since expanded its content range.

Meanwhile, leading specialist online-video players Gyao, owned by Yahoo Japan, and Nico Nico Douga, owned by Niwango, have found it so tough to generate sufficient revenues in Japan that they are both expanding their operations overseas.

Japanese fixed-line operators are also eager to expand their own online-video services, largely as an extension of their IPTV services. NTT is enabling subscribers of its NTT Plala IPTV service to stream content to their smartphones, tablets and PCs, and leading cable operator Jupiter Telecommunications (J-Com) is planning a similar service.

What’s more, Hulu’s ambitions in the mobile market might well be tempered by the fact that tens of millions of mobile subscribers in Japan already have access to free-to-air broadcast mobile TV via the One-Seg mobile-TV-broadcasting service.

Content the key, as usual

Hulu has arrived in Japan with an array of licensing deals with the majority of US major content suppliers, including CBS, NBC Universal International Television, Sony Pictures Entertainment, Twentieth Century Fox, Walt Disney and Warner Bros.

Moreover, the company says that “additional content will be rapidly and continually added to the service” and, significantly, that it will also look to secure “Japanese-produced content and content from across the Asian region” – though the company has launched with no local content.

If there is one thing that any investor in Japan can tell you – especially the good folks at News Corp., which bowed out of DTH player SkyPerfecTV in 2003 – it is that good local content is absolutely critical to success.

Even though it has nearly 4 million subscribers, SkyPerfecTV has never been able to truly dominate the market, principally because it has relied too heavily on foreign content rather than focusing on developing a strong platform of local content. Hulu is obviously well aware of this and is eager to strike deals with local content producers to bring their content to the Hulu platform.

That seems to be the obvious path to travel, especially since Hulu is attempting a subscription-based revenue model with no ads. Hulu claims that it has selected the ad-free model for Japan because it fits in well with the unique requirements of the market.

The pressure is on

Regardless of the business model, the pressure must surely now be on Hulu to start putting together a respectable range of Japanese content to try to localize the platform and ensure that it does not follow the same path as SkyPerfecTV. But that is far easier said than done.

By far the biggest content providers in Japan are the five major terrestrial broadcasters, though there is a strong independent production sector as well. This includes J-Com, which produces content for the terrestrial broadcasters’ regular digital and satellite channel operations.

Considering that the terrestrial players and J-Com have their own strong online-video ambitions, it is hard to envision what value these companies would get from supplying their top local content to a market newcomer like Hulu. Hulu will most likely have to scout hard for Japanese content producers that do not have their own online-distribution ambitions – a tough task if ever there was one – if it wants to get the type and volume of new local content it is going to need to make Hulu Japan a success.

This, of course, is where things start to get tricky for Hulu. Good-quality content – even on a nonexclusive basis – does not come cheap. And do Hulu’s shareholders really want to shell out serious cash for new Japanese content, considering that they have no experience in such a complex market?

After all, even though Hulu Japan is being offered as an online service, it is still at its core a pay TV service, and quite frankly, what experience does anyone at Hulu have of running a pay TV service in Japan?

Even the Japanese find it difficult to run pay TV services in Japan.

Alan Hadden, chairman of the Global Mobile Suppliers Association

As the demand for data from consumers continues to swell, the need to move from 3G to LTE is becoming ever more apparent to carriers. But while the technical and business cases are readily apparent, the real challenge is obtaining radio spectrum. Spectrum is the life-blood of every mobile operator and its scarcity makes its acquisition a difficult and usually expensive undertaking.

Fortunately the LTE standard can be deployed in a wide range of frequency bands, which enables operators to roll it out, at least initially, with whatever spectrum they have available. “The standard allows LTE to be deployed not only in different spectrum, but in different amounts of spectrum,” Alan Hadden, president of the Global Suppliers Association (GSA) tells Telecoms.com. He goes on to say that the standard has been defined to “recognise very much the individual needs either of a particular operator, country or region—or indeed globally.”

While this is a real plus for LTE it does present the problem of wide spectrum fragmentation. According to a recent report from Informa, (LTE Spectrum Strategies and Forecasts to 2016), LTE will be deployed in at least 20 bands worldwide, with a total of ten bands to be used in the Asia-Pacific region. In Japan alone, for example, there are seven bands that have been earmarked by operators.

As the Informa report observes, this lack of consensus over spectrum is a cause for concern. The uncertainly over when spectrum will be released by regulators and how much they will have to pay for it, is causing operators to hold back on deployments, which in turn is potentially slowing down the creation of a worldwide eco-system and stymieing efforts to create economies of scale around devices.

This issue is the prime reason why there is a delay in the production of LTE smartphones. Chipset manufacturers are looking to the operators before they commit, who are in turn looking to what is available from regulators and indeed what other operators are doing. According to Hadden this is why 700MHz is currently the most widely supported frequency for LTE—simply due to its use in the US, where LTE is most widely deployed. What the industry needs then is an awareness of what the most popular bands will be.

“You do have this huge quantity of spectrum options. But for a successful business what you need are standards, common agreements and international alignment. And what’s likely to emerge will be a series of prime bands, or core bands if you will, for LTE.”

According to Hadden the GSM standard is a blueprint for this double-band approach. “It’s a reflection of the success of GSM. GSM was a common band, and a second band was available So if you look at what’s happening in LTE; basically what are the common bands?”

The most popular approach, he says, is to go for a higher frequency band for adding capacity, and a lower frequency band for wider coverage using fewer base stations and in-building penetration. “New spectrum is coming, more or less, either at the higher capacity 2.6GHz level, which is an internationally agreed spectrum for these systems, and then also in the digital dividend space.”

In the US this digital dividend spectrum is the 700MHz mentioned above, which had already been freed up by June 2009.  In Europe however, this process is still in its early stages. According to Hadden, this is having an impact on Asian deployments, which he believes still looks to Europe for its lead in telecoms, if only due to economies of scale around devices.

“The licensing is sort of underway, but I think you need more of the major markets to have completed that allocation. If you look at the big markets whose decisions then impacts Asia, which are the major economies of France, Spain, Germany, Italy and the UK, then the question arises: Which of those has actually auctioned and allocated 2.6GHz?”

Hadden points out that, of these European markets, only Germany has actually deployed LTE. Spain has completed its auction, France is in the process of doing so and the others are all some way off.

As well as 2.6GHz, 1800MHz is also likely to be of great interest in Asia. “The real beauty of 1800,” Hadden says, “is that it’s already a common allocated band that can be used to deploy technologies other than GSM. And in many cases there is adequate spectrum that will allow a competitor to allocate 10MHz for LTE, and that’s really attractive. It’s clearly already happening and, as it does, the ecosystem will begin to support it.”

The evidence is certainly there to back up Hadden’s assertion. Telstra in Australia is starting to roll out LTE at 1800MHz, and is part of an 1800MHz alliance that also includes Deutsche Telekom and France Telecom, which can only help with economies of scale. Singaporean carrier StarHub has also announced plans to use 1800.

One country that looks as though it might be following a different path, though, is Japan. NTT DoCoMo is refarming its UMTS 2100MHz band for LTE, and has called on operators worldwide to show support by following suit, something that Hadden feels is unlikely.

“There will always be solutions found for specific requirements. While DoCoMo is a major player with major market reach, that doesn’t make 2100MHz a major band for LTE. I don’t think that what’s happening in Japan will spill out elsewhere.”

One Asian country that is likely to have an impact on the LTE market worldwide though is China. Its focus on TDD spectrum is being echoed around the world, with many operators choosing to use the technology. The attractiveness of TDD for operators stems from the fact that spectrum tends to be cheaper than FDD, while its time division nature is touted as a better match for the asymmetrical nature of internet use.

For Hadden, the tipping point though is the recent announcement by Clearwire in the US that it will be moving to LTE, using TDD technology. “It’s a positive outlook [for TDD] with the potential for a global standard.  It’s meeting needs and being tested. But what’s important about Clearwire, and with respect to the Chinese, is that it’s the first commitment in a well developed market.”

Ultimately, Hadden believes that identifying core bands is vital for the efficient development of LTE. Aside from 700MHz in the US, he believes that the dominant bands will be 800MHz, 1800MHz and 2.6GHz. While there may be another 16 other frequency bands in operation by 2016, it is these four that could form the basis of a global standard, delivering the benefits of economies of scale to operators and vendors, and the vital ability to roam worldwide for LTE users.

Alan Hadden, will be speaking at the sixth annual LTE Asia conference, which takes place in Suntec, Singapore, on the 5-7th September 2011

It is hard not to carry this attitude across into my working life, and there has been no better example of this in recent years than my writing about the Asia Pacific mobile broadband market, in which I have covered the gradual decline of Intel-backed WiMAX technology and the inexorable rise of LTE.

Of course, I have nothing against LTE as such; it is just that it has been really fun over the last couple of years to watch the WiMAX guys land the odd counterpunch and give themselves a bit of hope that they might just stave off Armageddon after all.

That’s Tokyo calling
If you are looking for a regional WiMAX champion, you don’t need to look much farther than KDDI-backed Japanese operator UQ Communications, which launched in July 2009 and within two years had more than 1 million subscriptions, and which expects to have 2 million by end-March.

Of course, even having reached the magic seven-figure subscription count, UQC remains a relatively small fish in the Japanese pond and a long way behind the big three operators – NTT DoCoMo, KDDI and Softbank – in the mobile broadband market. It even trails smaller player eMobile.

Nonetheless, UQC is not only offering faster downlink speeds than those offered by DoCoMo’s nascent LTE-based Xi service – which launched in December – but is setting its sights on launching 802.16m next-generation WiMAX 2 services in 2013.

UQC staged its first public WiMAX 2 trials in Tokyo July 6, demonstrating downlink speeds of 150Mbps. The firm says the launch of the next-generation technology will enable it to compete head-on with the market’s fixed-broadband providers.

What’s more, UQC’s management says WiMAX 2 will ultimately be able to provide theoretical downlink speeds of 330Mbps, comfortably matching the downlink speeds being offered by fixed-broadband providers – even over FTTH services.

UQC’s management says that when the firm upgrades to WiMAX 2 services in 2013, it will offer downlink speeds of up to 165Mbps, which will enable subscribers to download a full-length HD movie in just six minutes.

What does this mean?
There is little doubt that UQC’s heavy emphasis on the speeds available via WiMAX 2 is an effort to pave the way for a more serious assault on the market as a fixed-broadband replacement rather than acting as primarily a mobile broadband service.

The reasoning behind this move is clear: Japan’s mobile broadband market is already saturated, and the established mobile operators are already getting into position to go to the next level as they launch LTE services. Market leader NTT DoCoMo launched LTE services in December.

DoCoMo’s LTE services are available to less than 10% of the population but are set to be available to about 70% by 2014, offering downlink speeds of about 100Mbps.

Since UQC is not in a position to compete on a level playing field with the established big three operators in the mobile market – principally because it can’t offer the same range of handsets as the mobile players – it makes sense for the firm to target as wide a market as possible and try and make inroads into the fixed-broadband sector.

This ties in nicely with the fact that KDDI – even after acquiring a stake in leading cable MSO Jupiter Telecommunications – has only a limited fixed-broadband footprint compared with NTT East and NTT West, which on a combined basis have a nationwide fixed-broadband presence via xDSL and FTTx.

In addition, UQC’s management says the fixed-broadband market remains a relatively soft target, because fixed-broadband prices remain high and because IPTV services have yet to seriously take off on the country’s fixed-broadband networks, largely because of the strong free-to-air market.

UQC says many local fixed-broadband subscribers are far less attached to their services than in other countries in the region and are liable to defect to UQC’s high-speed mobile broadband services if they are of sufficient quality.

The Wi-Fi factor
UQC says subscribers are demonstrating an increasing demand for mobile broadband services, citing as evidence the moves by fixed-broadband providers such as NTT East and NTT West to provide widespread Wi-Fi coverage in urban areas.

As part of its Wi-Fi expansion strategy, NTT East has struck a deal with major local retailer Seven & I Holdings to deploy Wi-Fi hot spots in 1,300 of the firm’s stores by March and eventually expand to 8,700 outlets in eastern Japan. Sister firm NTT West is deploying hot spots in more than 5,000 Seven & I Holdings outlets in western Japan.

NTT East and NTT West say their huge fixed-line infrastructure will enable them to provide far better wireless-broadband connectivity via Wi-Fi than any of their rivals.

NTT East – the leading fixed-broadband player in the market – has already sold 90,000 Hikari Portable Wi-Fi modems, which give broadband subscribers access to its Wi-Fi network, taken principally by users of iPads and other tablets.

Second-ranked mobile operator KDDI is also deploying an aggressive Wi-Fi network rollout. The firm has already opened 10,000 hot spots and plans to open 90,000 more by March 2013.

This strong trend toward providing high-quality mobile broadband connectivity is clearly a positive one for UQC, given that the firm is able to provide a high-quality mobile broadband experience in comparison with the other mobile broadband operators in the market.

UQC, which has already deployed 5,000 Wi-Fi access points nationwide, might well be able to use the higher quality of its mobile broadband services to persuade a sizable – though still relatively small in terms of the overall market – number of fixed-broadband subscribers to switch from FTTx and xDSL services to its own offerings.

That really would give the WiMAX guys something to finally smile about. After all, everyone loves an underdog, don’t they?

Gemalto expects the UICC cards to be used by more than 15 million DoComo LTE subscribers over the next three years

SIM vendor Gemalto has said that its LTE technology has been selected by NTT Docomo for the Japanese carrier’s LTE roll-out.

Docomo’s LTE service, dubbed Xi, will employ Gemalto’s Universal Integrated Circuit Cards (UICC), which the company said had been tailored to meet the Docomo’s stringent performance standards. The function of the UICC card is to authenticate the subscriber on the network and store applications for both the operator and the end-user.

Gemalto expects the UICC cards to be used by more than 15 million Docomo LTE subscribers over the next three years.

NTT Docomo’s Xi LTE network currently covers the major urban centres of Tokyo, Nagoya and Osaka, and plans to scale this out to reach 70 per cent of the Japanese population by March 2015.

“Docomo is leading the introduction of LTE in Japan and Gemalto is ideally placed to bring the latest in LTE technology”, Tan Teck-Lee, President of Gemalto Asia, said in a statement. “Working together, we will drive innovative solutions and services to enrich Docomo’s subscriber experience.”

The after effects of the Japan disaster will be felt in the telecoms industry in months to come

The knock on effect of the Japan earthquake and tsunami may be felt in the telecoms industry in months to come, as the country is home to some of the world’s biggest suppliers of silicon, microchips and LCD displays.

So far, there are few reports of damage to electronic production facilities, but power and transportation are expected to be heavily impacted in the wake of the natural disasters. Short supply and rising prices of components such as NAND flash memory, dynamic random access memory (DRAM), microcontrollers, standard logic, and LCD parts and materials should all be anticipated.

Japan is the world’s largest supplier of silicon used to make semiconductor chips, generating 60 per cent of the global total, according to industry research group IHS iSuppli. Most of country’s largest electronic component producers operate their manufacturing facilities far to the south of the epicenter of the damage, yet IHS iSuppli expects Toshiba’s shipments of NAND from its central Japan plant could drop by up to 20 per cent in January and February; a Hitachi display plant has been shut down; and production from Panasonic’s LCD fab has been impacted temporarily.

However, the global supply chain has about two weeks of excess component inventory in the pipeline for semiconductor parts affected by the quake. Because of this, the shortages are not likely to appear until the end of March or the start of April but are likely to linger until the third quarter, iSuppli said.

The biggest impact will likely be felt through outgoing shipments from Japan, which are likely to be suspended or delayed over coming weeks.

Donate and support disaster relief via the American Red Cross

DoCoMo said it has achieved transmission data rates of approximately 1Gbps in the downlink and 200Mbps in the uplink

Japan’s leading carrier, NTT DoCoMo, said Monday that it is gearing up to test LTE Advanced with an eye to racking up speeds of 1Gbps on the downlink.

The company was pre-licensed by the Kanto Bureau of Telecommunications of the Ministry of Internal Affairs and Communications to carry out field experiments of LTE Advanced back in January. Once the licence is issued, DoCoMo will begin field experiments in real radio environments in the cities of Yokosuka and Sagamihara in Kanagawa Prefecture, in both indoor and outdoor trials.

Using radio environment simulators in its R&D centre, DoCoMo said it has achieved transmission data rates of approximately 1Gbps in the downlink and 200Mbps in the uplink.

Standardization of LTE-Advanced is currently being finalized by the3GPP and in October was accepted by the International Telecommunication Union Radiocommunication Sector (ITU-R) as a technology compliant with the requirements of IMT-Advanced.

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As a result, you can hardly blame industry group the WiMAX Forum for staging its recent Analyst Summit in the heart of Tokyo to give global telecoms-industry analysts a close look at its biggest current success story, KDDI-backed WiMAX operator UQ Communications (UQC).

When UQC launched services in July 2009, the odds of success were firmly stacked against it. Japan already had three operators – DoCoMo, SoftBank Mobile and e-Mobile – offering high-speed HSPA-based mobile broadband services, as well as KDDI’s own 1xEV-DO-based mobile broadband services.

Nonetheless, UQC’s backers argued that the overcrowded mobile broadband market was actually ripe for the picking, principally because operators’ 3G networks were approaching full capacity and subscribers would be attracted to a new operator offering high speeds and unlimited data.

Still early days

Although it is still early, UQC is beginning to make some real progress in the market. It had nearly 340,000 subscribers at end-September 2010 and looks likely to meet its target of 800,000 subscribers by March 2011.

Of course, UQC still controls only a small portion of the market, but the company is hoping to have 2 million subscribers by end-2012 – at which point it expects to reach breakeven.

By end-September UQC had deployed about 11,000 base stations, which provide coverage to about 65 per cent of the country, and it hopes to reach the 15,000-base-station mark by end-March.

UQC’s increasing success in the broadband market is due to several factors, the most important being that the operator offers a genuinely high-speed mobile broadband experience with strong network coverage.

During the WiMAX Forum Analyst Summit, a busload of analysts was transported on a 90-minute ride across Tokyo and provided with UQC’s WiMAX/Wi-Fi routers to test-drive the UQC WiMAX network.

Well, the proof was clearly in the pudding, with my router providing stable and consistent connectivity with speeds no lower than 11Mbps and sometimes as high as 15Mbps – and this while crossing Tokyo’s busiest areas in a bus with 25 or so analysts also accessing the network.

But can they sell it?

It is the release of its range of WiMAX/Wi-Fi modems and routers that is really helping bring UQC far more opportunity for success in the ultracompetitive market. Using a dual-mode modem enables UQC to attack the huge laptop/netbook market without having to persuade people to buy a new device embedded with WiMAX capability or buy a stand-alone WiMAX modem – a crucial development, because it opens up far more of the market to the company.

The dual-mode modem enables UQC to become an attractive proposition for owners of iPhones and other increasingly popular wireless devices, because the WiMAX network provides far higher downlink speeds than the 3G networks and also offers unlimited data plans.

It is coming at a time when the 3G players are finding it harder to satisfy subscribers’ demands for mobile data, with SoftBank Mobile – the exclusive Japanese supplier of the iPhone – even providing free Wi-Fi to subscribers to try to ease the strain on its 3G network.

The retail pitch

The other key factor behind UQC’s “insurgency” in the Japanese market is the fact that the operator has taken a very different route in terms of building a subscription base than the traditional mobile operator model. UQC has not tried to build a huge network of retail stores or a massive sales and marketing operation. It has instead decided to construct a chain of MVNOs – currently numbering nearly 40 – to sell its mobile broadband services.

Of course, the downside is that it has to split the subscription fees with the MVNOs. But on the positive side, although UQC does offer retail services to subscribers directly, using MVNOs enables UQC to focus on providing a high-quality network to subscribers rather than spreading itself too thinly with its limited resources.

The highest-profile UQC shareholder is the largest one, KDDI, but other shareholders include leading ISPs, such as So-Net and Nifty, and several major electronics retailers.

802.16m on the way

The other big thing the WiMAX Forum was eager to show off during the Analyst Summit was the fact that UQC is already trialing the long-awaited 802.16m technology that will help the firm deliver theoretical speeds up to 330Mbps, though operational speeds to subscribers will be far lower.

The 330Mbps demonstrations were impressive and will help UQC stay ahead of the game once DoCoMo and the other mobile operators finally bring LTE and its much improved mobile broadband services to market.

But the interesting thing regarding UQC’s rollout of 802.16m is that the company does not itself plan to use the huge leap in downlink speeds made possible by the technology upgrade to offer new content and applications to its subscribers. As far as UQC is concerned, if its MVNOs want to use the souped-up network to launch new services and applications, most notably video-based services, that is their choice. But UQC sees itself principally as a network operator rather a content and services provider.

A long road ahead

UQC might be at the bottom of a steep mountain in terms of gaining a sustainable foothold in the Japanese broadband market. But the early signs suggest that it has a decent chance of success, primarily because its business model eschews a lot of the heavy capex an operator would normally deploy on retail operations, in favor of a primarily MVNO-led approach.

Although the MVNO model reduces UQC’s incoming revenues, it saves the company a fortune in retail-infrastructure, advertising and marketing costs, which are largely borne by its MVNO partners.

The real challenge for UQC, if it does hit its target of 2 million subs by end-2012, will be to maintain its high network quality in densely populated urban areas – one of the best features it has for attracting subscribers.