GOVERNMENT & POLICY

MPT likely to grant approval
Japan's Ministry of Posts and Telecommunications is likely to permit Type 1 telecommunications carriers to operate international Type 2 services using the Type 1 carriers' facilities. The current Telecommunications Business Law does not set specific domestic and international classifications, but no Type 1 carrier has ever been authorized to offer Type 2 international services. The MPT is expected to soon grant approval now that it has settled the issue of NTT's breakup. Several Type 1 carriers, including Japan Telecom and DDI, have already informed the ministry of their desire to enter the Type 2 international services market.

Healthcare assistance by satellite
The MPT plans to launch development of an emergency medical treatment support system that uses satellite transmission to send patient images and data from ambulances on the scene of an accident to waiting hospitals. In addition to assisting paramedic staff, the system should prove especially effective in times of natural disaster. The MPT, which will work with the Ministry of Home Affairs and other agencies to implement the system following its development, hopes to produce a commercially viable product by 2000.

Net-based R&D applications
Starting in FY1997, the Ministry of Education is accepting applications for research projects from university researchers via the Internet. The ministry plans to allocate ´11 billion to projects for future research, with each project receiving an average of ´100 million. The ministry, which planned to provide information on research programs through the World Wide Web by the end of April, believes that an Internet-based project recruitment system will rectify previous problems associated with the distribution of research funds.

Official cellular estimates upped
The MPT has revised upward its projections of the number of cellular phone users in Japan. The ministry, which has officially decided to adopt the CDMA (code division multiple access) standard as the next-generation digital cellular format, forecasts that cellular users will number between 42.8 and 47.3 million in 2000, and between 59.9 and 66.2 million in 2010. This is a significant increase from last April's forecast of 25.0 to 32.5 million in 2000. CDMA cellular units will reach the market in spring 1998.

BUSINESS BRIEFS

Year 2000 solutions from IBM, NEC
IBM Japan has set up the Year 2000 Solution Center, a new organization dedicated to solving the Year 2000 software problems of customers who lease or own IBM AS/400 computers. The new group, with 40 employees, will serve primarily midsize corporate clients. The group claims that it can solve the Year 2000 software problem for most clients within one week, and at about one-third the cost of competitor services.

NEC, meanwhile, has launched an effort to develop fixes for Year 2000 software problems likely to occur in its ofucon (office computers). The company is offering seminars and training programs for its office computer dealers across Japan, and at the end of March shipped Year 2000 solution development support tools and beefed up assistance to dealers. NEC, which currently has an installed base of 120,000 office computers in Japan, has to date focused primarily on its mainframe users through a program called AD Advanced Solution 2000. The company is now working at a fever pitch to develop Year 2000 software solutions for its office computer users.

Unisys targets intranet market
Unisys Japan has established Uniadex, a wholly-owned subsidiary that will specialize in Internet/intranet design, development, and operation and management services for multivendor system environments. The new firm, capitalized at ´200 million, has 460 employees, all of whom previously worked for Unisys Japan's Network Enable and Desktop Services divisions. The new company, based at Unisys Japan's headquarters building in Tokyo's Koto ward, has branch offices in Osaka and Nagoya. Uniadex is hoping for first-year sales of JPY 15 billion.

Corporate NT solutions
IBM Japan, in cooperation with ASCII, Oracle Japan, Microsoft Japan, Lotus Japan, and others, opened in February the PC NT Solutions Mall. This new Tokyo-based facility, dedicated to developing corporate client-server solutions based on the Windows NT platform, will be permanently staffed by employees of the various cooperating firms. The partners will focus on planning, designing, and installing PC server systems that use the NT platform. Other cooperating vendors include Otsuka Shokai, Catena, Canon Sales, Ricoh, and Nihon Office Systems.

Nihon DEC, meanwhile, has established its own Windows NT Business Promotion Center, a new organization whose goal is to bolster the company's Windows NT and BackOffice business support operations. The new center will provide Nihon DEC dealers, independent software vendors, and other business partners with single-interface information on the company's Windows NT solutions. Previously, Nihon DEC's business partners had to inquire about solutions via contacts defined by business unit. By beginning to support its partners directly through a single interface, Nihon DEC hopes to boost NT solution sales to JPY 100 billion by 2000.

Network software partnership
Marubeni and Hitachi Software Engineering have formed a partnership in the corporate network software business. Marubeni will seek out leading-edge software solutions in the US and elsewhere overseas, while Hitachi Software will perform technical evaluation, localization, system development, and post-installation services. The two companies see the Windows NT platform becoming a mainstay in the Japan market and hope to achieve sales of JPY 10 billion under the new partnership by 2000.

TELECOM TOPICS

More competition for OCN
Japan Telecom (JT) plans to connect its new Open Data Network (ODN) with cable TV networks operated by ten companies in the Tokyo metropolitan area. ODN, launched in April, is a backbone network service that competes directly with NTT's Open Computer Network (OCN), which started operation in December 1996. The ODN interconnection will enable JT to rely on the cable operators rather than NTT for some trunk links, and will help the cable services attract Internet users.

Meanwhile, Osaka Media Port (OMP) and the WIDE Project, the research group that operates Japan's National Service Provider Internet Exchange Point (NSPIXP), are cooperatively developing the World Computer Network (WCN), a connectivity service that they hope will rival OCN. NSPIXP will be relocated within OMP's network, and plans call for launching of WCN services in September. Between May and September, OMP will provide free use to volunteers in order to test the service. The partners claim that WCN will offer rates 10% to 20% lower than OCN.

Internet-based phone services
Tokyo-based Rimnet, a leading Internet connectivity service provider, in April began offering low-cost Internet-based telephone services in Tokyo, Osaka, and four other major Japanese cities. Users, who must have a Rimnet account, can use an ordinary telephone to dial into a Rimnet computer. After punching in their membership numbers, they can use their telephone in the usual manner. The maximum charge for a three-minute domestic long-distance call is JPY 60 (plus the applicable local phone call rate), lower than any conventional telephone service rate.

Yokohama-based Internet connectivity services provider ITS Japan has also started offering an Internet-based telephone service that allows users to call anywhere in Japan for JPY 45 for three minutes simply by attaching a dedicated adapter to an ordinary telephone. The company is initially offering the service only between Tokyo and Osaka, but will expand it to seven other major cities by December. ITS Japan also plans to offer a JPY 30 per minute rate from Japan to the US in late June. There will be a setup charge and basic monthly fee.

Mobile security
Matsushita Communication Industrial, NEC, and Mitsubishi Electric are jointly developing encryption technology aimed at preventing eavesdropping on mobile phone communications and unauthorized use of mobile units. The three companies have invested JPY 1.9 billion to establish a research company for the project in Yokohama. The Japan Key Technology Center will likely invest an additional JPY 1.3 billion in the new company, tentatively named Advanced Mobile Communications Security Technology Laboratory. The company will work on development of public-key encryption systems, a technology considered vital in supporting the security of the next generation of mobile communications-based electronic commerce and data transmission.

International least-cost routing
International carriers IDC and ITJ are considering introducing, in spring 1998, an international telephone service that utilizes the least-cost routing (LCR) feature. Units equipped with the LCR function for domestic long-distance calls account for more than 90% of telephones sold in Japan; the widespread availability of the LCR feature is considered a major reason that domestic long-distance NCCs (new common carriers) have been able to erode NTT's market share. The two international carriers hope to expand their own share by making it easier for users to place an international call through them instead of relying on more expensive market leader KDD.

MARKET NEWS

New Net strategy from AI Soft
Matsumoto-based software house AI Soft will market all of its Internet-related software products under a new brand called AI Soft Internet Crew. The company moved into the Internet software market in May 1996, releasing a Japanese-language version of a product from US partner Forefront. In February, AI Soft released its first original package, Web Player, which automates the process of going online, sending and receiving mail, and shutting down the PC. In March, it released Web What's New, a package that automatically downloads only the latest information from selected websites. AI Soft hopes to rack up sales of approximately JPY 400 million from the newly-named line of software products.

Explorer makes progress
Microsoft is catching up in Japan's browser war, according to a November 1996 survey of over 1,600 users conducted by Nikkei BP. Netscape's Navigator still holds the overall lead, with a 69% overall market share versus 31% for Microsoft Internet Explorer, when all versions (1.0 through 3.0) of each browser are tallied. Among the fast-growing number of (NEC PC98 and DOS/V) Windows 95 users, however, Explorer has already taken the lead. This is due, in large part, to Microsoft's bundling agreements with computer vendors, and its strategy of free distribution of IE 3.0 via the Internet. Industry watchers note Microsoft has doubled its overall browser market share in less than a year.

Gateway targets government sector sales
Since entering the Japanese market in 1995, Gateway 2000 Japan has focused on mail order sales to individuals and direct sales to corporate customers. The Yokohama-based company will soon attempt to move into the government sector. It plans by 1998 to set up a dedicated government sales organization and start bidding on a variety of Japanese government contracts. Bidding for such contracts is ferociously competitive in Japan, and winning bids rarely leave much if any margin for profit, but Gateway 2000 believes that recognition of its quality by Japanese government organizations will provide a substantial boost to its overall PC sales.

INTERNATIONAL NEWS

Net connectivity in the UK
Toyo Information Systems (TIS) has teamed up with UK telecommunications provider Mercury to start an Internet connectivity service business in London. The two firms will cooperate to provide both dedicated and dial-up connectivity services to Japanese corporations and expatriates in London. They also plan to offer bilingual website development and hosting services, and use the Internet to introduce UK-made products to potential cutomers in Japan. TIS's British subsidiary, TIS UK, had been working to enter the local Internet connectivity provider business since May last year, but decided it required a local partner to be successful. Mercury, for its part, hopes to secure an entry point into the Japan market through TIS.

Dual-format PHS/GSM phones
The MPT, telecommunications carriers, and communications equipment makers will ready export-use personal handyphone systems (PHSs) that comply with the GSM standard within FY1997. The GSM format has been adopted by nearly 80 countries and regions, while the PHS format is used by about a dozen countries. The PHS MoU Group, an industry organization set up by the MPT and private companies, will develop technical specifications by year-end that incorporate opinions solicited from European countries. If such dual-mode handsets are sold in Japan, users will be able to use their PHS handset as a GSM handset when traveling abroad.

Melco to produce LS120 disk drives in Thailand
Mitsubishi Electric has launched next-generation floppy disk drive (FDD) production at its Bangkok-based subsidiary, Melco Manufacturing Thai. The subsidiary is currently producing 30,000 120MB-capacity FDDs complying with the backward-compatible LS120 standard proposed by Compaq Computer, Imation, Matsushita Kotobuki Electronics, and OR Technology. Plans call for boosting output to 200,000 units as early as July. Capable of reading current 3.5-inch floppy disks, Melco's next- generation LS120 FDDs will be OEM-supplied to leading PC makers for a price about five to six times higher than conventional floppy disk drives.

Fujitsu bolsters China operations
Fujitsu has established a joint venture in Shanghai, China. Capitalized at JPY 850 million, Fujitsu Shanghai (FJS) is owned 80% by Beijing-based Fujitsu China and 20% by local firms. Initially staffed by 30 people, the joint venture sells computer products and systems and provides a maintenance support service. Fujitsu, which has been marketing data processing equipment in China through Fujitsu Hong Kong, plans to bolster its Chinese operations by setting up this new distribution network in Shanghai. FJS is aiming for first-year sales of JPY 4 billion in FY1997.

IN 50 WORDS OR LESS

Internet Initiative Japan (IIJ) will this year boost its links between Japan and the US from 9M bps to 240M bps, the equivalent of 3,750 telephone lines. The move will effectively make IIJ Japan's second-largest carrier in terms of US-Japan connections, putting it ahead of Type 1 carriers IDC and ITJ.

NEC intends to increase its domestic PC shipments by 20% to 25% year-on-year in FY1997, reaching 4.56 to 4.75 million units.

NCC Teleway is aiming to recruit 100,000 users for its Sirius Internet access service within the first year. The Sirius service, which started in April, will have 60 access points across Japan by the end of FY1997.

The MPT is likely to add an additional three-digit prefix (020) to Japan's cellular telephone numbering scheme this spring. The skyrocketing number of cellular users threatens to fill the "010" prefix added last year. This will bring the total number of cellular prefixes in use in Japan to four.

Toshiba will ship a series of Windows 95/NT and Solaris Internet and intranet software targeting mobile computing applications in June. Network Cryptgate (NCG) is a three-product package that incorporates mobile computing and security functions to provide easy intranet access from mobile terminals.

US software developer Intersolve will establish a Japanese subsidiary to develop the local market for Year 2000 software solution services. Two sales companies that Intersolve established jointly with Tomatsu will become a single, wholly-owned subsidiary that provides consulting and support services as well as development tools.

In first-quarter FY1997, Japan accounted for the largest portion of sales by US-based Claris Corp. Japan sales reached 40% of total company sales, edging out US sales by a slight margin. Japan sales of new versions of ClarisWorks, FileMaker Pro, and Claris Impact were particularly strong.

Lotus Development Japan in April released a fully 32-bit-compatible version of its Super Office 97 application suite for the Windows 95 and NT platforms.

Microsoft plans as early as July to ship the Japanese version of its Windows CE operating system for PDAs (personal digital assistants) and will OEM-supply it to Casio Computer, NEC, and others.

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