GOVERMENT & POLICY

Illegal downloads targeted
Japan's Patent Office is launching an initiative to strengthen license development for software sold or otherwise obtained via the Internet or other computer networks. Currently, a software copyright holder must find physical evidence of an illegally obtained software program - for example, one stored on a hard drive - in order to prove license infringement. The Patent Office seeks to ease the burden of physical proof and make it possible for copyright holders to sue based on evidence that programs were illegally downloaded from a server. This would make a lawsuit possible even if the illegally obtained program had been subsequently erased. The Patent Office is convening a committee to examine the issue, and the new guidelines, including changes in relevant law, may be implemented by April 1999.

MPT releases communication report
The MPT has issued the 1997 edition of its annual Communications White Paper. According to the report, Japan's data communications market reached ¥92.6 trillion in 1995, accounting for more than 10% of the nation's gross domestic product. The broadcasting business market reached ¥3.0 trillion in FY1995, up 6.1% year-on-year, while the market for broadcasting software amounted to ¥4.1 trillion. The market for cyberbusiness (Internet-based mail order services) reached an estimated ¥28.5 billion in FY1996, a 40-fold jump year-on-year and accounting for 8% of the global cyberbusiness market. The report claims that the data communications industry created 760,000 jobs between 1990 and 1995.

BUSINESS/MARKET NEWS

Mainframes stage a comeback
Domestic demand for mainframe computers is rising. The FY1997 shipment plans released by Fujitsu, IBM Japan, and Hitachi indicate that domestic shipments may increase by more than 30% (in terms of processing capacity). Mainframe market expansion is being supported by replacement demand from large corporations, and banks are expected to start placing orders in the second half of this year as they prepare to replace their third-generation online systems (which have been in use for about a decade).

Data-by-satellite plans launched
Softbank will enter the business of satellite broadcast data transmission. The company is preparing for full-fledged startup in spring 1998 of J-Sky-B, a digital satellite broadcast service it will operate in cooperation with News Corporation of Australia. Softbank plans by year-end to establish a new in-house organization and a new corporation dedicated to the business. The corporation will develop its own provider unrelated to the J-Sky-B venture. Eventually Softbank intends to provide content and services to other broadcasters. DirecTV operator Japan Digital Broadcast plans to start similar services this fall, which presages intense competition in the multi-channel digital broadcasting business.

Data warehousing on the Internet
Tokyo-based Wanbishi Archives will use Direct Internet's satellite-based Internet distribution system for a new digital data storage business that it will start this fall. Wanbishi will digitize documents, applications, catalogs, and other materials on behalf of corporate clients, and transmit the content to Direct Internet, which will in turn upload the data to a storage server located in the US. Clients will be able to query the server, which will relay the requested data via high-speed satellite circuits. A number of Internet-enabled data warehousing businesses are starting to appear in Japan, but Wanbishi plans to differentiate itself from competitors through use of the high-speed satellite link.

More virus protection
Computer Associates KK, the wholly owned Japan unit of US-based Computer Associates, has entered the corporate computer virus software market. In June, CA began licensing to corporate customers Inoculine, an anti-virus software program designed for Windows NT and other servers. CA sees growing needs for solutions to the so-called macro viruses that are transported via file transfers. CA KK currently has a staff of 50, but plans to increase its workforce to 200.

Computer sellers outsource delivery
Dell Computer will outsource to Federal Express (FedEx) the entire process of shipping PCs to Japan from its Asian operations base in Malaysia: clearing customs at Narita airport, temporarily storing packages in-country, and performing the final delivery to the customer. Dell says the sweeping new agreement with FedEx will trim delivery times by 20% and allow the company to inform customers ahead of time of the day their PCs will be delivered. Dell will also launch an Internet-based service that allows customers to track their merchandise after ordering.

       Gateway 2000 Japan, meanwhile, has entered a tie-up with express delivery company Sagawa Kyubin to deliver its computers to buyers. Customers can designate the time as well as place of delivery. The move is expected to cut delivery time by up to 40%.

Apple shifts core focus
Apple Computer Japan intends to focus on high-end PowerMac series computer sales, targeting corporate and advanced individual users. In value terms, PowerMac sales accounted for about 30% of company-wide sales in 1996, but Apple wants to increase the ratio to 60% this year while keeping sales of entry-level Performa series computers to about 10%. The company, which shipped approximately 900,000 computers in Japan last year, intends to shift emphasis to corporate users with growing interest in multimedia content as well as individual users seeking to replace their current computers with more advanced models.

PB-NEC battered by competition
Tokyo-based Packard Bell-NEC Japan (PB-NEC Japan) has withdrawn from the home computer market. The company launched sales of home-use PCs through large retailers in November 1996, but after being slammed by vicious price competition it has decided that a profitable business is unsustainable. The company plans to return to a business model of focusing on corporate and SOHO sales.

NTT Data to expand client base
NTT Data will broaden its Interpria Internet connectivity service marketing efforts to include small and midsize companies. NTT Data to date has focused primarily on large corporations, but severe price competition in the corporate sector has prompted the company to try and expand its current customer base of 100 companies to 300 by April 1998. It plans to use its systems integration expertise to help smaller firms set up Internet connections and in-house networks, something that few small companies have the expertise to accomplish on their own.

TELECOM TOPICS

Who pays?
Japan's three international long-distance carriers - KDD, IDC, and ITJ - have appealed to the US Federal Communications Commission to require US firms to pay a share of international circuit connection costs that they claim are paid for exclusively by Japanese companies today. The three carriers claim they must pay US carriers approximately $25,000 per month to connect an international 45M-bps line on the US side, and that they are bearing 100% of the burden for these two-way connections. Carriers in other countries have lodged similar complaints. US telecom companies argue that they must pay for domestic circuit congestion in the US because of the overwhelming amount of incoming foreign traffic attracted by US content. KDD and the other international carriers, however, counter that US Internet users also view overseas content.

NET NEWS

The high cost of security
VeriSign Japan boosted its fee for issuing an electronic signature certificate from ¥35,000 to ¥90,000 in July. The company claimed that heavy personnel and equipment costs made the increase unavoidable. The new fees will cover issuance of Web server digital IDs, the digital certificates that allow online merchants to maintain security. Since beginning the service in June 1996, VeriSign Japan has issued approximately 300 such IDs. Since the cost per ID is $290 in the US, the steep increase was expected to prompt complaints from Japanese users.

Online shopping survey
A survey conducted in February and March by ECOM found that 15% of respondents had online shopping experience. The ECOM study, which used both a Web-based survey and a paper questionnaire inserted into newspapers, found that the five items respondents most want to purchase online are theater tickets, highway and bridge toll tokens, books and magazines, software, and copies of citizen registration documents. The key benefits cited for online shopping (and the percentage of respondents who mentioned each) were ability to shop 24 hours per day (81%), ability to shop from home (69%), and ability to easily purchase goods from overseas and other remote locations (57%).

Roaming the Net
Tokyo-based Asia Internet Holding (AIH), a subsidiary of access provider Internet Initiative Japan (IIJ), will join a worldwide roaming partnership formed by IIJ and Eunet of Holland (one of Europe's largest Internet access providers). AIH will link its A-Bone Asia Internet grid with Eunet's European network, and each will resell the other's connectivity services. The two firms also plan to cooperatively develop Internet-based Virtual Private Network (VPN) services. The IIJ/Eunet worldwide roaming pact enables users in 25 nations to access the Internet for the price of a local telephone call.

The first step to censorship?
Japan's Internet service providers (ISPs) have voluntarily drafted a set of guidelines for ISPs to follow in order to control licentious, harmful, or otherwise objectionable material being distributed via the Internet. The guidelines call on ISPs to incorporate into their subscriber contracts clauses that prohibit the dissemination of illegal, objectionable, or harmful material over the Internet, and state that ISPs have an obligation to provide a mechanism for handling complaints and other issues related to use of their services by subscribers to distribute objectionable material.

IXP planned in Okayama
Twenty firms, including IIJ, NEC, Fujitsu, NTT, Hitachi, and Sanyo, have agreed to set up an Internet exchange point in Okayama Prefecture by the end of the year. The effort, to be implemented under the auspices of the Okayama Information Highway Initiative, will be led by Keio University Professor Jun Murai (often called "the father of the Japanese Internet"). Members of the Okayama prefectural government, the MPT, Ministry of International Trade and Industry, and Ministry of Construction will participate as observers. Internet congestion is becoming a serious problem in Japan, and while several exchange point initiatives are underway, it is unusual for such a diverse group of academics, professionals, manufacturers, service providers, and government representatives to cooperate in the same effort.

INTERNATIONAL NEWS

Akia to sell in Korea
Akia plans to enter the Korean PC market, possibly by year-end. The company is setting up a representative office in Seoul, and within a few months will incorporate it as its subsidiary. With the Korean market expected to expand from 1.8 million units in 1996 to over 2.3 million units this year, most of which are desktop units, Akia intends to take the initiative in Korea's still-small notebook computer market. First- and third-year sales targets are ¥2 billion and over ¥5 billion, respectively.

Hitachi develops Asian EDI system
Hitachi has developed, in cooperation with local firms in Singapore and Malaysia, an advanced electronic data interchange (EDI) system that it plans to start using with approximately 200 Asian suppliers in early 1998. The system, which Hitachi claims is more advanced than those used in Japan, will enable virtually paperless transactions with its Southeast Asian suppliers. Singapore-based Hitachi Asia says that it currently uses an EDI system with about 30 suppliers, but differing EDI standards used by different companies has resulted in expensive modification work. The new system will use EDIFACT, the UN-sponsored world standard.

IN 50 WORDS OR LESS

Toshiba hopes to boost its global PC sales by 48% year-on-year in FY1997. The target would expand domestic sales from 600,000 units in FY1996 to 850,000 units in FY1997, with overseas shipments rising from 2.1 million to 3.15 million units.

Nippon Jimuki (NJC), an NEC-affiliated information technology system vendor, has set up a subsidiary specializing in network system construction. NJC Network Engineering will carry out everything from network system design and consulting to construction and maintenance services.

Genesis, a venture capital-backed US startup, has set up a wholly owned Japanese subsidiary to market computer telephony products.

Tandem Computers Japan has delivered to NTT a ¥3 billion mainframe server boasting the world's largest data storage capacity (10TB), enough to store data on 12 billion calls. NTT reportedly plans to install 10 more Tandem servers.

Japan's Patent Office will start disclosing summarized patent information free of charge over the Internet by mid-1998. The aim is to spur domestic R&D activity. It will also offer a low-cost, Internet-based full-disclosure patent information database service.

Yahoo! Japan has started a free service providing information on nearly all listed corporations in Japan via its website. The Yahoo Corporate Information service (http://profile.yahoo.co.jp) may pose a threat to companies that are charging for Web-based stock price and corporate information.

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