NTT kicks-off 5G foray at Rugby World Cup

There might be more attention given to the rugby than mobile networks in Tokyo right now, but the World Cup is giving NTT Docomo a pleasant opportunity to test out its 5G smarts.

Last Friday, the Rugby World Cup kick-off in Japan and NTT said it was also offering a trial 5G service ahead of a full-commercial launch in Spring 2020. According to local press, 5G devices will be set-up in local stores to allow for a more in-depth experience of the games, while the telco has also announced it will step-up deployment plans.

“We are marking Friday as the day we begin our full-fledged 5G services,” said NTT Docomo President Kazuhiro Yoshizawa.

Although this is progress, what is worth noting is this is little more than a dress-rehearsal for the telco. As one of the official partners of the Rugby World Cup, NTT has an excellent opportunity to test out how the network will perform under strain. Lessons learned here will be passed onto the next big-ticket event, the Tokyo 2020 Olympics.

This is an event which will give NTT the opportunity to show-off what it can do and put itself in a leading-position in the 5G race. The world will be watching the Olympics, huge numbers of fans will flood into the country and connectivity will be tested to the extreme.

Alongside the announcement of the 5G trial, NTT has also said it will speed-up 5G deployment plans over the next couple of months. Given one of its rivals, Softbank, said that was shifting up a gear last week, it was only going to be a matter of time before NTT followed suit.

By next June, NTT has suggested it will be ready to launch the 5G connectivity onto the waiting masses, with plans to have 10,000 base stations in action by the spring of 2021. The team also wants 60% population coverage by 2023, a reasonable objective and certainly not one of the most aggressive we have seen around the world.

While Japan was arguably one of the leading voices in the 5G arena during the early years, it has maybe fallen into the shadows. This is nothing to do with the continued progress of the Japanese telcos, but perhaps due to the fact others around the world have been much more vocal and bullish. Realistically, it doesn’t matter a huge amount whether the 5G networks are switched-on or not right now, the big difference will be how quickly the telcos can scale the coverage footprint.

This is a challenge which will be faced by every nation around the world, though with the Rugby World Cup and the Summer Olympics next year, Japan has an excellent opportunity to stake a claim for global leadership.

NTT Docomo set to ditch Huawei phones over Android fears – report

Japanese operator group NTT Docomo will not offer Huawei smartphones when it launches its 5G network next year, according to a report.

The scoop comes courtesy of Nikkei Asian Review, which chatted to some NTT execs that preferred to keep it on the QT. The reason for this sudden reticence is fairly simple: if Google pulls the plug on Android support for Huawei phones the operator doesn’t want to be stuck with thousands of very expensive bricks that nobody wants to buy.

If this is true then it sets a very alarming precedent for Huawei, especially if the other Japanese operators follow suit. Japan was apparently Huawei’s fifth largest market last year and is right in the middle of the geopolitical arm wrestle between the US and China that has forced Google’s hand when it comes to Android support for Huawei phones.

The Nikkei Asian Review is on good form today, having also learned that Softbank is hoping to launch its 5G network two years ahead of schedule. How great an achievement this is, however, is open to debate, since many 5G networks around the world are already live. If the original projection by Softbank was that it wasn’t going to get its 5G act together until 2022 then it just as well it has belatedly pulled its socks up.

Rakuten delays network launch to work out the bugs

Japan’s fourth mobile operator has said it will delay its launch, originally set for October 1, in favour of a limited trial for 5,000 users.

The announcement will put a dampener on the spirits of those who are closely watching developments in Japan. With the barriers set so high on entering the mobile connectivity game for new-comers, cash-rich technology companies will be looking for tips and tricks to develop their own game-plans, though this was not supposed to be part of the story.

“In order to ensure the stability and quality of its service for customers and continue to improve the network based on customer feedback and requests, the company will initially open applications to 5,000 subscribers free of charge through the Free Supporter Program,” the firm said in a statement.

The official launch of the service will now be at some point before 31 March 2020, with the Free Support Program set to conclude at that point. Those subscribers who are assisting with the network trial will continue to get free services through to 31 March however.

The trial will focus on Tokyo, Osaka, Nagoya City and Kobe City, with KDDI and Okinawa Cellular to provide roaming services outside of these regions. Those on the trial will receive unlimited calls and data services through the period, in exchange for providing regular feedback to the telco.

The launch of Rakuten has caught the attention of many inside and outside of Japan for several reasons. In the country, consumers have had to deal with three providers to date and the introduction of a fourth player will provide additional competition, as well as a potential disruption to create a new status-quo when it comes to pricing. Just look at the impact Reliance Jio had on India to see the potential a new player can inspire.

Outside of Japan, there will of course be vendors rubbing their hands together in anticipation of a genuine greenfield project, though those who have an interest in muscling in on the connectivity game.

Starting with the vendors, this is a potential gold mine. If Rakuten is going to be competitive, it will have to get its network up-and-running very quickly. Aggressive network deployment and expansion to reduce the reliance on roaming requires some serious investment. The more success Rakuten can generate in the early days, the more quickly it will be able to mobilise investment to fuel further expansion.

And now for the disruptors. There will be several companies which will be keeping an eye on developments here, hoping to understand what works and what doesn’t when deploying a new network.

Dish is one company which falls into this category. Should the T-Mobile US and Sprint merger survive the legal challenges it is facing, Dish will become the fourth MNO in the US through acquiring the Boost prepaid brand from Sprint. It will then have to try and build its own network as quickly as possible.

There are of course other companies who have already declared their interest in the mobile connectivity game, 1&1 Drillisch in Germany for example, however internet companies have also been rumoured to be getting involved.

Amazon is the company which immediately comes to mind, a rumour about Amazon mobile is never too far away, however this is applicable to any internet firm which has a lot of money. Owning and managing a network is one way to make money, another opportunity to collect valuable data on consumers and a chance to own the relationship with the consumer end-to-end.

If Rakuten can prove an internet company can deploy an end-to-end fully virtualized, cloud-native network cost-effectively and in a timely manner, as well as attract the right people to manage the network to meet customer expectations, why wouldn’t others believe they can do the same.

Amazon has buckets of cash, as does Google, Facebook, Alibaba, Baidu or Microsoft. If Rakuten can do it, why couldn’t they? Or how about investment companies and venture capitalists who are always looking for a way to make money?

KDDI catches the Lime bug as scooter revolution drives forward

KDDI has announced an investment in Neutron Holdings, the company which owns the Lime scooter sharing service which is becoming increasingly popular around the world.

With more people living in cities than ever before, new solutions to move said people around cities are needed. Most urban centres do not have the most helpful public transit systems and it is becoming increasingly impractical for everyone to drive. Transport sharing initiatives are one way to fix the problem and Lime is presenting a popular solution.

Some might not be familiar with the business, but they might well have spotted a stray electric scooter on the pavement. These are just obstacles for pedestrians to navigate, but an alternative means for anyone to speed up the commute. Beating Connie home to ensure the linens are fresh and clean could be so much easier.

By downloading the Lime app, users can locate the nearest free electronic scooter through an embedded mapping feature, before paying for the service through a QR code or entering a six-digit code located on the scooter. Each ride costs $1 (roughly) irrelevant of the length.

After being founded in San Francisco in 2017, the Lime bug has been catching worldwide. The main footprint is in the US, though the scooters can be found all over Europe, as well as in South America (Uruguay and Mexico), Singapore, Australia and New Zealand. The idea of ‘mobility as a service’ is certainly catching on.

As part of this investment, Lime will also join the newly-developed Smart EAST project in the city of Fukuoka. The city is often referred to as the most innovative in Japan and will be the first in the country to host a Lime scooter ride. Alongside fellow project sponsors Digital Garage Co. and KDDI, the aim is to ‘create a model city with comfortable, high quality lifestyle options and intelligent use of urban space through the introduction of cutting-edge technological innovation’.

“We’re thrilled to be working with the Smart EAST project to bring our electric scooters to Japan for the very first time,” said Mitchell Price, Lime’s GR and Policy lead in Asia Pacific. “Fukuoka is a city focused on the future, and with Lime electric scooters riders will be able to unlock sustainable urban mobility like never before.”

What is worth noting is that the firm might come under some criticism before too long. Although it is a creative way to answer the mobility challenge in increasingly congested urban environments, they are proving to be a nuisance occasionally. In some cities it is illegal to ride scooters on the pavements, tickets for the offence in Los Angeles increased by 1815% between January and July 2018, while some are also frustrated by the scooters being discarded willy-nilly with no consideration to others.

This is not necessarily surprising as there are no rules to dictate the practice of riding a scooter. City officials might well have ignored these ‘vehicles’ in by-gone years, simply because there weren’t enough to justify any serious consideration. However, should trends continue on the same trajectory, a conversation will certainly need to take place.

Arguably Uber kicked-off this revolution, though KDDI is looking to cash-in on a trend which is spreading to all forms of transport very quickly.

Funded through the KDDI Open Innovation Fund (KOIF), the aim of this venture is to invest in start-ups both domestically and internationally which are using connectivity in a way outside the norm. KOIF Number 3. was first launched in April 2018 alongside Japanese venture capitalist firm Global Brain looking into firms in fields such as AI and IoT, areas where 5G can compound growth potential.

KOIF Number 3. will run through to 2028 with 20 billion Japanese yen to play around with, focusing primarily on the Japanese, US and South Korean markets. Of course, this is an investment opportunity, though the investment will also present collaboration opportunities with KDDI and the other start-ups which the fund has invested in.

Softbank opens yet another investment fund

Softbank CEO Masayoshi Son has continued his quest to prove he has been a man in the wrong career for the majority of his life with the launch of another investment fund.

The Growth Acceleration Fund has completed its first closing with committed capital of $269 million, somewhat short of the $100 billion raised during the first venture, though it will offer plenty of opportunity to explore new opportunities.

Having launched the Softbank Vision Fund and the Delta Fund, this latest attempt will look to target start-up businesses globally, though the primary focus of the fund will be the Asia markets. Softbank Group will be the main and controlling partner of the fund, contributing 52% of the capital, while other Softbank subsidiaries will also contribute as well as institutional investors such as Korea National Pension Service.

This is of course not the first fund which has been launched by the Softbank business, though it is another step-forward for Son, who seems to have the goal of being the most influential person in the technology industry.

The first investment body, the Softbank Vision Fund, was launched in 2017 and now has $91.7 billion in committed capital from the likes of the Mubadala Investment Company, Apple and Foxconn. With this capital, Son has made some heavy bets in the technology space including Nvidia, Arm, Slack and WeWork.

The more humble fund, the Delta Fund, is headquartered in Jersey and currently has $6 billion in contributing capital. The focus of this fund is also on the technology industry, although Softbank is less forth-coming with the names of its investments. So far, the Delta Fund has directed investment towards ‘VR/AR development tools’, a ‘geographical location platform’ and a ‘GPU developer’.

Although investment management is somewhat outside of the realms of Son’s experience to date, it seems he has a knack to running funds. In the financial year ending March 31, the two funds added 1.26 trillion yen in profits to the Softbank accounts. With such profits being realised, you can see why Son is keen to double-down and explore further.

G20 gets tough on tech tax as trade war gets agenda nod

20 bean-counters walk into a bar and ask for a tonic water. The barman asks who picking up the bill, and all fingers are pointed towards Silicon Valley.

In southern Japan, finance ministers and representatives of the central banking organizations have gathered to discuss the world of international and domestic finance. Of course, G20 is about much more than spreadsheets and calculators, but this weekend saw the accountants gather, while in the next room, ministers for trade and the digital economy were setting the world to rights.

Starting with the accountants, Silicon Valley is to remain the political punching bag of 2019.

“Specifically, in the area of international taxation, we will continue to have discussions on a review of the existing tax framework triggered by digitalization, in addition to fighting against tax avoidance and evasion,” Japanese Finance Minister Taro Aso said in a statement.

Of course, these politicians are savvy enough not to target a specific segment or highlight companies who are abusing the grey areas in the system. There are numerous different organizations outside of the tech sector who are mistreating globalisation trends for tax benefits, though the tech giants are the ones in the limelight right now.

In the G20 Finance Ministers and Central Bank Governors meeting, new ideas have been tabled suggesting governments around the world will be cracking down on the creative accounting techniques which are becoming ever-so-more common.

According to a communique seen by Reuters, the newly proposed rules would not only make it more difficult for the tech giants to make use of low-tax countries for their benefit, it would also work the other direction. Countries like Ireland, who have benefitted from offering loopholes to the tech giants, would have their freedoms curbed in the pursuit of fairness and a more level global approach.

The new rules would propose two different approaches to taxation. Firstly, companies would have to pay fair tax on the revenues which are derived in the country, and secondly, should the accountants find a way around these rules, a global minimum tax rate could also be introduced. It is the tax version of the Swiss Cheese model; the more layers which are incorporated, the more difficult it is to effectively create a tax evasion model for these organizations to follow.

For countries like the UK and France, this is a win, though the likes of Ireland, Luxembourg and the US will find the outcome frustrating. While the UK and France have been pushing for more stringent tax rules, Ireland and Luxembourg are attempting to protect the light-touch regulatory environments which benefits their own societies but screws everyone else.

The US has suggested any change to taxes was discriminatory to its own companies, effectively a raid on the US economy. Although US Treasury Secretary Steven Mnuchin has seemed relatively cordial in reaction to developments, it remains to see whether any further strain is placed on international relationships. The US is already struggling to maintain strong links with certain governments, and this presents another risk to stress relationships.

Mnuchin has also found himself in the news regarding the Huawei conundrum.

The US finance chief has said in Fukuoka that a trade deal between the US and China could ease the firm stance which is threatening to provide collateral damage all around the world. The statement quotes President Donald Trump, who made the suggestion over Twitter a few months back.

For those firms impacted by the ban, the reiteration of this statement might come as some relief, though critics will become increasingly frustrated. It seems the White House has little concern for collateral damage as long as its own ambitions are fulfilled. For the firms who supply products to Huawei or investors who have been left short by such a ban, the ease in which their livelihoods can be used by the White House as a disposable bargaining chip must be incredibly worrying.

This of course was a topic of conversation at the Ministerial Meeting on Trade and Digital Economy also.

“We continued our dialogue to mitigate risks and enhance confidence among exporters and investors, as we committed to do in Mar del Plata last year,” a briefing document states. “We affirmed the need to handle trade tensions and to foster mutually beneficial trade relations.”

While it might seem like a throw-away comment, perhaps we should appreciate the significance of recognising the situation. In most circumstances, governments would steer clear and allow the bickering duo to continue their chest-beating, however in recognising the circumstances perhaps we are closer to someone stepping in and de-escalating the situation.

Clearly neither the US or China can be trusted to be mature and manage the saga for a net-gain, so it might need a third-party to step in. As it stands, no-one is benefiting, and everyone is losing. The winner of this trade war will be the one which can be the least negatively impacted; that should not be considered an effective way to manage international relations.

Nokia and Ericsson compete to be SoftBank’s 5G best friend

The public battle for 5G ascendancy between Nokia and Ericsson has moved to Japan, with simultaneous SoftBank deal win announcements.

Nokia says SoftBank has selected it as a ‘strategic partner to drive its commercial 5G offering’. In other words Nokia is selling SoftBank a bunch of 5G gear. Specifically we’re talking about the Nokia AirScale RAN product suite, the 5G version of which is added to all the stuff Nokia already does for SoftBank.

“We are delighted to continue our long-term relationship with SoftBank and to be working with them as a trusted end to end partner at such an important milestone in the transformation to 5G. We are committed to help SoftBank launch their commercial 5G network,” said John Harrington, Head of Nokia Japan.

Meanwhile Ericsson has also announced a 5G RAN deal with SoftBank, which is sensibly pursuing a multi-vendor policy of 5G kit (although presumably not Huawei or ZTE). This will, of course, involve the Ericsson Radio System and this deal seems to apply specifically to mid and high frequency bands (Nokia made no comment about frequency bands).

“SoftBank and Ericsson have been partners since the 2G era and we are thrilled to support them on this latest part of their technology journey,” said Chris Houghton, Senior Vice President, Head of Market Area North East Asia, Ericsson. “With the help of our advanced product portfolio, SoftBank can unlock the potential of 5G for Japanese society and we look forward to building on our long-standing partnership.”

Nokia also mentioned it now has 38 5G commercial contracts, including 20 with named customers. Ericsson made no equivalent claim but it recently identified 18 named 5G contracts and has recently amended that to reveal six of them currently involve live networks. We don’t know the total number of commercial contracts Ericsson has, and its public list doesn’t yet include SoftBank, so it looks like the Nordic rivals are more or less level when it comes to 5G at this stage.

Japan joins the anti-globalisation movement

It might not be as aggressive a position as the White House has entrenched itself in but limiting foreign ownership of strategic segments is a similar objection to globalisation.

According to The Telegraph, the Japanese government has identified 15 new sectors which would be restricted from foreign ownership, while restrictions on a further five would be increased. Any foreign investor wanting to take more than a 10% share of a companies listed in these segments would have to report to the Japanese government.

“…based on increasing importance of ensuring cyber security in recent years, we decided to take necessary steps, including the addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security,” said a spokesperson for the Japanese government.

While telecom is already one of the sectors which has been listed for protection against foreign ownership, the new segments include mobile phone and the wider IT sector.

The rules themselves seem to be heavily nuanced to offer enough wiggle room for decision makers. At the very top level, should an investment be deemed contrary to national security, the Japanese government has granted itself the power to block or force changes to investment plans.

Although this might seem like another step on the road towards isolating China, sceptics are suggesting this is a plan to block the theft of trade-secrets by Chinese authorities and companies, it should hardly come as a surprise. After all, Japan is one of the countries the US has success in turning against China.

Last year, the Japanese government passed rules which would ban the use of phones, computers and other components from Chinese vendors in any of its agencies. Telcos have also been awarded 5G spectrum licences which come with coverage and security obligations, a move seen by some as a means to limit network exposure to Huawei. The telcos had in fact already committed to omit Huawei and ZTE from their network deployment plans, though an official position is a much stronger symbolic gesture.

There might be genuine security and economic concerns about China and its telco flagbearers, but the world is increasingly moving away from the concepts of openness. This announcement might only be a pebble in the global pond, but each pebble adds to the growing waves of isolationism.

All four operators are awarded 5G licences in Japan, with security conditions attached

NTT DoCoMo, KDDI, Softbank, and Rakuten have all received the 5G licences they applied for, but they come with coverage obligations and security commitment.

The Ministry of Internal Affairs and Communications announced on 10 April (in Japanese) that all the four applicants have been awarded radio frequencies and licences to rollout 5G services. Each licensee is awarded 400MHz spectrum on the 28GHz frequency, while three of them are awarded 200MHz on 3.7GHz except Rakuten, which has requested 100MHz.

All the operators are going to roll out 5G services starting in 2020. NTT DoCoMo, KDDI and Softbank will launch the service in spring time, with Rakuten planning to open its service in June. The total investment planned by the operators to the end of 2024 amounted to Yen 1.6 trillion ($14.4 billion).

While both NTT DoCoMo and KDDI have pledged to cover over 90% of the country within five years, Softbank only plans to cover 64% of the country and Rakuten 56%. The minimum requirement from the government is serving every prefecture within two years, and at least 50% of the whole country within five years, calculated by the number of geographical blocks the networks will cover out of the total 4,500 blocks the Ministry divides the country into.

In addition to coverage requirement, the Ministry has also attached a dozen granting conditions (pp.16-17 of the summary, in Japanese), including commitments to expand optical fibre networks (#2), to improve safety measures to minimise outage during natural disasters (#3), to prevent interference of existing radio licensees (#7) etc.

The item that may raise eyebrows is Item 4 on the list, which requires the operators to “take appropriate cyber security measures including measures to respond to supply chain risks” (unofficial translation). It refers to earlier regulations including the “”Information and telecommunications network safety and reliability standards” published by the Ministry of Post and Telecommunications in 1987, “Common Standards Group for Information Security Measures for Government Agencies and Related Agencies” issued by the National Information Security Center (NISC) in 2018, and the cross-departmental “Agreement on IT procurement policy and procedures for goods and services” published on 10 December 2018.

The last two documents, though neither of them names any particular countries or brands to be excluded, have been broadly recognised as the Japanese government’s decision to ban companies like Huawei and ZTE from public sector procurements. By invoking these regulations, it may not be too much of a stretch to read it as a message to the operators to stop using equipment supplied by the Chinese vendors. This may not cause serious disruptions to the operators’ business though, as Softbank, the only operator that has Huawei equipment on its network, is already planning to swap for Ericsson and Nokia, Nikkei reported earlier.

Japanese 5G licensees

All data-roads lead to Tokyo after EU’s thumbs up

The European Commission has given its nod of approval for data protection rules drawn up in Japan, effectively extending GDPR protections for European citizens to the Asian country.

On top of the current data protection regulations in Japan, an additional set of rules have been created adding safeguards to guarantee that data transferred from the EU will be subject to the same protection as European standards. The supplementary rules will be binding on Japanese companies importing data from the EU and enforceable by the Japanese regulator and courts.

“This adequacy decision creates the world’s largest area of safe data flows,” said Věra Jourová, Commissioner for Justice, Consumers and Gender Equality.

“Europeans’ data will benefit from high privacy standards when their data is transferred to Japan. Our companies will also benefit from a privileged access to a 127 million consumers’ market. Investing in privacy pays off; this arrangement will serve as an example for future partnerships in this key area and help setting global standards.”

Starting with the rules, new conditions will be set into play regarding the protection of data, the rights of European citizens to request further information on usage, as well as further requirements dictating what data can be transferred out of Japan to other nations. Protections have also been put in place with regard to how intelligence and law enforcement agencies can use or retain data, while a complaint-handling mechanism has also been introduced.

With these new rules the road to Tokyo is now open, allowing data to freely transfer between Japan and all members of the European Economic Area (EEA), Iceland, Liechtenstein and Norway. It’s a win for the bureaucrats which have been looking to develop deeper relationships, creating a trading bloc which can provide more competition for the likes of the US and China.

“This is the first time that such a recognition takes place under the GDPR and in a reciprocal manner. As of today, Japan has adopted an equivalent decision for data transferred to the EEA,” said Tanguy Van Overstraeten, TMT Partner and Global Head of Data Protection at law firm Linklaters.

“This major milestone puts both Japan and the EU in a unique position, strengthening the recently adopted Economic Partnership Agreement (EPA) between the EU and Japan. The EPA will enter into effect on 1 February 2019, creating an open trading area covering over 600 million people and almost one third of the world’s GDP.”

For Japan enthusiasts, this announcement will come as great news, especially ahead of the EU-Japan trade agreement which is set to come into force next month. This tie up will create an open trading zone covering 635 million people and almost one third of the world’s total GDP, and the first ever bilateral framework agreement between the two parties.

As part of the new relationship the vast majority of the €1 billion of duties paid annually by EU companies exporting to Japan will be removed, as well as regulatory barriers inhibiting some trade, for example on car exports.

The European Commission might have its critics throughout the world, but this doesn’t look like anything aside from a good bit of business.