How To Improve The Quality Of The Internet In Japanese Society

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1 CHAPTER 2.3 Information and Communication Technologies Policy in Japan: Meeting the Challenges Ahead HIDEO SHIMIZU, Ministry of Internal Affairs and Communications, Japan KUNIKO OGAWA, Ministry of Internal Affairs and Communications, Japan KOICHI FUJINUMA, Ministry of Internal Affairs and Communications, Japan The world has witnessed remarkable growth and diffusion in information and communication technologies (ICT) system usage in this decade.the further development of the ICT industry will become a major factor for economic growth.this chapter will provide some economic background related to current Japanese ICT policies. It also sets out changes in the regulatory environment and looks at the current status of ICT infrastructure in Japan.The positive outcomes of the steps that have been taken are found in the high penetration rate of the broadband, including fiber optic cable services, mobile telephones with a high Internet access rate at 87 percent (incidentally, over 60 percent of these mobile telephones are third-generation telephones). Mobile telephones in Japan can be used also for watching television, using electronic money, and purchasing electronic tickets.the final section of this chapter will highlight challenges in the ICT field for the future, such as convergence of communications and broadcasting, security and privacy, and relating government policies. 2.3: Information and Communication Technologies Policy in Japan History of Japan s ICT policy up to 2005 Japan has made sequential national ICT policies since around 2000, with the aim of fostering an advanced ICT network society.the Information Technology Basic Law was enacted in November of In 1999, Japanese Internet penetration rate was just 13.4 percent, lagging behind that of Northern Europe and North American countries. Also, in April 2001 the number of broadband subscribers in Japan was 737,000, behind the United States and Korea. At the time, introducing ICT into corporate management in Japan meant simply installing information technology devices and systems.the law was established because of a sense of urgency on the part of the government about Japan s slow start in the ICT revolution. In January 2001, based on the Law, the Advanced Information and Telecommunications Society Promotion Headquarters was established within the Japanese cabinet. Beginning in January 2001, the headquarters crafted several national e-japan Strategies that would put Japan among the leading ICT nations. Specific targets were set: Promote the upgrading of Japan s Internet network to meet the highest global standards, with super high-speed access ( Mbps) possible within 5 years; and make this access available at affordable rates for all citizens. 1 Under the principle of private-sector-driven development, a number of government policies were implemented. Among these were policies to enforce fair competition in the information and communications field, policies to support the development of e-commerce systems, policies that implement e-government, and policies for human resources development. In particular, infrastructural improvements for the expansion of broadband progressed so rapidly that by

2 2.3: Information and Communication Technologies Policy in Japan Figure 1: The framework of Japanese ICT policy e-japan Strategy (Jan 2001) IT Basic Law Establishment of IT Strategic Headquarters (Director: Prime Minister) KEY AREA Development of broadband infrastructure, and so on e-japan Strategy II (Jan 2003) 1. Health care 2. Diet 3. Lifestyle 4. Financing for small businesses 5. Knowledge 6. Labor 7. Administrative services e-japan Strategy II accelerated package (Feb 2004) KEY AREA Emphasis on IT usage (7 leading areas) IT policy package (Feb 2005) Evaluation / validation of world s most advanced method (Expert Committee on IT Strategy Evaluation) IT New Reform Strategy (Jan 2006) e-japan Priority Policy Program 2006 (Jul 2006) Realizing a society that has the benefits of IT whenever, wherever, and with whomever Realization of a ubiquitous networked society Frontrunner in the world s ICT evolution Realization of an autonomous ICT society e-japan Priority Policy Program 2003 (Oct 2003) e-japan Priority Policy Program 2004 (Jun 2004) e-japan Priority Policy Program 2002 (Jun 2002) 108 e-japan Priority Policy Program (Mar 2001) Ministry of Internal Affairs and Communications IT Policies Ministry of Internal Affairs and Communications u-japan Policies Source: MIC, Japan, the targets of the e-japan Strategies had been achieved. The ICT environment in Japan made it possible for 35 million households to have a constant connection to a digital subscriber line (DSL), for 23 million households to have cable TV, and for 17.7 million households to have fiber-to-the-home (FTTH) connections. As infrastructural improvements progressed, interest turned toward the promotion of usage. In 2003, the headquarters established a new strategy called e-japan Strategy II, settling on seven areas health care, diet, lifestyle, financing for small businesses, knowledge, labor, and administrative services where ICT could be used in groundbreaking ways. Again, as infrastructural improvements progressed, attention turned toward the issue of ICT usage. E-Japan Strategy II aims to continue to maintain the Japanese position as the frontrunner in terms of ICT technology beyond 2006 (see Figure 1). Toward the ubiquitous networked society In December 2004, just before the target year for completion of the e-japan Strategy, the Ministry of Internal Affairs and Communications (MIC) drafted its u-japan Policy.This policy seeks to create a ubiquitous networked society by 2010 that will permit ICT access at any time, anywhere, with anything and by anyone. 2 The major goal of the u-japan Policy is to lead the way as the world s most advanced ICT nation in 2010, to have the world s best ICT infrastructure, and to contribute to the world by providing an original and creative Japanese social model that balances infrastructure with

3 ICT usage.the following are the three basic elements of the u-japan Policy: development of ubiquitous networks that can be used seamlessly for both wireless and fixed networks, advanced usage of ICT to assist in resolving social issues, and improvement of the environment for ICT usage in a safe and secure manner. In January 2006 the Advanced Information and Telecommunications Society Promotion Headquarters created the Information Technology New Reform Strategy, which included follow-up on the capability of ICT to facilitate structural reforms (that is, its ability to help resolve issues facing Japanese society), ICT infrastructure improvement (that is, developing infrastructure that moves Japan toward the goal of being a ubiquitous networked society), and dissemination to the world (that is, Japan s ICT contribution to the world). The new strategy seeks to make all areas of Japan accessible to broadband so that Japan s communications infrastructure is completely broadband-capable by The strategy also seeks to make 2011 the First Year of Completely Digital Networks for all communications and transmissions, with the changeover to digital terrestrial television broadcasts complete by July of All of this is to be accomplished through the principle of privatesector-driven development and a variety of government policies that seek to promote these goals. ICT and macroeconomics: Three effects on economic growth Japan has placed priority on ICT-related policies because ICT has an impact on economic growth in a number of ways: through the growth of the ICT industry, through a deepening of ICT capital stock, and by fostering productivity increases for all industries, as a result of ICT spreading across industries and corporations. The following section provides some economic background, drawn from the Japanese information and telecommunications white paper of 2006, for current Japanese ICT policies. 3 The first effect: The direct impact of ICT industry growth The ICT industry accounts for an increased percentage of GDP.The per-industry real GDP of the ICT industry in 2004 was 61.9 trillion yen (US$560 billion), or 11.7 percent of Japan s real GDP. Also, the percentage change of per-industry real GDP for the ICT industry was 9.21 percent.this means that the ICT industry contributed 40 percent to the change in Japan s real GDP. 4 The effect that the ICT industry s performance has had on Japan s economic growth is significant, no matter what other industry it is compared with (Figure 2). The second effect: ICT capital stock and economic growth Real investments in ICT in 2004 totaled 16.4 trillion yen (US$150 billion) 21.5 percent of the total capital investments made by the private sector (see Figure 3). ICT capital stock totaled 36.9 trillion yen (US$335 billion), comprising 3.0 percent of private capital stock. 5 A look at investments in ICT capital stock over the years shows that, although they temporarily dipped in the mid 1990s, they have since rebounded and continue to grow. Figure 4 shows the contribution of ICT capital to the economic growth rate. ICT capital stock contributed 0.21 percent to economic growth from 1990 to 1995 (economic growth was 1.51 percent); from 1995 to 2000 ICT capital stock contributed 0.54 percent (economic growth was 0.97 percent); and from 2000 to 2004 they contributed 0.21 percent (economic growth was 1.15 percent).thus ICT capital stock deepened overall economic growth by 13.9 percent, 55.7 percent, and 18.3 percent respectively over these years. Considering that ICT capital stock comprises 2 3 percent of private capital stock, its impact on economic growth is significant. The third effect: The spread of ICT and economic growth The third effect is an increase in productivity resulting from the spread of ICT in industries and businesses. This increase is due to an improvement in total factor productivity (TFP), which is a variable factor and not explained in terms of changes in the input of factors of production such as capital and labor.the increase in TFP for the general ICT industry in Japan between 2000 and 2004 was 3.7 percent; it was 2.9 percent for electrical machines. Clearly TFP was high for fields related to ICT, but in other industries it was not necessarily so high, and the overall industry total stood at just 0.09 percent. It is now believed that growth in Japan s TFP is being primarily supported by the ICT industry, which is a leading factor in technological innovations. History of changes in the regulatory environment Over 20 years have passed since the privatization of Nippon Telegraph and Telephone Public Corporation (NTT) in Since that time a number of businesses have ventured into the communications market; coupled with an easing of regulations, this has resulted in a considerable growth of the communications market. 6 As of March 2006, there were 2.3: Information and Communication Technologies Policy in Japan 109

4 2.3: Information and Communication Technologies Policy in Japan Figure 2: Contribution of the ICT industry to changes in real GDP, Percent 4.0 ICT industry Other industries All industries Source: Do Research Institute, Figure 3: Evolution of real ICT investment, ,000 18,000 16,000 14,000 Software Software Electronic Electronic computers computers and peripheral and peripheral attachments attachments Telecommunications equipment Telecommunications equipment Percentage of ICT investment covered by private-sector Percentage capital of ICT investment covered by private-sector capital investment Yen (billions) 12,000 10,000 8, Percent 6,000 4, , Source: Do Research Institute, 2006.

5 Figure 4: Contribution of ICT capital to the economic growth rate Percent 6 Labor ICT capital General capital 4 TFP Economic growth rate : Information and Communication Technologies Policy in Japan Source: Do Research Institute, registered and 13,412 notified telecommunications providers offering a variety of communications services. The regulatory framework for telecommunications businesses in Japan is continually revised to meet the needs of the telecommunications services market and to ensure that users enjoy a broad range of services through the promotion of fair competition in the facilities and services fields.these changes in the regulatory framework can be divided into three time periods, as related below. Period one: From monopoly to competition (1985 ) In April of 1985, the Telecommunications Business Law went into effect. Based on this law, the government introduced competition into all areas of the telecommunications market; also NTT was privatized.when the law went into effect, a type 1 telecommunications business (that is, the setting up of physical facilities containing telecommunications lines and providing telecommunications services) required a massive initial investment in order to construct a network. Economies of scale, as well as other factors such as the externality of the network made it difficult to enter into the telecommunications market.the design of the network was based on the principle that telecommunications was an essential industry to the life and economy of the nation and that the network would play a major role in serving the public interest, by ensuring, for instance, that people received important announcements during emergencies and crises. For these reasons, type 1 telecommunications carriers were required to obtain a license. Period two: Promoting further competition (1997 ) In order to facilitate the entry of new carriers into the telecommunications market, revisions made to the Telecommunications Business Law in 1997 eased a requirement for obtaining permission to operate for type 1 telecommunications carriers. In 1998, restrictions on foreign investment were abolished in principle. In 1999, in order to further increase the international competitiveness of Japan s ICT industry and to create a more dynamic, competitive environment, NTT was restructured under holding corporations into three separate companies: a regional company for eastern Japan, a regional company for western Japan, and a long-distance network company. Following the restructuring of NTT, the basic rules governing connections were revised in A long-run incremental costs (LRIC) system was implemented for telephone networks cost calculation method, and the connection rules for DSL service were improved by creating conditions and procedures for unbundling subscriber lines 111

6 2.3: Information and Communication Technologies Policy in Japan 112 and so on, and by establishing shared facilities to allow competitors to connect (a process called colocation ). In 2001, in consideration of the degree to which competition had progressed, the Telecommunications Business Dispute Settlement Commission was established to handle disputes and other matters between telecommunications companies, and to recommend necessary improvements and changes in the rules to the MIC. In 2002, the universal service fund system was upgraded to eliminate geographical digital divide. Period three: From ex-ante regulations to ex-post regulations (2004 ) Because of changes in the market structure, revisions were made to the Telecommunications Business Law in These revisions aimed to continue to adapt the law to changes in the market environment and network structure, as well as to encourage new companies to enter the market and to promote fair competition among them.the original business classifications were abolished and market entry regulations were greatly eased, shifting the regulations from ex-ante to ex-post. In principle, regulations governing fees and notification of contract conditions were abolished and steps were taken to ease the authorization of the relative contracts. Along with relaxing these regulations, rules to protect consumers were introduced in 2003 together with a system for evaluating competition in the telecommunications. Evaluation of competition in telecommunications In 2003, an analysis and evaluation of competition in telecommunications was conducted by the government. The analysis was done in each major service such as Internet access, mobile telecommunications, Internet protocol (IP) telephones, and fixed-line telephones.the following are some of the results of the analysis. For the broadband market, attention was paid to changes in the competitive environment accompanying the shift toward the convergence of communications and broadcasting with fiber optic lines (FTTH). In the asymmetric digital subscriber line (ADSL) market, NTT East and West s share as of December 2005 was 39.1 percent; the market was judged to be functioning effectively under the rules governing connections, with vigorous competition in terms of cost and service. In the FTTH market, NTT East and West had a 60.7 percent share as of December 2005; the number of contracts was growing and video services were being increasingly realized.the mobile telephone market was switching from the 2nd generation (2G) to the 3rd generation (3G), and competition remained as vigorous as ever. NTT Docomo s share was 54.1 percent as of December It becomes difficult to predict the future trend of ICT with the innovation and changes in ICT field such as the convergence of communications and broadcasting, the convergence of fixed and mobile telephones, the further spread of broadband, IP telephones, and fiber optics. The current status of ICT infrastructure in Japan The following section describes the remarkable development of ICT infrastructure fostered by the above-explained Japanese policies; it also describes the new trend of convergence in broadcasting and communications. The development of ICT infrastructure The International Telecommunication Union (ITU) s July 2006 edition of The World Information Society Report listed a Digital Opportunity Index (DOI) of 11 factors (such as population coverage for mobile telephones, Internet connection fees, Internet access from mobile telephones, and ratio of broadband coverage) for 180 economic regions. Korea had the highest DOI score, followed by Japan. Also, in a comparison of broadband fees, Japan was the cheapest at US$0.07 per 100 kilobits; it was tied with Korea as the fastest with a transmission speed of 51.2 Mbps. Increase in the number of Internet users In 2005, the number of Internet users in Japan stood at million people (66.8 percent of the population). A majority of people estimated at million (57.0 percent of total Internet users) used both personal computers and mobile devices (such as mobile telephones) to access the Internet. Of these, million people (22.5 percent) used only mobile devices, and million (18.6 percent) used only personal computers. The rate of penetration for broadband has been increasing (see Figure 5). By the end of 2005 the number of contracts for broadband lines had reached million (a 19.1 percent increase over the previous year). Looking at the breakdown of this figure, we see that contracts for DSL were the most common, at about million in 2005 (a 6.2 percent increase over the previous year). Next came FTTH, with approximately 546,000 contracts (an 88.4 percent increase over the previous year).this was followed by approximately 331,000 contracts for cable Internet (an 11.8 percent increase) and approximately 20,000 contracts for fixed wireless access (FWA) (a 34.8 percent decrease). The government s goal, based on the u-japan Policy, is to make broadband available in every region in Japan by 2010 through measures promoting the upgrading of the broadband network. Interest in switching to FTTH Internet connection lines is increasing, and a comparison of the net increase in the number of contracts during the fourth quarter shows that the number of contracts rose for FTTH during the period, surpassing that for DSL.

7 Figure 5: Evolution in the number of broadband contracts Contracts (10,000s) 2,500 2,000 1,500 1, ,495 1,956 2, DSL Cable internet FTTH FWA* , , , : Information and Communication Technologies Policy in Japan Source: Communications Usage Trend Survey, MIC, Japan. * FWA contracts have grown from 0 contracts in 1999 to 20,000 contracts in 2005; these relatively small values are not visible in this figure. By the end of 2005, million people (such as DSL subscribers and fiber optic subscribers) had used IP telephones. In addition, there are peer-to-peer telephones that are cheaper and utilize IP technology, but they do not have an assigned IP phone number because they do not satisfy a quality standard. In keeping with the spread of the Internet, NTT has stopped investing in circuit switches and is instead promoting a switchover of the network to IP. Major companies in Japan have indicated a policy of switching communications networks from public switched telephone network (PSTN) to IP by 2010; it is expected that telecommunications services, including telephones, will be offered via an all-ip infrastructure. Penetration and sophistication of mobile telephones Mobile telephones are no longer just for talking; they have become people s most accessible mobile information terminals. One example is their Internet capabilities. By the end of 2005, the number of people accessing the Internet from mobile telephones or other mobile information terminals was million (81.2 percent, a 7.9 percent increase over the previous year).this was the first time Internet access from mobile devices had exceeded Internet access from personal computers (the relevant figure for personal computers was million). 7 In addition, mobile telephone terminals offer games, music for downloading and playing, one-segment broadcasts (terrestrial television broadcasts aimed at mobile terminals), and video telephone. Furthermore, there are a number of mobile terminals with functions that enable the user to connect to a variety of information read from barcodes, and even to handle electronic money and tickets via smartcard or radio frequency identification (RFID). In 2004, the market size for mobile commerce (m-commerce) was 971 billion yen (US$8.8 billion), encompassing 17.2 percent of the business-to-consumer e-commerce market. People are able to do a variety of tasks whenever and wherever they want with their mobile telephones. Currently, telecommunications carriers provide subsidies to encourage the sale of mobile telephone units; thus, users are often able to purchase relatively cheap units that offer a high degree of functionality.this structure is credited with having a great effect on helping highly functional terminals to broadly penetrate the competitive portable device market. However, to produce more competitively priced products, discussion on replacing this funding scheme with a new price plan is underway. Dramatic increase in Internet traffic In recent years, IP traffic in Japan has shown a tendency to double each year.the continuing increase in the number 113

8 2.3: Information and Communication Technologies Policy in Japan 114 of broadband subscribers and Internet users is the engine for this trend. It is believed that the increase in IP traffic is to the result of factors such as the strong momentum Internet use is gaining in society and the economy, the sudden rise in peer-to-peer file sharing, and the ability of individuals not just content providers to transmit heavy content such as music and movies. Convergence of broadcasting and communications: The development of digital broadcasts Terrestrial digital television broadcasts in Japan began in December 2003.The reception area for these broadcasts has expanded rapidly by June of 2006, this area covered 32.2 million households of potential viewers, or 68 percent of the total number of households in Japan. By the end of 2006 all prefectural capitals in Japan began terrestrial digital television broadcasts; by July 2011, all broadcasts will be done digitally.television is one of the most accessible means for citizens to obtain information, and it is hoped that switching television to digital will lead to a communications infrastructure in households. Also, in April 2006 digital one-segment broadcasts (terrestrial television broadcasts aimed at mobile terminals) began, enabling image and data broadcasts to be received on mobile devices as clearly as they appear on home televisions. Movement toward convergence of telecommunications and broadcasting In line with the increase in digital broadcasts and the dramatic increase in carrying capacity the result of the spread of broadband throughout the communications network telecommunications carriers are using their optical fiber networks as a single channel for both broadcast services (for television shows and so on) and for communications services.the movement, described as a convergence of telecommunications and broadcasting, is based on the three phenomena of (1) full-scale online delivery of movies and music; (2) sharing of terminals, networks, and so on; and (3) the simultaneous entry of corporations into the communications and broadcast fields. The acceleration of this convergence, as well as the situation of the telecommunications and broadcasting industries, will lead to an increase in information provided and to improved production of content.these increases are expected to contribute to strengthening the standing of Japan by, for example, disseminating Japanese culture in the world at large. With features such as video on demand (VOD) distribution services that allow people to view videos from their personal computers (that is, Internet broadcasts); and with the common usage of the same transmission channel for both communications and broadcast services, business tie-ups continue to transcend industry boundaries. Terrestrial digital television broadcasts have been shown in Japan since One of the goals of digitizing terrestrial broadcasting is to provide bidirectional services by connecting broadcasting with the Internet. Such bidirectional services enable the viewers and listeners to have access to a wide variety of services.television is the medium that most people use to obtain day-to-day information and can be found in practically every household. Therefore, digitizing television will provide a basis for ICT in households. Among cable television and telecommunications corporations in recent years, an increasing number are offering a triple play package to consumers: Internet access, video delivery, and IP telephone service. Challenges for the future The world has witnessed changes to society as a result of ICT advancement. Public policies to reflect these social changes and to further ensure that the benefits of ICT trickle down are needed. Japan is restructuring its systems and policies in the ICT field, as well as promoting various measures.the following are some challenges that Japan faces in this area. Promoting discussion on the frameworks of communications and broadcasting The MIC held a Panel on Frameworks of Communications and Broadcasting from January to June of A comprehensive range of proposals for Japan to reach its goal of creating the world s leading communications and broadcasting infrastructure by its target of 2011 were suggested. Proposals included making use of its strengths to become the leader in the field of broadband, mobile, and television communications; preparing legal systems for the convergence of communications and broadcasting; revising its communications-related regulations; easing its broadcast regulations; and reforming Nippon Hoso Kyokai (NHK), Japan s public broadcaster. In June 2006, an agreement between government and ruling parties was reached on the framework of communications and broadcasting. Based on this agreement, a Program for Restructuring the Communications and Broadcasting Sectors was announced in September 2006.This program addressed the four sectors relating to NHK reform, broadcasting, convergence, and communications. In addition, at the end of August 2006, a study group on the comprehensive legal structure for communications and broadcasting was established. For approximately a year and a half, this study group will examine, from a technical standpoint, how to concretely orient discussion on the legal system with regard to combining and linking communications and broadcasting.

9 Negative issues brought about by ICT advances As the ubiquitous network continues to develop, and as ICT continues to permeate citizens lives, it is important to deal with concerning issues such as privacy and security, a safe and secure ICT usage, and eliminating the digital divide. For example, ensuring security in ICT usage is becoming a major social issue. Individuals and companies may become the victims of crimes such as ID theft, skimming, or billing fraud in their daily lives and daily operations (when using an ATM, using a credit card, shopping on the Internet, and so on).these security concerns must be addressed effectively and promptly. There is also a need to provide measures against spam .the MIC initiated a revision to the anti-spam law (effective from November 2005) whereby anyone who uses the information of an sender in a deceptive way is liable for prosecution.the ministry is also promoting a Spam Purging Project (begun in February 2005) that operates through the joint cooperation of the government and the private sector.the project encourages telecommunications companies to cut off and otherwise deny line access to spammers. International cooperation is also being sought; an agreement was reached between Japan and other Asian countries in April 2005, with France in May 2006, with the United Kingdom in September 2006, and with Canada in October Furthermore, in recent years there has been a succession of incidents involving illegal or harmful information being posted on websites and electronic bulletin boards. In response, the Provider Liability Limitation Law (in effect since May 2002) and its related guidelines establish standards of restriction on providers responsibility that enable providers to remove illegal information. Also, by creating guidelines (rather than required regulations), the government supports the voluntary efforts of ISPs to deal with this issue. New competition promotion program 2010 The MIC held a meeting on a framework for competition rules to address the transition to IP-based networks and released a report in September 2006.This report was written in light of the changes to the market environment resulting from the development of IP, such as the spread of broadband, the switching from PSTN to an IP network, and the diversification of business models. The measures for implementing these upgrades by 2010, with a view toward promoting greater competition and ensuring the interests of users, were released in September 2006; the MIC then set about implementing them.when competition policies are developed, the fundamentals of fair competition will be ensured, providing an appropriate balance between promoting competition to build facilities for creating networks on the one hand, and opening up the networks of dominant telecommunications companies that have bottleneck facilities on the other hand.the strategy also promotes fair competition, thus allowing for the spread of a vertical integration business model that cuts longitudinally through each network layer. Promotion of the u-japan Policy The MIC is promoting the u-japan Policy as a means of contributing to the entire government s initiatives on behalf of the IT New Reform Strategy, which aims to achieve a ubiquitous network society in Japan by 2010 as previously related in this chapter.the ministry has summarized the necessary policy packages for each year in its ICT Policy Outline; it promotes a variety of policies related to topics such as eliminating the geographical digital divide, developing a seamless access environment for both fixed and wireless networks, promoting advance social system restructuring through ICT, ensuring the safety and security of citizens through ICT, and ensuring network reliability and security. 8 In September 2006, the u-japan Promotion Program 2006 was assembled as a mid-term policy to be implemented until 2010, reflecting the changes in the communications and broadcasting situation that have taken place since the creation of the original u-japan Policy.This mid-term policy includes (1) the promotion of the convergence of communications and broadcasting, (2) strengthening the growth rate, the competition levels, and the national standing through ICT, and (3) achieving a safe and secure ubiquitous network society through ICT. 9 Japan faces issues that stem from changes in its social and economic environment, such as a declining population the result of a lowering birthrate and aging population. However, we believe that ICT will generate economic vitality and will encourage social and economic development through factors such as the increasing accumulation and integration of knowledge and technology, transforming the existing social and economic system, and accelerating the pace of innovation via the realization of a ubiquitous network society where ICT affects all aspects of socioeconomic activity. Notes 1 e-japan Strategies u-japan Policy 2005, Chapter 1. 3 See the 2006 Information and Communications White Paper, Chapter 1. 4 Of real GDP growth for 2004 (which was 2.5 percent), 1.0 percent was the result of the ICT industry. 5 The definition of ICT capital stock here is electronic devices and software for use on computers which are capable of connecting networks. This definition includes electronic computers and peripheral attachments, fixed-line communications devices, wireless communication devices, and software (not including self-developed software). 2.3: Information and Communication Technologies Policy in Japan 115

10 2.3: Information and Communication Technologies Policy in Japan 6 See the supplement to the MIC report Framework for Competition Rules to Address the Transition to IPBbased Networks, In Japanese. 7 Communications Usage Trend Survey (2006) conducted by the MIC. Available at 8 See u-japan Policy (2005, Chapter 1). 9 MIC u-japan Promotion Program References Bleha, T Down to the Wire. Foreign Affairs. 84 (3). Do Research Institute Survey on Economic Analysis of ICT, Japan (in Japanese). Tokyo: Do Research Institute. ITU (International Telecommunication Union) World Telecommunication Indicators Geneva: ITU The World Information Society Report, July edition. Geneva: ITU MIC (Ministry of Internal Affairs and Communications), Japan Communications Usage Trend Survey. Available at White Paper Information and Communications in Japan. Tokyo: MIC u-japan Policy. MIC. Available at menu_02/ict/u-japan_en/index2.html Framework for Competition Rules to Address the Transition to IP-Based Networks. Tokyo: MIC. 116 OECD OECD Broadband Statistics, December Retrieved July 28, Rowen, H. et al Making IT: The Rise of Asia in Hi Tech. Stanford University.