Japan Mobile Communications, JMC, and Daini Denden have agreed in discussions with the Ministry of Posts and Telecommunications to split the service for car telephones respectively between East and West Japan. JMC is an affiliate of Teleway Japan Corp, in which Toyota and Nissan are investors, and Daini Denden is a Kyocera affiliate. Both companies will seek outside investment to begin operating companies that are due to start services in Autumn 1988. Teleway Japan has both Tokyo and Nagoya areas, leaving Daini Denden with Osaka and the rest of West Japan including Kyushu. Nippon Telegraph & Telephone will continue to have exclusive rights to car telephone services in Japan until 1988. JMC and Daini Denden applied to enter the market following telecommunications liberalisation in April 1985, but the start of services has been held up by the Ministry’s restriction of the airwaves. JMC’s investors are Toyota, Nissan and six trading companies, including New Japan Steel and Tokyo Electric. The new company has a capital base of 490 million yen, and it aims to make a profit within four years of take-off date in October 1988, according to director of Teleway Mitsuo Gotoo. Some estimates put the cellular radio market growth rate in Japan from the current 80,000 car telephones to 4.5m by the year 2000. Great hopes were held for the mobile communications industry in August 1986 when regulations regarding radio communications, which have proved to be lucrative in the US and Europe, were relaxed and the market opened for companies other than NTT. But hopes were recently dashed with the so-called ‘supply and demand regulation clause’ of the Electronic Communications Operation Law, in which the Ministry of Posts imposed administrative guidelines and claimed that there are not enough frequencies to go round for NTT and two additional commercial companies. The Ministry said that if both Teleway Japan and Daini Denden entered the market, both would fail, but the industry does not agree and reckons that currently-unused frequencies, together with two commercial satellites due to go up next year, would provide ample capacity. Industry predictions are that current car telephone rental of approximately $2,000 monthly would fall to about $66, and the car telephones would become as prolific as the pocket beeper, which has a user base of 2.32m to date. Japan Mobile Communications has adopted NTT’s system, while Daini Denden has adopted Motorola’s J-TAS system, and the award of half of Japan to Daini Denden may mollify the US company somewhat: Motorola’s has been complaining bitterly that it was being squeezed out of the cellular equipment market.
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