Terrie's Take: Japan's Race to Free Wi-Fi, SIM Card Unlocking, Dancing's Legal, and Jobs Everywhere!

Terrie's Take - AkihabaraNews.com

Terrie’s Take is a selection of Japan-centric news collected and collated by long-time resident and media business professional Terrie Lloyd. AkihabaraNews is pleased to present Terrie’s learned perspective; we all could use another take on the news - here’s Terrie’s:

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Terrie’s Take on June 30, 2014

Feature:

  • Japan's Race to Free WiFi

Briefs:

  • SIM-locked phones to become thing of the past
  • Thomas Tank Engine alive and well
  • Now you can shimmy and sway the legal way
  • AirAsia gets heavy-hitting partner
  • Jobless rate lowest in 16 years

Japan's Race to Free WiFi
Like Golden Week holiday traffic jams, some things just happen, and so it is that the Japanese government has come to realize that the country is almost third world when it comes to providing wifi access to foreign travelers. Although there is of course a massive wifi grid throughout Japan (more than 600,000 access points), the ability for international visitors to access it easily is limited by the fact that they either need to have phone accounts in Japan, show up in person at some inconvenient or easy-to-miss service window, or hunt around to find a free wifi connection. In contrast, locals simply hop on to their accounts via 3G phone connections, then switch over to wifi to get more speed or to stay connected cheaply.

The best example of how to make a tourist frustrated is to be had at Starbucks. Even as the company sets an exemplary standard for providing free wifi to all customers at 996 of its 1,034 cafes around Japan, it isn't until a non-resident arrives for a welcome bit of air conditioning and a latte while browsing the Internet that they realize to connect they either had to sign up before they left the wifi at the hotel, or they need to sign up via their Japan registered phone so that they can get an activation email. The traveler is thus left fuming at the stupidity of not being able to connect even as Japanese all around them are logging in with their handy-dandy local phone accounts.

It's free after all, why the massive hurdles to use it?

The reason of course is that the provider (an NTT competitor) supplying Starbucks' connection, and presumably Starbucks is paying for this, wants to limit the actual usage, and so makes sure that connection times are forced to end after a suitable period -- in this case 24 hours. A very similar model is being used, but for just 15-minute timeouts, by the various Tokyo Metro subway stations that finished rolling out their visitor wifi, MANTA, in April. The MANTA system is provided by NTT, and is one of many cozy relationships the company seems to be forming recently with various national and local government agencies.

The reality of spotty wifi for travelers in Japan is embarrassing and shows the general penny pinching attitude of the government towards providing better tourism infrastructure, even as the "Travel Balance" we referred to in TT-761 proves that overseas visitors to Japan are now spending more money here than Japanese traveling abroad are. Just why the government is unwilling to make greater contributions to improving visitors' experience is beyond us. And it's not just wifi. The government also needs to be putting more cash into 24x7 (not just M-F office hours) multilingual call centers for visitor problems, subsidies for small companies in the tourism industry to improve their services/language capability/handle foreign payment systems, proper in-house online sales of national rail and bus travel, and general marketing as well.

Anyway, on the wifi front, it looks like the situation will change.

In the middle of last month, NTT East announced that in conjunction with the government, it would offer on a 3-month trial basis free wifi for ALL incoming travelers, via its 45,000+ access points around the east and north parts of Japan (NTT East's coverage area). Access will be via an access number on a card that visitors will need to pick up at the airport, using their passport as ID. OK, that is not so convenient, especially if you don't know you have to go to a specific service counter... Still, access will be for 336 hours, or 14 days, after which the user is expected to buy further access, or use one of the other disjointed free wifi alternatives available.

No one is saying what will happen after the trial period ends in September, but our guess is that there is now enough political pressure on the government that no doubt there will be some deal between the two parties to keep it turned on. If we were NTT's competitors, we'd be pretty unhappy about the situation -- and yet we haven't heard a peep of complaint from them. How is it that the government appears to be footing a roll-out of this size without any public bidding?

Unless, perhaps because the government is not paying for it at all.

We know that the NTT network is not new. They've been building it out for quite some time now, competing with KDDI, Softbank, and even their cousin NTT DoCoMo, in trying to figure out a viable business model. KDDI and Softbank mostly go after individual accounts, and they have each user paying to get all-you-can-eat access for around JPY1,000 or so per month over the cost of a phone plan. NTT, however, has taken a different tack and instead has been trying to convince small merchants all over the country that if they pay JPY5,000 a month and offer free wifi, the customers will come.

As far as value propositions go, it's not a bad idea, but the problem is that Japanese customers already have about as much connectivity as they will ever need, and so merchants quickly figure out that JPY5,000 is just another cost on their bottom line. For this reason, the NTT East wifi network, as impressive as it may seem at first glance, is still only a fraction of the size of those of its competitors. KDDI's national network has about 240,000 access points and Softbank's over 270,000.

However, it appears that some time last year someone at NTT had the revelation that there is in fact one user demographic which is not only growing rapidly but which is starved of internet connectivity of any kind and therefore could be attracted to all those merchants forking out monthly subscription fees -- foreign tourists. So, suddenly it makes sense that, even as the other carriers continue to offer paid services, NTT is suddenly rolling out "free" internet to foreign tourists.

The success of their experiment depends on a number of things happening. i) the tourists have to get out and about and not cluster in specific areas. Otherwise the usage levels will be out of balance and underutilized merchants will still fall off the client list in disappointment. ii) The tourists will have to buy enough stuff to warrant the JPY5,000/month. iii) There can't be any competitors with a better value proposition for the merchants -- JPY5,000/month is expensive in today's wifi world. iv) There shouldn't be any competitors offering better convenience and coverage -- in other words, a service which doesn't require travelers to pick up cards, deal with overloaded big city free wifi access points, or be limited by access periods.

Now that the race has started, we think it is only a matter of time before NTT's competitors decide that they need to be in the race as well -- then things will get interesting. The big question is who will be paying for it. Will the government chip in to cover the costs or one of the other major players? Will another player like Starbucks appear? Will the convenience store operators figure out an easier way for foreigners to register with them? Will city mayors decide to act en mass to get visitors connected? Or will someone simply start selling SIM cards that tourists can preload even before they travel here?

The answer is, it will likely be a mix all of these things. Once it gets going, Japan Inc. is good at competition, and that can only be good for our international guests.

SIM-locked phones to become thing of the past
The Internal Affairs and Communications Ministry says that it is preparing new rules for the country's wireless phone companies requiring them to stop locking SIM chips to specific phones, and thus preventing customers from moving their accounts to new hardware when and as they please. Although SIM locking theoretically allows telcos to reduce phone hardware pricing by allowing them to amortize a subsidized hardware purchase with continued usage of the account, the Ministry reckons that by allowing users to move their accounts, telco connection fees will actually fall due to increased competition. The new rules could take effect from 2015. ***Ed: For international travelers it also means you will be able to just buy a SIM and not a whole phone when you are in Japan.** (Source: TT commentary from japantimes.co.jp, Jun 27, 2014)

Thomas Tank Engine alive and well
While in the UK there are few replica Thomas the Tank Engines around, mostly because of the high licencing fees involved they are few and far between. The expense doesn't seem to have deterred Shizuoka's Oigawa Line operators, though, and instead they have found the investment to be well worthwhile. The organization operating the line reports that trips on its Thomas look-alike steam train are expected to be fully booked out for the school holidays this year. The replica engine is not only well made, it takes its passengers on a 40km trip through a picturesque, unpopulated mountainous area of the prefecture with a hiss of real steam and thunderous chugging that kids will remember for the rest of their lives. ***Ed: This is what tourism in Japan can be. So many small regional towns don't realize that with a bit of capital and ingenuity, they can bring hordes of visitors back to their area. It helps that this part of Shizuoka has an old little-used dam-servicing train line of course...! Nice photos with this article.** (Source: TT commentary from dailymail.co.uk, Jun 27, 2014)

Now you can shimmy and sway the legal way
Every country has some antiquated laws. One of Japan's is the need for a bar or club to have a dancing licence before allowing patrons to get into the music. No spontaneous shimmying and swaying allowed. This law dates back to the post-war period when dance halls were seen as congregation points for prostitution and crime. After a number of decades of benign neglect by police, about four years ago they started raiding clubs again, especially those open after 11:00pm, leading to an outcry over the arrest of one particularly popular club owner. The government is now saying that it will relax the rules and allow the kids to have some fun again -- all in the name of the coming 2020 Olympics. ***Ed: Thank goodness for the Olympics! What will they use as an excuse for changing stupid laws after 2020?** (Source: TT commentary from cbc.ca, Jun23, 2014)

AirAsia gets heavy-hitting partner
You can't keep a good entrepreneur down, and ANA probably made a big mistake cutting its ties with Tony Fernandes and his AirAsia airlines. Now Rakuten has said that they will buy a major stake in a new Japanese subsidiary to be set up by AirAsia in Japan. The deal will be announced on July 1st, according to the Nikkei. ***Ed: What's interesting is the speculation that Rakuten will use the new airline not just for regular passengers, but also to haul freight around the country as part of its shopping mall logistics infrastructure. The new airline will apparently be based in Chubu, where it can easily acquire landing rights. (Source: TT commentary from reuters.com, Jun 26, 2014)

Jobless rate lowest in 16 years
Although a full 1/3 of jobs in Japan are temporary and thus by their nature underpaid, nonetheless, the nation is reaching a point of full-employment, and its jobless rate is now the lowest it's been in the last 16 years, falling to just 3.5% in May. At the same time, the average household spending for May was down 8% over last year, indicating that people are working more but spending less -- perhaps a direct result of the inflation and price rises that are now becoming evident post the April 1st consumption tax increase. ***Ed: It's too early to say where the employment demand is coming from, but we do need to remember that almost 10m workers have now passed out of the workforce due to mass retirements over the last 3 years (the dankai generation) and are being replaced with just 3.6m new graduates over the same 3-year period. So this is probably not so much Abenomics at work as a demographic coincidence. But you can't blame the government for wanting to take the credit.** (Source: TT commentary from nytimes.com, Jun 27, 2014)

• • •

That was Terrie's Take.

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