Distribution of digital terrestrial content to mobile terminals is the new craze in Japan. The result is a series of joint investments between terrestrial networks and mobile service providers. The important date is April 1st when these programs actually start reaching the mobile terminals of ordinary Japanese via the "one-seg" route. Tad Osaki has the report.

Amid the scramble for broadband distribution of content, power players are looking forward to the launch of digital terrestrial content distribution to cell phones in April this year. This is because such a distribution has the potential to boost the industry and make the content available to a broader spectrum of viewers. While some broadcasters are treading with caution, others are aggressively seeking alliances with cell phone operators and IT ventures pushing the level of content supply to cell phones users that now consists of 90 million people- more than double the number of TV households in Japan.

The magic date is April 1. This is when the digital terrestrial programs will start reaching cell phones via what the Japanese termed the "one-seg" route, one of the 13 frequency band segments, currently used for the 26-month-old digital terrestrial broadcasting. This particular segment was allocated for the transmission of content to mobile terminals such as cell phones and car navigation system, not only by digital terrestrial broadcasters alone but also by other content suppliers for news, weather forecast, program information and others, thus opening up a whole new outlet.

Tokyo Broadcasting System (TBS), the third largest commercial terrestrial network, has so far been most active in this area. It has invested Yen10 billion (US$87 million) last summer to acquire 14% shares of eMobile, a mobile broadband service subsidiary of eAccess Ltd., with a goal to start TBS content distribution to cell phones in 2007. TBS also announced to set up a joint venture to distribute sports news clips to mobile terminals and PCs with Index Corporation. The aggressive mobile content venture had acquired the toy and game manufacturer Takara and movie studio Nikkatsu, Sky Perfect Communications, Japan's leading satellite-based multiple content supplier, in early 2006.

Fuji TV, the most profitable of the five commercial terrestrial networks, on the other hand, accepted the proposal by NTT DoCoMo. Inc., the cell phone wing of the giant NTT group, to acquire 3% of Fuji TV shares for some Yen20 billion (US$174 million) late last year. This was to cement closer business affiliation in preparation for the "one-seg" distribution of Fuji TV content via Fuji's digital satellite subsidiary, BS (broadcasting satellite) Fuji. This is the first investment by the NTT group where its earnings have been higher than that of Toyota Motors.

NTT's rival KDDI, that runs another cell phone operation called au, is also stepping up its content distribution. It will use its higher speed transmission of 2.4 megabit per second and is preparing to start 30-minute pay programs by the summer of 2006, an extension of current short programs of up to 6 to 7 minutes. KDDI merged with Power Com, a communications subsidiary of Tokyo Electric Power Company (TEPCO), on 1st January this year. This was to strengthen its fiber optics transmission capability and IP phone services - another step toward expanding Internet communications.

To exploit the available opportunities some of the IT companies like Softbank Corp., eAccess Ltd. and IP Mobile Inc. have grabbed the rights to start new cell phone operations last November. These were under the control of four front-runners for the last 12 years. Softbank in collaboration with Yahoo is expected to start cell phone operation in April 2007. It aims to get 6.7 million subscribers by the end of 2011 and 10 million subscribers "in not too distant a future" as the company's president Masayoshi Son puts it. On the other hand, eAccess is set to begin its service in March 2007, offering TBS and Yoshimoto Kogyo comedy content, targeting 5 million subscribers by the end of 2011 and "10% share" within five years. IP Mobile, focusing on data communications, will be the first to provide cell phone service in three major metro areas of Tokyo, Osaka and Nagoya in October 2006. The companies hope to get 11 million subscribes across the country by 2012. IP Mobile plans to offer flat-rate mobile broadband services, with downlink speed up to 5.2 Mbps and uplink speeds up to 858 Kbps. The commercial rollout plan calls for 3,000 base stations to be deployed by the end of 2007 and 8,500 by 2012, according to IP Mobile.

All three claim that the current Japanese cell phone communication fee is way too high, indicating their readiness to offer lower fees than the existing players. Industry observers are already saying that the cell phone market, so far highly profitable for operators, may plummet to cut-throat survival war with the advent of these newcomers. Since the three IT ventures have been active in data processing in the mobile internet market their obvious next goal is to combine their data with video content to join the content distribution race along with other content providers.

Among the cable operators, Jupiter Telecom (J:Com), the leading cable MSO, will start PHS (personal hand phone system) service in March, using Wilcom's PHS terminals, under the brand "J:COM Mobile," for nearly one million subscribers of J:COM telephony services. At a monthly fee of a little over US$ 20, J:COM expects to win 100,000 subscribers within a year or two to stay in the potential race for content distribution to mobile terminals.

USEN (United Sensational Entertainment Network) Corporation, now pushing free, commercial-supported broadband content distribution to PCs, under the service name Gyao, is also eying cell phone users. This Osaka-based wired radio operator has grown into a multimedia company after merging with Gaga Communications, a second-tiered imported movie distributor, in 2004 and a cell phone software developer, KLab, from cell phone content distributor Cybird l in 2005. It has also invested in the ailing record label, Avex Group.

After getting five million subscribers since April last year USEN's president Yasuhide Uno is confident about having another five million subscribers within a year "because there are more than 50 million PC users out there." According to Uno, the natural extension of this strategy is content distribution to mobile terminals. USEN's content covers dramas, sports, music and variety shows. Few dramas are jointly produced with the digital satellite broadcaster BS Fuji and will be shown from March onwards. YUSEN is also trying to get NHK and the other five commercial networks to stream their programs on Gyao.

On the hardware side, terminal manufacturers are racing to turn out cell phones, portable PCs and GPS navigation gadgets capable of receiving the "one-seg" signals in time for the April launch. KDDI was the first to market Sanyo Electric's first cell phone for "one-seg" communications, W33SA (2.4-inch display), last December. This was followed by Hitachi-made cell phone, W41H with a 2.7-inch display, in February this year. NTT DoCoMo is scheduled to launch a cell phone - P901iTV with 2.5-inch display- made by Panasonic Mobile Communications.

The gradual service expansion of digital terrestrial broadcasting, now in its third year, has given additional boost to cell phone distribution of video content. Digital terrestrial signals can be viewed by 27 million households, about 60% of all TV households now, and it is likely to increase by additional 20%. With the launch of cell phone distribution of digital terrestrial content, the coverage is expected to go up even further, to please the Ministry of Internal Affairs and Communications (MIC), which is mandating discontinuation of analogue broadcasting in 2011. Industry informants are saying that the "one-seg" distribution is a god-given help to accelerate slow-moving digital terrestrial viewers. Another "Windfall" for the cell phone operators as well as for digital terrestrial broadcasters is the approaching 2006 World Cup soccer, which will attract consumers to buy the new gadget to view the games. The future of the cell phone distribution of video content has never looked rosier. Few years ago there were a lot of skeptics but now there are more believers!

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