Rapid Increase in the Mobile Phone-Incorporated IC Card Settlement Market: 14.3 Million Subscriptions to IP Telephony Facilities Forecast for Fiscal 2009

Rapid Increase in the Mobile Phone-Incorporated
IC Card Settlement Market:
14.3 Million Subscriptions to IP Telephony Facilities
Forecast for Fiscal 2009
— Perspectives of the IT Market Scale and Its Trends until 2009 (1) —

January 12, 2005
Nomura Research Institute, Ltd.

Nomura Research Institute, Ltd. (NRI: Tokyo; Akihisa Fujinuma, President, CEO & COO) has completed market analyses and market scale forecasts until the year 2009 for 7 principal domestic information technology fields. NRI has, as the first phase, released market scale forecasts for 3 mobile phone markets and seven broadband markets (see reference for each market definition). Furthermore, NRI will announce forecasts for "e-business life" , broadcasting, hardware, platform and security markets in upcoming release.

NRI anticipates that, in the mobile phone market, the introduction of number portability (scheduled for 2006) and the entry of new players will have a substantial impact upon telecommunications carriers. Because of its growth potential, the size of the mobile platform market is expected to grow to ¥250 billion during fiscal 2009 (April 2009 --- March 2010), mainly because mobile phones incorporating contactless IC card capabilities are likely to generate a new settlement market. The mobile content market will also continue to grow and is expected to increase from ¥253 billion in fiscal 2004 to ¥339.5 billion in fiscal 2009.
The number of 3G mobile phones in use will account for 50% of all mobile phones during fiscal 2005, and the transition from 2G will be almost completed by the end of fiscal 2009. (This estimation does not take account of the influence of mobile number portability or of the entry of new carriers.)

The broadband market will reach a period of maturity, while the use of fiber optic will develop more gradually. Fiber optic will be installed progressively both in detached properties and in apartment complexes, thereby increasing the number of broadband- subscribing households to around 9 million by the end of fiscal 2009, and the size of the market to some ¥440 billion. The number of households subscribing to broadband via such systems as FTTH, FTTB+

, cable television and DSL will reach 29 million, (accounting for about 60% of all households) by the end of fiscal 2009. In the IP telephone market, the number of subscribers to services for general consumers is expected to grow from 6.8 million at the end of fiscal 2004 to approximately 14.3 million by the end of fiscal 2009.

IT Market Forecasts

(billions of yen)

Market		FY2004	FY2005	FY2009
Mobile phone markets	Carrier *¹	6,843.7	6,915.5 7,022.4	6,625.7 7,430.2
	Mobile platform	29.8	52.2	240.1
	Mobile phone content	253.0	275.3	339.5
Broadband markets	DSL	477.4	556.7	527.9
	FTTH	113.3	180.7	436.2
	Cable Internet	170.6	200.1	221.4
	Public wireless LAN	3.1	6.4	28.4
	IP-VPN, wide area Ethernet	457.0	575.4	735.0
	ISP	707.2	749.8	759.9
	IP telephone *²	683.4	924.3	1,426.9


*1:	The upper figures in the carrier column for fiscal 2005 and fiscal 2009 are the forecasts if the average revenue per unit (ARPU) of each carrier continues to decline by 3% every year during and after fiscal 2005. The lower figures are the forecasts if the ARPU of each carrier ceases to decline from fiscal 2005.
*2:	The numbers of subscribers with IP telephones for general consumers are in units of 1,000.

This is the fourth IT market forecast, following those of 2000, 2001 and 2003. It is, however, not uncommon for the assumptions on which market forecasts are made to evolve, due to rapid fluctuations in the environment surrounding IT markets and to the emergence of new services and players as a consequence of technological innovation. In accordance with the demands of these constantly evolving markets, NRI will continue to revise forecasts as and when this is necessary.

[For inquiries, please contact]
Corporate Communications Department
Nomura Research Institute, Ltd.
Phone: +81-3-6270-8100
e-mail: kouhou@nri.co.jp

[Reference]

<Market Definitions>
Mobile phone market

Carriers	The market size forecast is the sum of telecommunications revenues of 4 mobile phone carriers (NTT DoCoMo, au, Vodafone and Tuka), and is derived by multiplying the forecasted average revenue per unit (ARPU) at the end of the term by the number of subscriptions at the middle of the term. Revenues of new entrants and the sales of mobile phone terminals are not included.
Mobile platform	This comprises the market of businesses providing infrastructures which help carriers to develop business, such as the provision of mobile content services, including the distribution of various kinds of information. The forecast is based specifically on the sum of the mobile e-authentication and mobile settlement markets.
Mobile phone content	This market is concerned with the provision of chargeable content on mobile phones. These comprise an entertainment market including the downloading of ring-tone melodies (ring-tone songs and voice recordings), games and display images, as well as information, such as news and weather forecast, services market.

Broadband market

DSL (digital subscriber line)	The forecast applies to the ADSL (asymmetric DSL) access market for households. It does not apply to SDSL (symmetric DSL), which provides identical uplink and downlike speeds for businesses, or VDSL (very high-bit-rate DSL), which serves tenants of apartment complexes via optical fiber links.
FTTH (fiber to the home)	The forecast applies to optical fiber broadband access markets for households. In this forecast, the FTTH market is defined in a narrow sense as the market where optical fiber is laid directly to households. On the other hand, FTTB (fiber to the building) + is defined as a market where optical fiber is used in conjunction with VDSL and other technologies to bring services to apartment complexes.
Cable Internet	Cable Internet is a generic term for Internet access services that employ a cable television network. NRI’s forecast applies to the broadband access service markets that are served by domestic cable television operators catering to households, including individual houses and apartment complexes.
Public wireless LAN	The size of the public wireless LAN market is defined as the sum of contract and monthly charges collected from regular service users together with volume-based service charges collected from temporary users. ISP charges are not included. The cost of installing and operating access point equipment provided to subscribers at their expense is not included.
ISP (Internet service provider)	The ISP market is concerned with internet access services provided via access lines such as dial-up, DSL, cable television, FTTH(NTT's B Flets, etc.), dedicated lines and wireless. The transmission and utilization fees in respect of the access lines are not included. Neither the initial fees (construction cost and commission) incurred in setting-up nor the equipment rental fees are included in the estimate of the size of this market.
IP telephone	The forecast applies to IP (Internet protocol) telephone services for consumers using an ordinary telephone rather than a PC. The forecast also includes IP telephone services providing IP transmissions between subscribers. Telephone services using IP transit network only between NTT stations, such as services provided by Fusion Communications, are therefore not included in the forecast.

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