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5G networks

Japan's SoftBank and KDDI to pump $38bn into 5G

Investments seen as boost to economy while country tries to make up gap

A man takes selfie in Tokyo. Japan is behind South Korea, China and the U.S. in 5G deployment.   © Reuters

TOKYO -- Two of Japan's major mobile carriers, SoftBank and KDDI, plan to invest a total of $38 billion into fifth-generation wireless networks in Japan over the next decade, Nikkei has learned, as the country looks to play catch-up in deploying the ultrafast technology.

Shifting to a new generational wireless standard involves significant capital investment. 5G technology is expected to affect a wide range of industries from internet services to the automotive sector, bolstering Japan's economy as a whole in coming years.

SoftBank recently decided to spend 2 trillion ($19 billion) yen to set up a 5G network that spans 350,000 base stations in 10 years, becoming the first Japanese telecommunications company to reveal a long-term network strategy.

As a first step, the company will expand to 50,000 base stations by March 2022 from less than 10,000 currently, focusing on setting up 5G service in densely populated areas. It aims to have 200,000 base stations by around 2025, ensuring constant 5G access for all of its mobile users nationwide.

Ultimately, SoftBank aims to turn 5G into the standard for business activities as well. 5G networks allow the transfer of large amounts of data to multiple devices with minimal lag time. By setting up an extensive web of base stations, SoftBank will encourage more companies to switch over to 5G and promote new developments in data-intensive fields like the Internet of Things, telemedicine and self-driving cars.

Meanwhile, rival KDDI will invest 2 trillion yen over the next 10 years into 5G and advanced sixth-generation technology, a push that includes the goal of reaching 50,000 5G base stations by March 2022

Japan's two other major mobile carriers, NTT Docomo and Rakuten, are expected to build more stations as well.

The world has adopted new mobile network technology roughly once every decade since first-generation wireless, used by devices like car phones, was introduced in the 1980s. Investment into 4G peaked in 2013 to 2014, when then Japan's top three mobile carriers poured a combined 1.8 trillion yen into the technology in each of those years, according to the Nikkei Economic Electronic Databank System. Mobile-related investments have been picking up against since 2019 with the rise of 5G.

The switch to 5G is expected to provide a bigger boon for Japan than 4G. In light of tensions between the U.S. and China, many countries are shying away from using products made by Chinese telecoms company Huawei Technologies. This is expected to open up business opportunities for Japanese players like NEC and Fujitsu, though much of the market is still controlled by Nokia and Ericsson.

Demand for 5G-compatible smartphones, which require more components than 4G phones to the benefit of component makers, is expected to rise as well. Chipmaker Kioxia has decided to invest 1 trillion yen to build a new factory to bolster output of memory chips for 5G phones.

Still, Japan is falling behind on 5G deployment. A recent survey by British company Omdia ranked South Korea as the world's top 5G market, with the U.S. in fourth and China in eighth place. Meanwhile, Japan ranked 13th.

The world's telecommunications companies are planning a combined $1.1 trillion in capital investment over the next five years, according to industry group GSM Association. Japanese players have called for government assistance in 5G investments, especially with Prime Minister Yoshihide Suga urging mobile carriers to cut rates.

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