Internet Trends in Japan

The Internet Explosion

August 2, 1996 (Updated: July,1999)

Izumi Aizu

This article was written in 1996 while he was the Director of Planning Department, Center for Global Communications (GLOCOM), International University of Japan.

The origins of the Internet in Japan

The development of the Internet in Japan began in earnest with the creation of a private sector consortium to carry out an experimental project known as "WIDE" (Widely Interconnected Distributed Environment), led by Mr. Jun Murai, in 1986. In 1992 the world Internet conference, INET92, organized by Internet Society (ISOC), was held in Kobe. From that time onwards, there was increasing demand for a commercial network that could be used freely without any restriction. Part of this pressure came from companies wanting to use the Internet for their business activities. In 1993 a subsidiary of AT&T launched the first commercial Internet access service in Japan.

Explosive Growth

As in other countries, the global Internet boom has manifested itself in Japan. According to the Ministry of Posts and Telecommunications, the number of Internet service providers increased from 334 at the start of 1996 to 773 in May 1996. This is equivalent to an annual growth rate of 500%, which was among the highest rates of increase in the world that time. Internet use is expected to accelerate further in 1997, when Japan's biggest telephone company, NTT, launches a low-cost service called OCN (Open Computer Network).

The author estimates that there are about 3 million users of commercial online services in Japan, and that another several hundred thousand people are using the Internet in corporate environments. In addition there are hundreds of thousands of academic users and also of scientific users. These figures add up to a total Internet user population of between 4 and 5 million. This figure is said to be growing at a rate of over 200% annually. If this trend continues, the number will reach 10 million in 1997 and 20 million in 1998.

Information Technology Seen as the Way Out of Recession

The major factor behind this rapid growth is technological innovation. The spread of the Internet has been driven by the development of the World-Wide Web and browsers, which have given ordinary people a cheap way to send and receive information to and from around the world.

Falling computer prices have led to an increase in computer use, which has in turn brought growth in the number of Internet users. The growth of Internet user population has brought increases in the information content and services available on the Internet, thereby encouraging more people to use the Internet. As a result, more people are motivated to buy personal computers. This chain reaction continues to power a "virtuous circle."

One factor unique to Japan is the expectation that the Internet will provide a way out off the recession that has affected the Japanese economy for so long. Information technology is increasingly seen as the trump card that will end the recession, and a growing number of companies are seeking to improve productivity by actively applying information technology to their operations. The aim is to speed up decision-making by widely installing personal computers and utilizing e-mails and other forms of "groupware". In the United States, the drive to improve white collar productivity through the installation of electronic networks began in the late 1980s. A similar pattern is at last emerging in Japan, and this is naturally generating demand for corporate networks based on the Internet and intranets.

Policy Factors Encouraging Government Use

The situation has also been influenced by media reports about the Internet boom, and by the government's policy of promoting information and telecommunications as way of breaking the recession. A key factor in this context was the advocacy of the National Information Infrastructure (NII) and the Global Information Infrastructure (GII) - the so-called Information Superhighway - by the Clinton-Gore administration. Fears that Japan could be left behind by the United States have had a strong influence on the Japanese government and business sector.

In 1994 the government established the Advanced Information and Telecommunications Society Promotion Headquarters as an organ reporting directly to the Prime Minister. In addition to encouraging the use of information systems in government administration, this organization has promoted the introduction of information technology as an industrial policy. In fiscal 1996 (April 1996 to March 1997), local area networks, or LANs, will be introduced in all government ministries and agencies. And during fiscal 1997 these separate LANs will be interconnected to create the Kasumigaseki WAN, a wide-area network named after the government office district.

Budget items relating to information technology are being substantially increased. The Ministry of International Trade and Industry (MITI) and the Ministry of Posts and Telecommunications (MPT) have added tens of billions of yen to their budgets under such headings as "promotion of multimedia ." Particular emphasis is being placed on trials involving the use of Internet for electronic financial transactions, and on remote diagnosis experiments in the medical sector. In the education field, funding has been provided for the linkage of all national universities to the Internet, and for the 100-School Networking Project, which aims to provide Internet connections in selected elementary, middle and high schools around the country.

Government departments are also starting to distribute information through homepages. The Prime Minister's Official Residence began the process in August 1994, and it has since been followed by other central government organizations, including MPT and MITI, the Ministry of Foreign Affairs, the Ministry of Agriculture, Forestry, and Fisheries, the Ministry of Home Affairs, the Ministry of Finance and the Economic Planning Agency. However, the most of these homepages are used mainly for public relations, and their content is still inadequate in both qualitative and quantitative terms.

Local government use of the Internet is also accelerating rapidly. As of January 1996, 22 prefectural governments already had Internet connections and another 23 were planning to establish links. By May, 38 had obtained Internet connections, and 9 were planning to do so. It is predicted that all 47 prefectural governments will be connected to the Internet by the end of this year.

Upsurge of Business Use

There has been an explosive increase in business use of the Internet, and a growing number of companies are establishing home pages. The majority of major corporations now gives each of their employees a personal computer and has introduced e-mail as medium for internal business communications. E-mail is also being used for communications with individual customers and with other companies. Manufacturers are starting to use the Internet to enhance the efficiency of production processes. For example, it is now used to procure parts from overseas.

The World-Wide Web is commonly used to distribute information for such purposed as advertising and promotion, including the presentation of corporate and product information, and for sales and user support, including the provision of technical information. In addition, there has been a conspicuous rise in the on-line marketing of goods and service by distribution companies and vendors involved in travel and tourism and sales of regional produce.

In the media sector, newspaper publishers, broadcasters, advertising companies, and others involved in the distribution of information are starting to move onto the Internet. Several leading newspapers, including the Asahi, Mainichi, Yomiuri and Nihon Keizai (Nikkei), provide news bulletins, weather reports, and other information through their web sites. These services are still being provided on an experimental basis, and normally there is no subscription charge. Costs are commonly covered by advertising revenue. However, the information content is limited compared to that offered by the newspapers themselves. Only current information is offered, and there are apparently no sites that allow users to search accumulated information from the past yet.

The Rise of "Netizens"

The Internet is almost the only interactive medium that is available to all. In Japan, too, ordinary citizens and individuals are actively distributing and publishing information through personal Web sites. These enthusiastic users, known as "netizens", compete to create attractive graphics that convey a rich variety of information, ranging from news about their hobbies and families to specialized know-how. Women are also actively involved in this information flow, though current estimates indicate that only 10% of users are female. Unlike the mass media, the Internet allows people to express themselves in ways that reflect their personal perceptions and feelings. The Internet is becoming popular as a forum in which Japanese women, whose scope for participation in society has tended to be limited, can express themselves freely. Perhaps it's an indication of deeper social change that Internet is bringing to Japanese society.

Izumi Aizu
Principal, Asia Network Research Sdn. Bhd.
Manager, Research & Planning, Institute for HyperNetwork Society
Research Fellow, GLOCOM (Center for Global Communications, International University of Japan)
Secretary General, Asia & Pacific Internet Association