Technology and Innovation in the Diffusion Process of 3G Mobile Phones in Japan

Abstract

Technology and innovation become more important determinants of corporate competitiveness, and the telecommunications sector is no exception. A good example is found in the development of mobile phones. Technological development, embodied in innovative functions from first generation (1G) to third generation (3G) systems, has played significantly important roles in the growth and upheavals of the Japanese mobile phone market. In addition, development in contents, value added services which are supplied by related firms formed in the vertical structures, charging systems, handset development; all these have made this small gadget an increasingly important part for daily life.

The paper analyses the effect of technological innovations and competition policies on the diffusion of 3G mobile phones in Japan. In particular, the paper attempts to identify what are the factors to promote the 3G mobile phones in Japan by using panel data analysis. To construct an empirical model, the number of subscribers to 3G mobile phones is taken as a dependent variable, while the following three groups of variables (1) GDP and charges, (2) competition policies, and (3) technological innovations are selected as independent variables. This paper analyses not only the 3G market as a whole but also individual three carriers namely NTT DOCOMO, au (KDDI) and Softbank. In particular, the latter focuses on different strategies of three carriers toward technological innovations and competition. Monthly data related to 3G mobile phones from October 2001 to December 2008 is used for the analysis.

Keywords: 3G mobile phones, technological innovations, competition policy, panel data analysis