ICT Overview

ICT Overview

Digitalization of society brought about
by 5G and Beyond 5G

To cope with the worldwide outbreak of the coronavirus from early 2020 onwards, the Japanese government has been calling on people to voluntarily refrain from going out unnecessarily or attending group events. This led to local governments and businesses introducing telework, implementing online learning, and relaxing regulations related to online medical care. In the manufacturing, infrastructure, and construction industries, which center on work on-site, production activities are being carried out through remote control of machine operations. In the field of education as well, there are ICT solutions to improve the efficiency of school work, and AI to provide the best learning according to the level of understanding of each student. In this way, digitalization has begun to progress in these areas that used to lag behind.

The role of the ICT market in promoting the digitalization of society as a whole is very important. The nominal GDP of Japan's ICT industry is 44.2 trillion JPY (8.7% of all industries), ranking next to the commercial (61.4 trillion JPY) and real estate (59.4 trillion JPY) industries (See Figure 1).

Pie chart showing the nominal GDP of Japan's major industries (2018) The nominal GDP size of all industries is 508.2 trillion JPY (2018). The percentage of each industry is; ICT 8.7%, commerce 12.1%, real estate 11.7%, medical/welfare 8.5%, construction 5.8%, service to businesses 8.3%, transportation machinery 2.3%, service to individuals 5.6%, and other industries 37.1%. Created based on data from the Ministry of Internal Affairs and Communications

Japan's ICT market, which has developed through the spread of telecommunications services and the advancement of telecommunications networks, holds a 6.4% share of the global market. Excluding the EU, it is the world's third-largest market after the U.S. and China, and it is one of the major industries in the Japanese economy (See Figure 2).

Bar graph showing the worldwide share of ICT market (2013-2019) The breakdown for 2019 is; 31.3% for the U.S., 19.1% for the EU, 13.0% for China, 6.4% for Japan, and 30.2% for other countries. Created based on data from Statista.

Industries in Japan are becoming more efficient and adding more value with the accelerating digital transformation enabled by the development of ICT infrastructure and digital technology. In this process, the integration of cyberspace and physical space is being facilitated. Going forward, people's activities are expected to move from physical space to cyberspace, and there are high expectations for the use of ICT infrastructures, such as the 5th generation mobile communication system (5G), and digital technologies such as cloud computing and quantum computing.

5G is expected to support digital transformation in a variety of industries and sectors. The government aims to realize this through policies such as "Society 5.0," a social system that highly integrates cyberspace and real space, and the “Beyond 5G Promotion Strategy”, which drives the digital transformation facilitated by 5G. The increase of about 20% in the budget (MIC standards) for implementing 5G-related policies, from 128.4 billion JPY in 2019 to 157.1 billion JPY in 2020, is also part of this. As a result of these 5G technology initiatives, Japan is expected to rank third in the global 5G service market in 2025, after China and the U.S. (See Figure 3).

Bar graph showing the worldwide 5G service market forecast (2019 and 2025) Japan's forecast for 2019 was around 100 million USD, but it is expected to expand to 24.4 billion USD in 2025. It is the third largest in the world after China's forecast of 78.8 billion USD and the U.S. forecast of 36.4 billion USD for 2015. From fourth place onward, it is followed by South Korea 12.8 billion USD; the United Kingdom 4.4 billion USD; Germany 4.2 billion USD; Canada 2.2 billion USD; Italy 1.5 billion USD; and France 1.2 billion USD. Created based on data from Mordor Intelligence

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