A royal mess: Content filtering on Japan's mobile internet

Rarely a day goes by at Infinita in the past few weeks without all sorts of investors, analysts and industry experts calling in asking for help figuring out just what on Earth is going on with the topic of “Content filtering” on the mobile web in Japan. Here’s the deal: After several crime incidents involving high school students using dating sites last year, Japan’s Ministry of Internal Affairs and Communications in December 2007 asked the mobile network operators to step up their efforts implementing and promoting content filtering services to limit access by minors to “potentially harmful types” of mobile websites. All carriers since 2005 have been offering filtering applications that restrict access to sites that fall into the “potentially harmful” category: adult content and things links like gambling, of course - but more notably, anything that enables communications between users, such as the ultra-popular gaming and social networking site mobagetown and the mobile versions of mixi, bulletin boards like 2ch.net and dating sites. The list of sites to be filtered out is managed by Netstar Inc., a joint subsidiary of TrendMicro and Alps System Integration. Under the proposed measures, all mobile phone subscribers under the age of 20 signing up for a new contract will be subject automatically to these access restrictions, unless their legal guardian accompanies them to the mobile carrier’s shop and opts out. For existing contracts that have a minor as the user, parents will be contacted by the carrier from next month, informing them that if they do not opt out, the filter will be automatically turned on sometime early this summer. Carriers NTT DoCoMo and au KDDI’s age limit for this policy is 20 (the “full legal age” in Japan), SoftBank Mobile’s policy differs slightly, with the age limit having been set at 18. While NTT DoCoMo and au KDDI take a “blacklist” approach, filtering out sites that have been evaluated as being potentially harmful by Netstar, SoftBank handles things more strictly by implementing a “whitelist” approach, only letting through sites that have explicitly been approved by Netstar. Now, why does all this matter? Over the past few years, the Japanese market there has been experiencing a very strong shift, especially among the early-adopting teenage crowd, away from paid subscription “official sites” listed on the carrier deck, which generally are tightly monitored by the carriers, to so-called “inofficial sites” not listed on the official portals and operating beyond their control, usually under an advertising-funded model. Both the proliferation of mobile data flat rates (making browsing off-portal content much more affordable) and the increasing adoption of mobile search (making it much more accessible) have contributed significantly to these developments. And while some official content providers have suffered in the process, off-deck content providers and the mobile advertising industry as well as the carriers themselves have been thriving as a result. Thus, the new content filtering rules come as a shock to the industry - at least when taken at face value, see below - threatening to throw what some fear could be a major wrench into the gears of the evolution of mobile web usage in Japan. DeNA Co., Ltd., the parent company of mobagetown, took a major beating, losing 150 billion JPY (source in Japanese), approx. USD 1.4 billion, in market capitalization in the week after the Ministry’s announcement in December. mixi Inc. has been hit less hard, since it is less dependent on the teenage crowd for revenues (it has a minimum age limit of 18 anyway). Up steps the Infinita analyst and says: Things are far less bad than they seem, for DeNA and for the industry in general. Specifics first: In DeNA’s case, the demographic makeup of mobagetown’s users has shifted from almost 70% under the age of 20 one year ago to less than 25% today (source in Japanese), with the trend continuing towards a user base with a higher average age as the service becomes more mainstream. Having said this, other off-deck content providers relying more heavily on teenage users than DeNA may have some difficult times ahead of them. Secondly and more importantly, the total market segment that could theoretically be affected by the filtering system - that is, if every single parent decided not to let their children opt out - is about 7.5 million users (minor with internet-enabled mobile phones). According to Telecommunications Carrier Association of Japan data (source in Japanese), by September 2007 - months before the Ministry’s and carriers’ announcements - 2.1 million of these already had a filter set on their handsets, leaving only a good 5 million potential additional minors to theoretically activate (or rather, not opt out of) the filter from now on. And many of these will implore their parents to opt out, confronting them with arguments which will make sense from a parental point of view: From “I can’t use free navigation services anymore and might get lost” to “I can’t access my own high school’s mobile site anymore”. Third, the Mobile Content Forum (source in Japanese), an influential industry association, is lobbying with all its might already to loosen the rules governing which sites end up in Netstar’s filter list and which get through. Quoting today’s Nikkei English edition (subscription required), “Industry group Mobile Contents Forum is protesting the blanket restrictions proposed for the social networking sites and is urging the creation of criteria to differentiate between sites with established monitoring structures in place and those that do not offer such features. The forum, which will announce the groundwork for its criteria as early as the end of this month, plans to lobby cell phone companies to implement it when they adopt the content filters.” Considering all carriers and all major content providers are paying members of the Mobile Content Forum, that certainly shouldn’t prove too difficult a case to push through. Lastly, Netstar’s method for deciding what needs to be filtered and what doesn’t is shaky and has been coming under fire from the Japanese blogosphere and industry media already. As one blogger states in a December 18, 2007 post (source in Japanese), there does not seem to be a coherent system at all, with sites like mobagetown and dating site Star Beach blocked, but other community-heavy sites like Girlswalker and Yahoo! Groups being accessible. Mobile Gmail and search engines, both of which could easily enable “potentially dangerous communications” between users, work fine as well. The problem that Netstar is having such a hard time dealing with here is that, to call a spade a spade, the vast majority of mobile sites in Japan are potentially dangerous to minors - because they enable communities in one way or another (which is exactly why they are so much more useful than early generation mobile services and so much more successful). With many of today’s most popular mobile sites building heavily on social features - from off-deck sites like mobagetown to carrier-run services like au KDDI’s music playlist-based mobile social networking application “utatomo” to SoftBank’s 3D mobile virtual world S! Town, restricting access to minors for all sites with social/communication features or disabling these features would in consequence equal turning off a major portion of the mobile internet. You can’t take communications and social interaction out of a medium which is based on these without rendering it utterly useless. And that is certainly not going to happen. Representatives from DoCoMo, KDDI and SoftBank (who asked to remain anonymous) interviewed by Infinita last week all confirmed that basically, nobody has the slightest clue how exactly things will turn out in the short term, but in the long run things should be pretty much back to normal anyway. The drama unfolding on Japan’s mobile stage, at least for the time being, is thus a classic example of “Face-saving Hot Potato”: Ministry needs to make sure society remains under the impression it is doing its part in protecting their children and urgently issues measures. Mobile carriers rush to conform to prove how responsibly they are acting. Action is taken and widely publicized. Mobile industry, including the carriers, starts to lobby behind the scenes for more favorable conditions immediately. A few months pass. Things revert back to Status Quo with slight modifications. There is simply no way Japan’s tightly-knit old boys’ club of mobile (ruling over a USD 78 billion market) will have it that the industry’s development is stalled in any major way. However, what is a very scary development indeed is worrying talk of the Japanese government’s plans to more strictly control the way people in Japan access the internet and what sort of content they consume - the mobile content filtering debate is only a part of this. This topic in itself merits a blog post at least as long as this - fortunately, Gyaku.jp has written it already so we don’t have to. For more details on these developments, any of the companies mentioned here or, simply, anything else you might care to know about the Mobile Industry in Japan, please contact us anytime.

Posted by:Billich | Entry Date: 2008年1月23日 12:52