Web 3.0 and AI trends of major mobile carriers such as Docomo, KDDI and Softbank and emerging forces.

Web 3.0 and AI are attracting attention as the latest technologies and the arena for new business competition, and mobile carriers, which have been engaged in fierce competition to date, are beginning to move into this area.

Which companies will be the ones to carve out a blue ocean in the new age of business?

Business and market share of the four mobile carriers

▶▶ NTT DoCoMo

Market share: 36.1%.

No.1 in terms of mobile phone subscriptions! Strong in the financial and payment fields.

Since its establishment in 1991, NTT DOCOMO has built a strong position over the years as the centre of the mobile communications business, including mobile and car phones, and still reigns as the king of mobile carrier companies. Recently, the company has been focusing not only on the telecommunications business, but also on the financial and settlement area and marketing solutions, which it has positioned as its ‘smart life business’.

▶▶ KDDI Group

Market share: 27.0%.

Promoting business transformation with 5G at its core

The KDDI Group, which has the No.2 mobile phone market share, has a medium-term management plan to become a ‘Platformer supporting society’ by 2030, with 5G at the core of its business transformation, aiming to become a company that can provide added value in every industry and aspect of life.

▶▶ Softbank Group

Market share: 20.9%.

Developing financial and ICT businesses as well as telecommunications business

Generally known as a mobile carrier, but also invests in and develops a wide range of other businesses, including sports, finance and ICT. Its strength is that it has many services within the group, including PayPay, which has the top market share in the payment domain. As it is actively developing new businesses, it is expected to continue to play an active role in areas other than the telecommunications business.

▶▶ Rakuten Group

2.2% market share

Struggling in mobile business, awaiting a turnaround

Despite entering the mobile business as the fourth carrier, the company has been in the red for five consecutive years. Although it is ahead of its competitors in terms of prices, the bottleneck seems to be that it has not been able to acquire enough subscribers to turn a profit. The losses in the mobile business are dragging down the group as a whole, so a turnaround is a must.

*Refer to the Ministry of Internal Affairs and Communications' “Trends in the telecommunications market” for share rates.

NTT DoCoMo, KDDI, Softbank and Rakuten's Web 3.0 initiatives

The four mobile carriers are developing their business in various areas other than the mobile and smartphone business. Among these, the Web 3.0 domain is one that the companies have started to focus on in the last few years. Therefore, we will first summarise the initiatives of the four companies in the Web 3.0 domain.

However, the scope of the area known as Web 3.0 is very broad. First of all, there are crypto-asset-related businesses that issue and sell crypto-assets or provide exchanges. In addition, the development of blockchain, which is the basis for crypto assets and NFTs, the development of use cases and dissemination activities can also be considered as part of the Web 3.0 domain.

Furthermore, an increasing number of operators are focusing their efforts on the construction and operation of metaverses, which have become popular in recent years. The following is a summary of the status of each of the mobile carriers in the Web 3.0 domain, and which of their businesses they are focusing on.

NTT Docomo.

At its Q2 2022 financial results conference, NTT DOCOMO announced that it will invest 600 billion yen over the next five to six years to utilise Web 3.0.

As a precursor to this, on 31 October 2022, it announced a basic agreement with Stake Technologies Pte. Ltd, developer of Astar Network, a public blockchain from Japan, to cooperate in the spread of Web 3.0. The agreement states that they will ‘initiate a project to solve social issues by utilising the concept of distributed autonomous organisations (DAOs), which is one of the characteristics of Web 3.0’.

DAO refers to a system in which, by utilising tokens (cryptographic assets), an organisation or community does not need a centralised administrator, and participants become autonomous cooperative relationships and work towards a goal.

This type of initiative is being implemented in various parts of the Web 3.0 industry with expressions such as ‘utilisation of the token economy’. However, it is natural to assume that the partnership with Astar, which has the unique track record of being the only public chain from Japan, is not aimed solely at such initiatives.

At the time of the financial results conference, the company stated that it had not yet decided on which areas it would focus on, but its aims are gradually becoming clear: in 2023, the name of the subsidiary promoting Web 3.0 will be changed to NTT Digital Corporation, and it will work with businesses in diverse industries and sectors on system development, creating use cases and establishing rules. It announced that it had reached a basic agreement with 13 companies to collaborate in system development, use case creation and rule development with businesses in a variety of industries and sectors.

In this announcement, the company commented that it would ‘globally promote the creation of an environment in which individuals and companies can easily and safely use web3 services and blockchain technology as web3 enablers’.

The term ‘web3 enabler’ here is a generic term for common functions and means that enable the safe and secure use of services that utilise blockchain technology. Specifically, the aim is to create use cases such as the development and expansion of related systems, content management and trading using NFT, FinTech using cryptographic assets and stable coins, and self-management of personal data using DIDs (decentralised IDs).

The specific use cases are as diverse as these, but it appears that DOCOMO will develop services that make use of its track record of building trust over many years and its security know-how.

It is also noteworthy that the service is not a Galapagos service for domestic use only, as DOCOMO has stated from the early stages that it aims to become a global de facto. It is likely that services such as those developed on Astar, a global public blockchain, can be expected.

In terms of direction, it can be said that the company is at the stage of creating use cases for blockchain and tokens, while confirming the areas in which it should expand as a business in the future.

DOCOMO is also developing services such as XR World, a multi-device metaverse that enables users to experience music and other content and communicate via avatars.

KDDI Group

KDDI has long been involved in entertainment x Web 3.0 initiatives centred on the metaverse, participating in projects such as the city-linked ‘Virtual Shibuya’ metaverse in May 2020 and ‘Digital Twin Shibuya’ in October 2022. It can be said that efforts have been devoted to the creation of new forms of entertainment combining 5G with augmented reality (AR) and mixed reality (MR).

Finally, in 2023, the company launched ‘Alpha U’, a ‘Metaverse Web 3.0 service’. The name, which is a reference to the company's signature brand, ‘au’, also suggests the seriousness of the project.

In this way, KDDI's Web 3.0 strategy is centred on the Metaverse. The metaverse is said to be a new means of communication and a social networking service for the new era. Furthermore, unprecedented experiences and entertainment will be discovered one after another in the future, such as live music and shopping experiences in the metaverse space.

The use of NFT is also envisaged in αU, and there is no doubt that KDDI, as the central metaverse company in Japan, will develop this by involving Web 3.0 technologies such as NFT.

KDDI's metaverse Web 3.0 service ‘αU’

KDDI launched its metaverse Web 3.0 service ‘αU’ on 7 March 2023. The service will provide services for the Web 3.0 era, including metaverse, live streaming and virtual shopping. The following five services are provided by αU.

▶▶ αU place.

A service that reproduces the streets, shops and products of real space in a virtual space. It has the advantages of e-commerce, where you can search for products just like in a real shop and shop anytime you want.

▶▶▶ αU market

A marketplace where digital artworks (NFT) can be purchased. Works by famous fashion designers and well-known NFT artists appear exclusively on αU market.

▶▶ αU metaberse

The αU metaberse is a virtual space where users can enjoy live music performances by artists, enjoy conversations with other users, and meet various communities in the virtualised towns of Shibuya and Osaka.

▶▶ αU wallet

A crypto-asset wallet that allows users to manage digital artworks (NFT) purchased on the αU market and crypto-assets, which are the currency used when buying and selling.

▶▶▶ αU live

A live experience service that allows users to watch high-definition 360-degree and free-viewpoint video. The artist and venue are reproduced in a virtual space, allowing viewers to experience an experience similar to that of a real live performance.

SOFTBANK Group

Softbank is the only mobile carrier that has not directly undertaken any initiatives related to Web 3.0. Its main initiatives are investments in the blockchain and Web 3.0 areas through the Softbank Group's investment fund, the Softbank Vision Fund.

However, the fund's main areas of investment are in new businesses and artificial intelligence (AI).

It is safe to say that Softbank does not currently see the Web 3.0 domain as an important business, including its future potential, as it is not actively investing in the Web 3.0 domain.

Rakuten Group

Rakuten Group is the only mobile carrier with a crypto asset exchange business, Rakuten Wallet. It is in a completely different position from other carriers in that it is directly involved with crypto assets.

However, the exchange business has been in the red since its launch in 2019. The majority of crypto asset exchanges in Japan are in the red, so while this is not a problem unique to Rakuten Wallet, it is probably honest to say that it is not doing well.

On the other hand, Rakuten does not intend to remain in the exchange business alone: in the Web 3.0 industry, the term ‘wallet’ is used for services for managing crypto assets. The image is similar to that of a bank account, so it is not originally an appropriate name for an exchange service.

Nevertheless, the reason why the name Rakuten Wallet was chosen is that the service is intended to be a place to use crypto assets for ‘something else’. Specifically, it is ideal for people to use the service as a place to manage their funds when using Web 3.0-related services such as NFT and Metaverse.

It is likely that the future vision is for Rakuten Wallet to be used as a hub when crypto asset payments become available for a number of Rakuten Group services, including EC. However, at present, the use of crypto assets is not that advanced. The NFT marketplace Rakuten NFT stands out as the only place where crypto assets can be used.

As a group, it has been pointed out that Rakuten Mobile's losses are dragging the group down, and there is an urgent need to improve management as a group rather than expand the Web 3.0 business. It seems that the group is in a difficult situation with regard to the use of Web 3.0 and further investment within the group.

These are the initiatives of the four carriers in relation to Web 3.0. Other notable developments include the companies' investment in the blockchain gaming sector. This is because all four companies are participating as validators in Oasys, a gaming-specific blockchain from Japan.

Although it is difficult to differentiate between the four companies as they are all investing in the same project, ‘blockchain gaming’ is one of the Web 3.0 areas that mobile carriers should focus on.

In summary, DOCOMO has started various initiatives to create use cases using Web 3.0 technologies. KDDI's main focus is entertainment centred on the Metaverse, while Rakuten's main focus is the exchange business. On the other hand, it is reasonable to assume that Softbank has not made any significant moves in relation to Web 3.0 at present.

New mobile experience using Web 3.0 by Takafumi Horie

HORIE MOBILE, an MVNO brand by Takafumi Horie, is issuing and selling new HORIE MOBILE tokens on FiNANCiE, a token-issuing crowdfunding service that uses blockchain. Although there is a strong element of crowdfunding aimed at Horie's fans, this is one example of the use of Web 3.0.

AI trends of the four mobile carriers

Next, let's look at each company's efforts in artificial intelligence (AI) technology.

All companies have begun to utilise AI within their own organisations in this area, with docomo, KDDI and Softbank each announcing the use of AI as an assistant to improve the skills of employees and increase work efficiency.

NTT Docomo.

In 2023, DOCOMO will start a demonstration experiment for in-house use of generative AI with the aim of promoting DX in internal operations and providing services that utilise generative AI. In its internal operations, the company has started an initiative to use generative AI to automatically respond to highly specialised enquiries based on internal rules and manuals.

On the other hand, at the time of the announcement, KDDI expressed a certain degree of appreciation for the Generation AI, but also showed caution, citing issues related to information leakage and accuracy of answers.

KDDI Group

KDDI also started to use generated AI in its business operations at about the same time as DOCOMO. The company is verifying various use cases by its employees and aims to improve operational efficiency and develop business in the future.

KDDI has also announced that it will work with Amazon Web Services (AWS) to support the use of generative AI by companies and local authorities, providing infrastructure design, construction, operation and maintenance using AWS, a data utilisation platform, and agile development of applications.

Other support includes the provision of data utilisation platforms and business matching.

Softbank.

The Softbank Group is the most focused on artificial intelligence among the four carriers. Chairman and President Masayoshi Son commented in the group strategy announcement that the group will expand and further strengthen its AI business. He is also overflowing with enthusiasm for AI, stating that AGI (Artificial General Intelligence) with human-like general-purpose intelligence ‘will be realised within 10 years’.

The company appears to be moving ahead of its competitors in the use of AI by establishing a secure environment in which all employees can use generated AI in May 2023 and formulating the SoftBank AI Ethics Policy in July.

The Softbank Vision Fund is also investing in AI-related companies globally. For Softbank, AI is not just a ‘hot area’, but is likely to be a key area in the future.

Rakuten Group

Rakuten has partnered with OpenAI, a leader in the AI field, to develop new services using interactive AI technology. As a first step, the company has launched an ‘Investment AI Assistant’ service (trial operation until September 2023), which provides basic investment knowledge and investment methods suited to one's level.

Summary of Web 3.0 and AI trends In addition, for users of the messaging application Rakuten Viber, OpenAI's ChatGPT API-based interactive AI and DALL-E 2-based image-generating AI are available for free. In terms of the release of services for users, it can be said to be one step ahead.

Summary of Web 3.0 and AI trends

As shown above, there are differences in the degree of focus on Web 3.0 and AI among the companies. In summary, it is no exaggeration to say that Docomo, KDDI and Rakuten focus on different genres within Web 3.0, while Softbank is far more focused on AI than Web 3.0.

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