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NTT’s push to implement IOWN (Innovative Optical and Wireless Network), its next-generation infrastructure concept, is gaining momentum. In June 2025, NTT announced the successful completion of a proof-of-concept for the All-Photonics Network (APN), a core component of the IOWN vision. This new optical network technology can achieve communication that surpasses the limits of the existing internet, offering ultra-low latency, massive capacity, and significantly reduced power consumption.

This latest experiment dramatically improved energy efficiency while curbing communication delays to less than 1/200th of conventional levels. This represents a critical technological breakthrough for social infrastructures that demand advanced real-time processing, such as AI, autonomous driving, and remote medical care. NTT aims for full-scale implementation by 2030, with social integration expected to accelerate through collaborations with businesses, local governments, and research institutions.

Synergies with IOWN in Data Center Strategy

Alongside IOWN’s implementation, NTT is ramping up investment in its data center business. NTT Data and NTT Communications are expanding their footprint by building new, large-scale data centers and expanding existing ones, both domestically and internationally. These new facilities are expected to incorporate IOWN technologies.

Of particular note is the integration of APN with “Digital Twin Computing (DTC)”, which combines APN with computing resources. DTC is a technology that replicates all information from the physical world into a virtual space in real time, leveraging it for future predictions and optimization. This makes it highly compatible with data centers, which require vast amounts of data processing. Through the construction of next-generation data centers that support these advanced technologies, NTT aims to achieve both energy efficiency and high computational performance.

Moreover, IOWN-compatible infrastructure isn’t just for domestic deployment; it’s also set for global expansion. NTT is actively entering overseas markets, including Asia, Europe, and North America, to build digital foundations on a global scale. With bases already established in the United States, India, and Europe, NTT has begun operating IOWN-compatible data centers. It’s clear that this next-generation technology, originating from Japan, will have a significant impact on the global digital ecosystem.

A “Made in Japan” Infrastructure Revolution Spreading Worldwide

NTT’s ambitious IOWN concept isn’t just about network renovation; it has the potential to transform the very structure of society. A high-speed, low-latency, and energy-efficient communication infrastructure is indispensable across all domains: AI, quantum computing, remote operations, and smart cities. The fusion of IOWN and the data centers that support it brings us a step closer to realizing the next-generation digital society.

NTT’s challenge is now moving beyond the technical verification phase into implementation and deployment. There are high expectations for a future where cutting-edge technology from Japan spreads as a global digital infrastructure.

In recent years, “decentralization” has garnered significant attention within the data center (DC) industry. The Japanese government and Tokyo Electric Power Company are promoting initiatives like “Watt-Bit collaboration,” which links power and data communication, to encourage the shift of data centers away from urban concentrations. The underlying objectives include mitigating earthquake and disaster risks and revitalizing regional economies. However, the reality on the ground diverges somewhat from this ideal.

The Barrier of Hyperscaler Economic Rationality

The biggest obstacle is the behavior of foreign hyperscalers. The current demand for data centers is primarily driven by major overseas cloud providers such as Google and Amazon. Their location decisions are based primarily on economic rationality, and they strongly believe that there are significant advantages to establishing operations in areas where data centers and communication networks are already concentrated. Consequently, they are reluctant to decentralize.

Furthermore, supporting Watt-Bit collaboration requires robust internet infrastructure, including Internet Exchange (IX) points and submarine cable landing stations.

As one government official stated, “Decentralization won’t progress if we rely solely on economic rationality.” This indicates that a strategy extending beyond mere infrastructure development is needed for successful regional dispersal.

Government Strategy and Support for Domestic Operators are Key

Japanese data center operators are relatively more proactive in establishing DCs in regional areas. Japanese companies often demonstrate a willingness to expand into various regions, considering their social mission and the characteristics of the domestic market. However, even if they establish regional data centers utilizing subsidies and grants, sustained business operations are impossible without securing enough customers to cover ongoing running costs. Since major overseas cloud providers do not use regional data centers, it is extremely difficult for Japanese data center operators to decide to build new DCs in the regions.

Given this situation, the key to future progress lies in “government leadership” and “strengthened support for Japanese operators.” Market principles, left solely to economic rationality, will not lead to decentralization.

Instead, the government may need to strategically designate locations and actively guide development with a strong resolve. Additionally, effective institutional design is essential, going beyond one-off subsidies to include long-term operational support and tax incentives. The government’s large-scale utilization of regional data centers could also be an effective measure.

The question remains: Is the government prepared to push forward with decentralization, even if it means transcending economic logic? And how will Japanese companies respond to this trend? The regional strategy surrounding data centers is now reaching a critical juncture.