TOKYO-Wireless local area network (WLAN) service targeting the retail and travel industries is set to expand quickly in Japan. Some market watchers said that once the WLAN business takes off, it might be a rival for cellular phone service and may rob the cellular market of some market share.
Japan’s cellular-phone boom is seeing many people use their phones not only for voice services, but also for Internet access services anywhere in Japan. Under these circumstances, WLAN has been limited to residential use. But several carriers are starting to provide WLAN service in “hot spots,” such as restaurants and hotels.
Mos Burger, one of the largest hamburger chains in Japan, in cooperation with NTT Communications, in July started providing WLAN service in Tokyo. During the test period through the second quarter of next year, the selected 2,500 customers receive access to the Internet at six Mos Burger outlets in central Tokyo.
The system is based on IEEE 802.11b technology, an internationally standardized specification for the 2.4 GHz band that provides up to 11 Megabits per second (Mbps) data transmission speeds.
Users must bring in their own PCs to the burger shops, where they then can use the Internet free as long as they like while eating and drinking in the restaurants. Mos Burger and NTT Communications, the international and long-distance business unit of NTT Group, are planning to launch commercial-based services next year by providing the same wireless service at many more shops.
Masahiko Nagai, information system group manager of Mos Burger, said the company decided to launch the WLAN service at its restaurants to allure more customers. Although Mos Burger is a leading burger chain with 1,543 stores around the country-and 48 stores in other Asian nations-it is a much smaller business compared with McDonald’s with 3,598 outlets. Currently, McDonald’s is winning popularity by offering a 50-percent discount on its burgers. Mos Burger needs to provide value-added services to differentiate its products from its rival McDonald’s.
Shunji Iwai, assistant manager of the Corporate Planning Department of NTT Communications, said NTT picked Mos Burger as its partner because Mos Burger’s customer profile is similar to NTT Communications’ Internet user profile. These users are typically young men in their 20s to 30s. In addition, Mos Burger’s atmosphere is quiet and cozy compared with other burger shops.
Iwai said it is a win-win business model. “NTT Communications can explore new customers by offering the wireless service at Mos Burger, and Mos Burger can allure Internet-oriented people to their shops,” he explained.
Starting next year, NTT Communications is planning to provide the wireless Internet access service not only at Mos Burger outlets, but also at other locations like hotel lobbies and airports.
Mos Burger’s Nagai said because the number of restaurants having the WLAN service is currently limited to six, it has not seen much impact on sales from the new service, but he believes the firm will be able to increase its sales once the commercial service is launched. Nagai said the firm has not decided on service prices yet; however, it is considering charging less than 2,000 yen (US$16.40) per month.
Street-side service
Mobile Internet Service (MIS) launched an experimental WLAN service in Setagaya Ward in central Tokyo last June, targeting to launch commercial-based service in April.
MIS is a joint venture of Usen, the largest cable caster in Japan, and Root, a WLAN device vendor. The service is also based on the 2.4 GHz band. But unlike Mos Burger, MIS is constructing networks along certain streets to allow users to access the Internet while they walk along the streets or shop in the stores on the streets.
MIS has an aggressive business expansion plan. The firm plans to launch the service in central Tokyo in April, and will expand the service to all areas of central Tokyo by the end of 2002 and to all major cities around the country by the end of 2004. Within three years, it is targeting to win 3 million users by constructing 300,000 base stations around the country.
The company plans to provide service either directly-MIS will provide the service by renting networks from major Internet service providers (ISPs)-or indirectly-MIS will provide the service by partnering with ISPs-to end users. In the latter case, MIS will charge less than 1,000 yen (US$8.20) per month.
Usen, its parent company, provides optical fiber service for individual homes. Hiroshi Mano, president of MIS, said the service will not compete with Usen’s optical fiber service because Usen is targeting residential customers, while MIS is targeting mobile customers.
“We will not provide our service to residential, because unlike optical fiber service, which can provide up to 100 Mbps, our wireless system provides merely up to 11 Mbps,” Mano explained.
MIS is also planning to explore the Korean market. The firm has just set up a joint venture in Korea that will launch an experimental service in the country soon.
Several other companies have started or plan to start WLAN services. SpeedNet, a subsidiary of Tokyo Electric Power Co., is providing WLAN service in Saitama Prefecture, north of Tokyo. NTT East, a regional operator of NTT Group, is planning to launch Biportable, a wireless service using the 5 GHz band, next April. NTT West, the other regional operator of NTT Group, is going to launch an experimental WLAN service based on the 2.4 GHz band with Hankyu International, Kinko’s and Lotteria.
WLAN is winning much attention, because it seems to be an influential competitor to mobile-phone services like those provided by NTT DoCoMo, J-Phone and KDDI.
Keiji Tachikawa, president of NTT DoCoMo, however, said at a recent press conference: “Different from our mobile-phone service, the service area of wireless LAN is strictly limited, while wireless LAN can provide higher data transmission speeds than mobile phones. These two services are reciprocal. I don’t think these two services will compete each other. We (WLAN and mobile phone services) can co-exist.”
But mobile carriers are starting to closely consider wireless LAN offerings. Japan Telecom, the parent company of J-Phone, last month launched an experimental WLAN at Tokyo Station. A spokesman of Japan Telecom said the firm has not decided yet about commercial services.
