TOKYO—Japanese mobile carriers are emphasizing location services to combat increasing competition within the market.
The mobile-phone market in Japan has been expanding rapidly during the past several years. However, the market, which now has 72.8 million subscribers including PHS users, is becoming saturated, and harsher competition among carriers has forced operators to lower service prices, which has decreased their average revenue per user (ARPU) and overall revenues.
Finding a large opportunity in the market, the country’s three mobile carriers, in addition to other businesses, have been exploring the worldwide location services market, which is believed to be worth 1 trillion yen (US$7.4 billion) in 2003, according to market estimates.
KDDI, the second-largest operator in Japan, in cooperation with Secom, the country’s largest security service provider, in December launched an emergency information service. As part of its effort to compete with NTT DoCoMo’s FOMA third-generation (3G) services, KDDI launched the new location service based on global positioning system (GPS) technology and released two new GPS-enabled handsets.
The new service, called coco-Secom, will provide location data to mobile handset holders, let users make instant emergency calls, and when necessary, dispatch a security person to an accident site. Secom maintains security personnel at each of its 1,000 offices around the county around the clock.
According to KDDI, by fully using GPS technology, the system can pinpoint locations with less than 5 to 10 meters error.
The basic monthly charge is 300 yen (US$2.23), and an additional 300 yen is charged each time a user takes advantage of the service through a mobile telephone or 100 yen (US$0.74) when they use the Internet. When a security person is dispatched, users are charged 10,000 yen (US$74.36) per occasion. Including the conventional coco-Secom service, which Secom has been providing via a GPS terminal since last April, a total of 92,000 people use the services.
Hitachi currently manufactures the only handset available for the service. But KDDI said it will release more handsets that can provide the location service.
NTT DoCoMo, Japan’s largest mobile carrier, last November launched a location service based on GPS technology and its PHS networks through Location Agent, a subsidiary of NTT DoCoMo that was set up in July 2000. NTT DoCoMo holds a 59-percent stake in Location Agency, and Mitsui & Company, a leading trading firm, and NEC, one of Japan’s largest telecom vendors, hold 14 percent each.
Based on the proprietary location identification system called DoCoMo Location Platform (DLP), Location Agent is providing location data to mobile users for navigation purposes or to corporate users to track third parties.
Cosmo System, a venture in Nagano, for instance, is providing location services for school teachers who bring students on school outings, allowing teachers to track the kids’ locations during the trips, according to Masaaki Hayashi, a spokesman of Location Agent. In addition, the Kyoto Tourist Bureau is providing tourist information to visitors in Kyoto.
Japan Radio and Seiko Epson currently provide GPS terminals for the service from 50,000 yen (US$372) to 150,000 yen (US$1,115) per unit.
J-Phone, the mobile business unit of Japan Telecom, launched push-type local information services last year. Unlike the country’s other two mobile operators, J-Phone’s J-Station service is not providing location information, but rather location-oriented information to users by fully using its cellular network’s base stations around the country.
Most of the J-Station services are free, allowing all the operator’s 10 million users to receive the service. J-Phone is also providing a premium service, which includes a larger variety of news, weather and entertainment services than the free offering, for 100 yen per month. Because it is a push-type service, users automatically receive local information when they walk around a base station.
J-Phone said that it does not have any immediate plans to launch a GPS-oriented service.
Non-carrier companies
Toshiba Location Information, a Toshiba Group company, has been providing a location service for stolen cars. In Japan, about 56,000 cars were stolen in 2000, and the number of criminal cases has been rapidly increasing.
Toshiba Location Information not only provides a stolen car’s location information, but also prevention and notification services. When a user’s car is about to be stolen, a device on the car makes a warning sound, and the emergency information is immediately reported to the user. The service charge is 2,000 yen (US$15) per month, and an additional 300 yen is charged for each notification service. Besides that, a user must purchase the on-board device, which costs 39,800 yen (US$296) and up, and a 2,000-yen registration fee.
Core, a Tokyo-based venture company, in January announced that in April it will launch location services using NTT DoCoMo’s PHS networks and GPS technology. According to Masaru Asano, a Core spokesman, the system will be able to locate users’ mobile handsets or GPS terminals with high accuracy. The firm is targeting to provide the Location Provider System service to some companies that dispatch service people in the field and to travel agencies, which would like to get location information for their tour participants.
Keiji Tachikawa, president of NTT DoCoMo, has repeatedly said he would like to expand handset users in Japan by exploring the non-human market. “We can push up the total number of mobile users up to 360 million by letting cars, vending machines and pets have a mobile terminal,” he said.
However, so far location services have failed to push up mobile carriers’ earnings. For instance, coco-Secom has won 920,000 users, however, traffic from the service is still small.
A KDDI spokesman said it is targeting to win more users by providing new, attractive offerings like location services, rather than increasing its ARPU through the location services. GW
