TOKYO-NTT DoCoMo, the leading mobile carrier in Japan, plans to launch only experimental third-generation (3G) services on 30 May, rather than full commercial services as originally planned. NTT DoCoMo had repeatedly said it would launch commercial 3G services in May, but in late April, the carrier postponed commercial services until 1 October.
However, NTT DoCoMo said the long-awaited services with 384 kilobits per second (kbps) data transmission speeds will still be realized in May through an experimental service. Three types of 3G handsets from NEC and Matsushita will also debut with the launch of the May services.
On 26 April, Keiji Tachikawa, president of NTT DoCoMo, insisted that 30 May is still the date for the launch of its 3G services, and DoCoMo will fulfill what it said it would do. The experimental 3G service will be strictly limited to 4,000 people in the Tokyo metropolitan area. Handsets and monthly basic fees will be waived, although communications fees will be charged.
According to Tachikawa, the carrier was forced to postpone its commercial service launch for several reasons. These included bugs found in the software of wireless data controllers, switches and handsets; delays in the standardization process at the 3G Partnership Project (3GPP), forcing NTT DoCoMo to modify its system with the most recent changes to the wideband-CDMA (W-CDMA) standard; and some concerns based on previous trouble with new systems.
NTT DoCoMo has learned bitter lessons recently due to technical glitches. DoCoMo’s i-mode wireless Internet center went down more than 40 times last year, and the carrier had to recall more than 200,000 of its 503 Series Java-enabled handsets due to software bugs earlier this year.
“With these lessons both last year and early this year, we decided to provide experimental services (before commercial services),” Tachikawa said.
He also pointed out such experimental services will benefit the carrier because it will gain feedback from experimental service users about their handsets and services.
The market was quite cool to the news of the delay. Kate Lye, an analyst at UBS Warburg based in Tokyo, downplayed the postponement and said the market had expected NTT DoCoMo’s 3G service to be limited initially. Tokyo-based Keiichi Yoneshima, an analyst at J.P. Morgan Securities, said the delay will not overly impact NTT DoCoMo’s business.
A variety of offerings will be available for the experimental service users, including video-phone services that allow callers to see each other while they talk, video distribution services, advanced i-mode services, as well as basic mail and telephony. These services will be offered through either circuited-switched networks at 64 kbps or packet communication networks at speeds of 384 kbps.
Voice service fees will be the same as DoCoMo’s current PDC-based second-generation (2G) service, circuited-switched 64 kbps service fees will be 1.8 times as much as the voice service fee, and packet communications fees will be 0.05 yen per one 128-byte packet.
Compared to 2G services that are charged 0.3 yen per packet, the packet communications fee for 3G is much lower. However, if users are targeting “rich content,” the packet communications fee could be quite expensive based on file sizes.
NTT DoCoMo said it will invite experimental service subscribers through its home page and other channels beginning 10 May and will select 4,000 by a lottery.
Commercial plans
Tachikawa explained that NTT DoCoMo is planning to introduce a variety of charging programs for data communications services on 1 October when it launches commercial services. But he did not disclose the new pricing plan, saying the carrier has not made commercial pricing decisions.
Another remarkable feature of NTT DoCoMo’s 3G service, called FOMA, is “multi-access service” that will let users access both PDC networks and W-CDMA networks with one telephone number. Users will not be able to access both PDC and W-CDMA networks simultaneously, but they can switch from one to the other. This will allow FOMA subscribers to use their handsets for 2G services outside the initially limited FOMA coverage area.
Unlike 2G handsets in Japan, 3G handsets will carry a user identity module (UIM) card similar to GSM’s subscriber identity module (SIM) cards, although it can be locked by a carrier so it cannot be used on another carrier’s network.
Target market
Once it launches commercial service, NTT DoCoMo is planning to rapidly expand its 3G service nationwide.
It will launch commercial service in the Tokyo metropolitan area, a 30-kilometer radius from central Tokyo, and will expand the service to Osaka and Nagoya in December. Then it will launch the service in all major cities around the country by March 2002.
With the rapid expansion, the carrier is targeting to have 150,000 users by March 2002, 6 million by March 2004 and 17 million by March 2005. To facilitate the advanced services, DoCoMo will spend a total of 1 trillion yen (US$8 billion) for network infrastructure and handsets by March 2004.
To recover the large investment, the carrier aims to have a high average revenue per user (ARPU) from the new services. The ARPU of current NTT DoCoMo users for voice services is about 8,000 yen (US$65) per month.
Tachikawa said because the 3G service will target corporate users who need high-speed, broadband service, 3G ARPUs will be higher than those of current services.
3G handsets will also hit the market for sale around October. Although Tachikawa said the market prices have not been decided yet, basic terminals probably will be 30 percent to 50 percent higher than current handsets. Video phones with cameras will be more expensive than the basic handsets, and card-type terminals that are inserted into a PC card slot for data communications will be the same price as current PHS card-type handsets.
One remarkable feature of the 3G service is international roaming, but Tachikawa revealed DoCoMo will not be ready to provide international roaming until the second quarter of 2002. NTT DoCoMo’s prospective international roaming partners-AT&T Wireless in the United States and Hutchison 3G UK-said they are going to launch 3G services between 2002 and 2003, although they have not further fixed their time schedules. Tachikawa said once its partners are ready for 3G services, NTT DoCoMo will be able to provide international roaming services.
Although it has not yet picked a partner, Tachikawa said NTT DoCoMo would like to launch international roaming services in Korea before the World Cup Games in Japan and Korea scheduled to be held during May and June 2002. NTT DoCoMo has been providing international roaming services in cooperation with SK Telecom, the leading mobile carrier in Korea.
War of words
Tachikawa repeatedly said the carrier would not postpone 3G services, but just introduce an experimental service before its commercial services. But the market interpreted his comment as meaning the service delays were partly due to insufficient technical preparation and partly due to the 3GPP’s standardization process.
According to Tachikawa, NTT DoCoMo proposed at the March meeting of the 3GPP that all new versions of the 3GPP standard should have backward compatibility to the previous version. “Since we won the agreement to our proposal at the 3GPP, we believe no mutant is created at the international organization anymore,” Tachikawa said.
JP Morgan’s Yoneshima said that because NTT DoCoMo expected only a small number of users for the first year (150,000), the delay will decrease DoCoMo’s sales by only 6 billion yen (US$48.6 million). He noted, however, the delay may give people an impression that NTT DoCoMo fails to keep deadlines due to insufficient technological competency. UBS Warburg’s Lye said if NTT DoCoMo cannot increase its
ARPUs with 3G, NTT DoCoMo’s stock will be a “strong sell.”
