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DoCoMo US Chief Outlines Secrets of 3G Success

NEW YORK -- Providing insight into the factors that add up to 3G success, NTT DoCoMo USA President and CEO Nobuharu Ono took center stage at the CeBIT America show here Friday morning.

Japan's DoCoMo is one of the world's first wireless players, launching its analogue service in 1979, while analogue service didn't begin in the United States until 1983. DoCoMo then launched a data service in 1993. By 2000 it had terminated its analogue service, and in 2001 it began rolling out its FOMA 3G network -- based on W-CDMA -- to begin replacing its 2G network.

But while Japan has shown a propensity to adopt new wireless technology early and quickly, Ono said it didn't start that way with 3G.

"Subscriptions where under expectations when we launched in 2001," Ono said during his keynote at CeBIT. "But our FOMA service has really taken off since the beginning of this year."

Ono ascribed the slow uptake to three key factors: poor coverage (FOMA only had about 22 percent coverage when launched), unsatisfactory battery-life, and unattractive prices. He also noted that the original 3G handsets were not up to par with 2G equivalents at the time.

But since that time, Ono said DoCoMo has expanded its 3G coverage in Japan, reaching more than 90 percent of the population. Battery life has also improved, up to about 200 hours at present, and the company plans to launch a fuel-cell powered handset in the 2004 to 2005 timeframe. Perhaps most importantly, Ono said the 3G service has allowed it to provide a higher-quality voice network combined with faster data at a lower cost.

"You get more on 3G but actually pay less," Ono said. "This is the most important feature of 3G for our customers."

Ono said voice costs 40 percent less on 3G than it does on 2G, and even video, which requires two channels (one for voice and one for video), is comparable to the cost of just voice on a 2G network.

The improvements have allowed the firm to boost its 3G subscriptions to 572,000 as of May, though that's still a far shot from the total 38.3 million subscribers to its i-mode service, Ono said.

But with data already accounting for 20 percent of the firm's revenue, 3G just makes sense, according to Ono.

Users in Japan have adopted data services in record numbers because of a number of factors, Ono said. First, the users are charged by packet transmission, rather than usage time. Attractive handsets are also part of the picture. But one of the most important factors is that the service utilizes IP Protocol and HTML, making it easy for content providers to convert their existing Web sites to be viewed on a handset. Users and content providers have grown on a symbiotic basis, Ono said, noting that there are now 70,131 content sites available to users, of which only 3,572 are i-mode sites. The rest were created on a voluntary basis.

Ono also broke down usage, saying 50 percent of i-mode usage is for email, 23 percent is for i-mode menu sites, and 27 percent is for Web access to third-party sites. Delving further into the numbers, he said the vast majority of usage of its i-mode menus sites is for entertainment: 36 percent for ringtones and standby screens, 23 percent for music and movies information, and 17 percent for games and horoscopes. He said another 14 percent of usage is for information services. The remaining 10 percent applies more to enterprise usage, with 5 percent used for transactions and 5 percent for database access.

DoCoMo's present course has it fitting all sorts of new functionality into its handsets. It has recently debuted the SH505i, a phone equipped with a 1.3 megapixel digital camera. The phone actually swivels 180 degrees from the base, allowing it to look just like a camera as well. The company's i-shot service for photos was introduced a year ago, and already has 10 million users, Ono said. Users can send photos directly to other phones, or use the i-shot Center service the company provides to email photos to PCs. Customers can also print out their pictures at 24 hour convenience stores.

DoCoMo is also getting ready to launch the F505i, which features fingerprint authentification to make mobile-commerce more secure, though it may have enterprise applications as well. Video is already here, and that is paving the way for new applications in which DoCoMo sees its phones providing "guide dog" services for the blind and email for the deaf (it is offering a 50 percent discount for disabled users), video monitoring capabilities that will allow parents to keep tabs on children at daycare or in kindergarten, location-based services for checking if a bus or subway is running on time, even remote control functionality.

Going beyond that, though, Ono said the next step is "Mobile in All," in which mobile communications functionality is incorporated in all sorts of other devices. DoCoMo has already taken a step in that direction with the introduction of 500 c-mode Coca-Cola vending machines in Japan. Each machine incorporates a computer, full color display and printer, allowing users to make cashless purchases with their handsets. The company plans to have 3,000 vending machines deployed in Japan by March 2004.

It doesn't plan to stop there. It sees all sorts of things incorporating mobile technology, including vehicles, robots, even pets.

In the meantime, Ono said the company is working to transfer its success in Japan by taking its experience in i-mode and FOMA to other countries. In the U.S. it is partnered with AT&T Wireless, which plans to launch its own W-CDMA network by the end of next year.