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

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.

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