Danger of culture clash in high-tech lesson from Japan
By Tally Goldstein and Richard Waters in New York and Michiyo Nakamoto in Tokyo
Published: November 30 2000 20:48GMT | Last Updated: November 30 2000 20:53GMT
AT&T Wireless has just acquired an off-the-peg wireless internet strategy.
Along with the cash it is paying to cement its relationship with the third-largest US mobile
company, NTT DoCoMo is to throw in the i-mode technology and marketing experience that
has made its Japanese wireless internet service the most successful of its kind in the world.
The AT&T unit will have exclusive rights to these, as well as the i-mode name, in North
America.
But while the prospect of a US launch for i-mode is one of the most eye-catching results of
Thursday's deal, the biggest benefits of the technology alliance could take much longer to
materialise.
For as part of the partnership, AT&T Wireless has announced what amounts to a change in
technological direction, setting it on a path that would ultimately make its network compatible
with that of DoCoMo.
"This will create more excitement than the question of i-mode," says Thomas Lee, managing
director of wireless research with Chase H&Q.
In the short term, however, the prospects for a US version of i-mode are likely to attract the
most attention.
DoCoMo has swept the Japanese mobile phone market with its proprietary service,
amassing 15m customers in less than two years for a service that gives wireless access to
thousands of internet sites.
But efforts to launch similar low-speed mobile internet services in the US, based on wireless
application protocol (Wap) technology rather than i-mode, have been slow to catch on, with
only about 2m users in all.
Will DoCoMo's experience help AT&T Wireless, which currently has a mere 300,000
wireless data customers, turn the mobile internet into a mass market?
"I doubt it," says Peter Friedland, wireless telecoms analyst with WR Hambrecht & Co.
"Japan is ahead in wireless data, but it's not necessarily because of i-mode. It's cultural."
DoCoMo entered the wireless data market ahead of the competition and introduced the
service to a culture that is quick to embrace new technology and less accustomed to
internet access on desk-top computers.
It has also had the advantage of a 60 per cent share of the Japanese wireless market,
giving it a dominant position from which to launch its service.
Most Americans with internet access are used to paying a flat monthly fee for unlimited
internet use, while DoCoMo's wireless data customers are charged every time they
download an internet site on their mobile phones.
Mr Friedland is sceptical that a US carrier could successfully use that kind of pricing model,
though John Zeglis, chairman of AT&T Wireless, says that he plans to look into using the
DoCoMo pricing approach in the US.
Other lessons that AT&T hopes to learn from Japan include better handset design and ways
of making mobile internet access a more useful service.
"I think when we have better phones, we will get higher penetration," says Jordan Roderick,
president and chief executive of AT&T Wireless International.
Mr Zeglis, meanwhile, points to DoCoMo's success in persuading many internet content and
e-commerce companies to develop services and applications for i-mode.
While i-mode may be the buzz words most commonly associated with this deal, its eventual
strategic impact may be felt more in AT&T's move from its current, second-generation
wireless technology towards third-generation service.
"AT&T is desperate. It has no real data strategy and its evolutionary path is going to be
extremely expensive," says Tim O'Neil, wireless telecoms analyst with Wit SoundView
Group.
In an attempt to put such fears to rest, AT&T Wireless outlined a strategy that would see it
move through two technology steps before finally arriving at the same wideband CDMA
standard that DoCoMo itself plans to use for the 3G service.
Alongside its current network, which uses the TDMA standard, AT&T says that it will build a
higher-speed network using a technology known as GPRS, which is based on the GSM
standard that is prevalent outside the US. That would force the company to issue its
customers with dual-mode handsets capable of accessing both types of network.
The company also points out that customers will need dual-mode wireless internet browsers
capable of working with both Wap and i-mode.
The US company adds that it plans later to upgrade its GPRS network to a higher-speed
technology known as EDGE, before finally moving on to full 3G service.
This spaghetti soup of technologies is meant both to provide a route to a common 3G
standard with DoCoMo as well as a way of introducing new data services at progressively
higher speeds, as demand develops.
"Taking a route through that interim technology is the right way to go," says Sajai Krishnan, a
vice- president at Booz-Allen. "Taking those measured steps is more financially prudent."
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